Coal Value Chain Exchange and Climate Solutions Project

IMGXYZ15738IMGZYXChina and the United States are the two largest coal producers and consumers in the world. The two countries must work together to address environmental impacts throughout the coal value chain, from mining and transport to end use. Coal is the fastest growing energy outside of renewables, expanding production by 5 percent annually since the year 2000 and generating around 40 percent of global electricity. China and the United States have a significant role to play in affecting global energy and climate change trends. 

Ni Weidou, senior academician of the Chinese Academy of Engineering, and Robert Marlay, U.S. Department of Energy Clean Energy Research Center director, discussed future trends in the coal value chain and prospects for U.S.-China collaboration on coal with Chinese and international energy and climate experts. Carnegie’s Kevin Tu moderated.  

The Long Reign of King Coal

All the Chinese experts agreed that coal would remain the backbone of China’s energy sector for the foreseeable future, while the American shale gas boom has made the future of coal very uncertain in the United States.

• The Dirt on Clean: Ni reminded the audience that coal’s emissions record will remain a primary policy concern, as the world’s environmental carry capacity will dry up much faster than its energy reserves. Tu added that in 2010, China’s coal-fired carbon emissions were 17 percent higher than total carbon dioxide emissions in the United States. Milton Catelin, chief executive of the World Coal Association, said that dirty coal was here to stay, and the central question was then, “How do you realize the benefits of fossil fuels while reducing environmental impact?” Research into clean coal, he added, was “dramatically underfunded” in comparison to research on renewables or nuclear energy.  
   
• Innovation Is the Way Forward: Marley pointed out that science and technology investment seems to be at the “bottom of a list” of policy responses to climate change. He explained that policymakers often favor more immediate measures such as governance frameworks and carbon pricing. Achieving greater efficiency through innovation in coal production, he added, would be the equivalent of “implementing the Kyoto protocol three times over.” Both Chinese and U.S. experts agreed that broadening political support for innovation was necessary and could bring the costs of the most promising technologies within reach.

The Roadmap for Technological Innovation

• Assessing the Potential of Capturing Carbon Capture: Catelin asserted that Carbon Capture and Sequestration (CCS) technology represented 25 percent of the answer to the clean energy problem, and questioned the lack of funding available for CCS research. However, Ni expressed doubt that CCS was the silver bullet, pointing out its geological risks, CO2 leakage record, saline contamination and ground upheaval side-effects, and potential earthquake risks. He advocated a move toward new technical solutions such as Carbon Capture and Utilization. But both experts agreed that CCS was being deployed too slowly, and any global energy solution would be more expensive if it didn’t include CCS. 
   
• Other Technical Solutions: Ni pointed to other “intermediate ways” for cleaner coal utilization such as polygeneration, a technique based on coal gasification. Coupling energy transformation processes along polygenerative techniques, he said, would optimize energy flows. The cost, Ni admitted, was currently higher than conventional processes, especially coal-fired power generation. But with stricter environmental controls (such as PM 2.5) in the future, this situation is likely to change. Ni also signaled the possibility of synergistic utilization of renewable energy with coal, such as combining wind power with coal for methanol production.
   
• U.S.-China Collaboration: Marley pointed out that several “ambitious activities” were underway between the United States and China on coal collaboration, with scientists and engineers from both countries developing cleaner coal technology. He also listed some of the challenges that these collaborations faced, such as congressional concerns over the potential value of such cooperation, trade issues over “innovation mercantilism,” and disputes over intellectual property protection. 

Discussants: Milton Catelin, Hu Zhenqi, Zhou Dadi

IMGXYZ15740IMGZYXChina relies on coal for 70 percent of its primary energy consumption and 80 percent of its electricity generation. As the world’s largest coal producer and consumer, China alone accounts for nearly half of the world’s coal output and consumption. Coal’s problematic environmental record looms over its growing importance in meeting China’s spiking energy demand. The process of transitioning to “cleaner coal” will have a significant role to play in affecting global energy and environmental trends. This underscores the importance of future developments in energy security, climate solutions, and international economic development.

Hu Zhengqi, director of the Institute of Land Reclamation and Ecological Restoration at China University of Mining and Technology (Beijing), and David Mohler, vice president of Duke Energy, discussed the possibilities for sustainable coal development with Chinese and international energy and climate experts. Ma Linwei, deputy director of the Tsinghua-BP Clean Energy Research and Education Center, moderated.

Constraints on Sustainability

• Coal Locations: Hu pointed out that China’s coal reserves were located primarily in the north and west of the country, far away from the economic powerhouses in the south and east. This, he said, led to a number of constraints and bottlenecks in the industry’s sustainable development
   
• Coal’s Dark Side: China’s coal mining fatality rate is still alarmingly high (at 0.564 deaths per million metric tons of coal mined in 2011), but it is improving as large-scale mining technology is deployed at scale, Hu said. Coal-fired power plants represent nearly 45 percent of China’s national sulfur dioxide emissions and 30 percent of particulates discharge. The “treatment” of damaged, or contaminated, land next to coal mines is emerging as another dark side of the coal industry, Tu added. Hu also pointed out that forced migrations and the displacements of peasants caused by coal mine pollution are higher than the fallout from the Three Gorges Dam project.
   
• A Better Track Record: Any attempt at “sustainable development” in coal mining, Hu said, will have to tackle a whole gamut of problems head on, with greater “scientific capacity” as a guiding principle. These include moving toward cleaner coal mining techniques, reclamation of subsidized land, environmentally benign disposal of coal waste, treatment of waste land, and efficiency in cleaner coal utilization. Carlos Fernandez Alvarez, senior coal analyst at the International Energy Agency, added that the interaction between water and energy is an often overlooked issue that needs special attention.

Overcoming Bottlenecks 

• Beyond Carbon Capture: Mohler advocated a move “beyond” Carbon Capture and Sequestration (CCS) to more creative uses of coal-fired carbon emissions. Potential uses of the carbon dioxide produced in coal plants, he said, include use in integrated circuits or chips, in chemical processes (for example, carbon dioxide can replace sulfuric acid in alkaline water to control pH levels), and in other energy processes such as enhanced oil recovery. Alvarez added that the non-electricity uses of coal should not be underestimated.
   
• Technological Horizons: A paradigm shift, not just a solution, is urgently needed throughout the coal industry, Hu argued. This, he added, required a shift from “output-speed” metrics to “quality-benefit” metrics. Further, the current system needs to adjusted from solely emphasizing coal production to comprehensive utilization and deep processing of coal, and from “extensive” coal mining to safe, efficient, and high-tech mining. The safety aspect of the above adjustments, he added, should also be coupled with a change from simple control of coal mine accidents to the establishment of a comprehensive occupational safety framework.   

Discussants: Kevin Tu, Xu Shisen, Carlos Fernandez Alvarez

IMGXYZ15741IMGZYX Coal has undoubtedly played a key role in China’s rapid economic growth since the Chinese economy was opened to the outside world in 1978. However, the unprecedented exploitation and utilization of coal has also created enormous environmental and social challenges. Putting aside the other effects of coal use such as waste, land subsidence, and water contamination, China’s coal-fired carbon emissions alone are 17 percent higher than total carbon dioxide emissions in the United States. How China addresses coal-related environmental challenges, especially the rising carbon emissions, will have significant implications for not only China but also the international community.

In the third session of the Coal Value Chain and Sustainable Development Exchange, Wang Jinnan, vice president of the Chinese academy of environmental planning, discussed the improvement of environmental performance throughout the coal value chain. The discussion was followed by a presentation on coal and climate change by David Hawkins, director of Natural Resources Defense Council’s Climate Center.  

Tackling the Hurdles to Improving the Coal Value Chain

• China’s Technological Readiness: China is now looking at ways to minimize emissions (such as SO2, NOx and CO2) with advanced cleaner coal technologies. However, Wang explained that investment in this sector was insufficient and cost was a concern, especially considering the complicated technology needed at different stages of the cleaning process. He added that China must be realistic about whether deploying immature technologies at scale would be cost effective in the end.
   
• Can China Afford to Lower GDP Growth? Wang described how a case study was implemented over twelve years by selecting regions with different economic growth rates. In the regions where GDP growth was highest, there was a direct correlation between economic growth and coal usage. While the Chinese government is trying to slow down the country’s spiking emissions, it may be difficult to achieve the goal without negative impact on economic development.
   
• Unrealistic Targets Are Counterproductive: At present, Wang explained, power generators, boilers, and industrial kilns account for the majority of national coal consumption in China. To combat excessive usage across these sectors, China should set a lower national coal consumption cap. Wang added that the focus should not be entirely on carbon emissions abatement, as the most restrictive measures should be related to the SO2 control targets. To balance the needs for greenhouse emissions reduction and economic growth, Wang advocated a cross sector cap on coal and increasingly stringent environmental regulation.
   
• Different Regions, Different Strategies: Coal consumption has to be tackled on a regional basis, not on a general national level, Wang asserted. In some cities, coal usage has to be reduced. Wang added that there are regions that can afford to maintain current coal consumption levels and even areas that should be permitted to increase coal consumption.

Linking Coal to Climate Change

• The U.S. Coal Challenge: Together the United States and China account for about 40 percent of global carbon emissions. Hawkins stated that China and the United States need to resolve their common carbon challenge in order to achieve a global climate solution. The world needs to continue to take a serious look at carbon capture and storage, and retrofit candidates. In the United States, he explained, the government is targeting conventional air pollutants such as SO2, NOx, and mercury under new regulations. Sixty gigawatts of old coal-fired power plants have been retired as a result. Hawkins recommended making more investment in carbon capture and storage and added that enhanced oil recovery is a promising area that warrants more attention.
   
• What Can China Do Next: One panelist pointed out in China, the coal sector is changing as the government is investing less and placing the burden of technological investment on the private sector. While low carbon utilization of coal is a common goal, there are differing opinions of just what low carbon means. Ni Weidou, a professor at Tsinghua University, added that China needs to minimize the inefficient use of scarce resources and increase awareness of unnecessary energy use.
   
• The Future of Coal in China: Energy security in China relies on technology innovation. Zhang Xiliang, a professor at Tsinghua University, concluded that this is not a question of eliminating use of coal but of cleaner and more efficient utilization of coal. Zhang added that in relative terms, China has made significant progress in creating a more efficient power generation fleet, but any coal technology, no matter how efficient it is, will still release carbon dioxide and air pollutants. Milton Catelin, chief executive of the World Coal Association, added that the future of coal should be examined with as much pragmatism as possible. 

Discussants: Milton Catelin, Dan Guttman, Zhang Xiliang