China, People's Republic of: Tianjin Integrated Gasification Combined Cycle Power Plant Project

Energy / Conventional energy generation - Energy efficiency and conservation

The Tianjin Integrated Gasification Combined Cycle Power Plant Project involves constructing and operating a coal-fired integrated gasification combined cycle (IGCC) power plant with 250 megawatt capacity in Tianjin Harbor Industrial Park in the Binhai New Area of Tianjin city. This will be the first IGCC clean coal project in the PRC, using the most efficient and least-polluting technology currently available commercially. It will also be the first IGCC power plant in the developing Asia. On completion, the plant will generate 1,470 gigawatt-hours of electricity annually, which will be sold to the Northern China Grid Company Ltd. using a 220 kilovolt interconnecting transmission line to an existing substation in the industrial park.

The Project is consistent with the priority of the Government of the PRC to implement a coal-fired power plant with near-zero emissions by 2015 under its flagship clean coal program GreenGen announced in 2005. The Project is a cornerstone of the critical first phase of the GreenGen program. In the second phase, a scaled-up IGCC plant fitted with pilot-scale carbon capture and storage (CCS) is expected by 2013, and the third phase is expected to provide a coal-fired power plant with near-zero emissions by 2015. CCS is included in all climate change-mitigation strategies proposed by the United Nation's Intergovernmental Panel on Climate Change and the International Energy Agency. Various international studies have found IGCC power plants with CCS to be the least-cost option to cut carbon dioxide (CO2) emissions from coal-fired power plants by up to 90%. By successfully demonstrating the advantages of IGCC technology, the Project will reinforce confidence in the viability of this technology and enable the timely implementation of the ensuing phases of the GreenGen program.

Relevant approvals for the construction are in place. Project completion is expected by 30 June 2012.

The PRC is the world's largest coal producer and consumer. Coal production has increased from 0.98 billion tons (t) in 2000 to 2.74 billion t in 2008, or more than 48% of global production. In the PRC, electricity is produced predominantly from coal, which generated 81% of the total electricity in 2008. Electricity generation is the largest single consumer of coal. It consumed 1.34 billion t (49%) of the coal produced in 2008, with serious environmental problems and poor air quality caused by related emissions 50% of the nation's sulfur dioxide (SO2) emissions, 36% of its nitrogen oxide (NOX) emissions, and 39% of its CO2 emissions. Acid rain caused primarily by SO2 and NOx falls on one-third of the country and 45% of its farmland. The rapid increase in coal consumption has triggered a surge in emissions of CO2 a major greenhouse gas (GHG) and cause of global climate change.

The Government is actively improving energy efficiency and shifting to non-carbon and other cleaner energy sources to improve the country's environment and help mitigate global climate change. The Renewable Energy Law, enacted in 2006, brought unprecedented growth in wind, solar, and biomass power generation. Carbon-free nuclear power is expected to grow many folds. The PRC already has the largest hydropower capacity in the world, which is expected to grow substantially. Despite efforts to change the energy mix, coal is expected to remain dominant in electricity production in the near future.

To improve the efficiency of and reduce emissions from coal-fired power plants, the PRC is (i) rapidly closing small, inefficient plants, as indicated by the closing of 54 gigawatts of such capacity in the past 3 years alone; (ii) constructing new supercritical and ultra-supercritical (USC) plants with advanced technology that offer efficiency comparable to international standards; and (iii) accelerating the application of flue gas de-sulfurization. The development of coal-fired IGCC power plants has been slow, though they can offer 4% 5% higher efficiency than USC plants. So far, no industrial-scale IGCC plant is operating in the PRC. Higher capital and, operation and maintenance (O&M) costs (affecting electricity tariffs), and technology risks are cited as key barriers. IGCC technology is, however, gaining momentum in part because of the opportunity of combining it with CCS to cut emissions drastically.

The Project will demonstrate a key enabling technology with potential for large GHG emission reductions from coal usage in the largest coal-consuming country in the world. ADB project support will provide additional technical due diligence and help mitigate associated risks, strengthen compliance with safeguard policies, and thereby establish appropriate benchmarks and standards for future IGCC projects. The successful implementation of the Project will lead to scaled-up IGCC power

plants and trigger the next phases of the GreeGen program, with the potential for very large reductions in GHG emissions from coal-fired power plants in PRC.

The Tianjin IGCC power plant has successfully passed the critical continuous operation test at full load and will continue for some more time on trial operation which should enable plant's commercial operation by the end of 2014.

As requested by the Borrower, ADB cancelled loan savings in the amount of $23.16 million effective 26 November 2013 and subsequently approved the updating of baseline projections. In addition, the loan closing date was extended up to 31 October 2014 to accommodate a CCUS pilot project which will enhance the attainment of project's outcome.

Total contract awards to date under Loan 2616 is $104.2 million while disbursed amount is $105.7 million. The undisbursed loan balance of $6.1 million was cancelled, following advise from PIA that no further withdrawals will be requested. The loan was financially closed on 27 Feb 2015.

Contract award for Grant 0196 is $4.8 million representing the contract with the coal gasifier and gas turbines supplier for the long-term maintenance of $4.5 million, and individual consultants' contracts of $0.3 million. The grant closing date was extended to 30 June 2016 to allow completion of all activities.

250 MW IGCC demonstration plant constructed at Tianjin;

Adequate plant O&M capacity created

Capacity developed for obtaining carbon offset revenues from IGCC plants

The long-term maintenance contract is under the grant.

The draft PDD was prepared in cooperation with Greengen staff. Due to the uncertainty of post 2012 CDM, Greengen decided not to further pursue CDM possibility.

Through 2013, the plant had to go through some major repairs, including the replacement of (i) compressor at the air separation unit, and (ii) the nozzle at the combustion unit. In addition, further trial operations had to be completed. The plant has operated reliably since the beginning of 2014.

Category A. A summary of environmental impact assessment was circulated to the Board and posted on the Asian Development Bank (ADB) website on 14 April 2008.

Envrionment Monitoring Reports were disclosed on ADB's website in May 2012, in November 2012, January 2014 and February 2015.