Facing China's Coal Future - IEA

© OECD/IEA 2012 Facing China’s Coal Future
Prospects and Challenges for Carbon Capture and Storage
strong potential to raise international funds. The Chinese government is also highly organised
and effective at accessing multilateral development funds, making the country an attractive
location for CCUS demonstration projects. Broadly speaking, potential international financing
mechanisms fall into four categories: bilateral government funding; multilateral institutions;
multilateral development banks; carbon finance.
Bilateral government funding
The European Union and several EU countries, Australia, Japan and the United States currently
have bilateral activities with China on CCUS RD&D which, in many cases include the broader
portfolio of clean coal technologies. As noted previously, these activities have focused on studies,
modelling, geologic storage assessments, test pilots etc. This is in large part because of funding
limitations but also because of China’s early stage of CCUS development. Now that China has
established a foundation for CCS, it is prudent to advance large‐scale demonstration activity and
more substantial financing support. While current bilateral financing levels are too low for any
meaningful large‐scale projects, bilateral arrangements offer funding vehicles that could
potentially be leveraged. Prominent examples of bilateral activities include:
China and the European Union: In September 2005, the EU‐China Partnership on Climate Change
was established to provide a high‐level political framework for co‐operation between the
European Union and China. Several areas of CCS co‐operation were launched under this
framework including the China‐UK Near Zero Emissions Coal Initiative (NZEC), Co‐operation
Action within CCS China‐EU (COACH) and the Support to Regulatory Activities for Carbon Capture
and Storage (STRACO 2 ). NZEC and COACH have both helped lay the foundation for large‐scale
CCUS demonstration. Funding is delivered through the European Union’s Sixth Framework
Programme. The overall budget for COACH is USD 3.7 million over three years.
China and the United States: Bilateral co‐operation on CCUS between China and the United
States is guided under two principal agreements: the US‐China Fossil Energy Protocol (Shengli
Consulting, 2010) and the Protocol for Cooperation on a Clean Energy Research Center. The Fossil
Energy Protocol was established in 2000 between the US Department of Energy (US DOE) and
MOST and includes six annexes under which joint projects are conducted (CCUS cuts across all of
the annexes but is focused in Annex II: Clean Fuels and Annex IV: Energy and Environmental
Control Technologies). In November 2009, the high‐level US‐China Clean Energy Research Center
(CERC) was established with USD 150 million in equal joint funding that will support institutions
and researchers in the two countries. CERC’s Advanced Coal Technology Consortia (CERC‐ACTC)
have developed a five‐year joint work plan that includes CCUS (US DOE, 2011).
China and Australia: Most bilateral CCUS activities take place under the Australia‐China Joint
Coordination Group on Clean Coal Technology, which was established in 2007. The China
Australia Geological Storage of CO 2 (CAGS) Project (2009‐11) is supported through the Cleaner
Fossil Energy Task Force of the Asia‐Pacific Partnership on Clean Development and Climate
(funded by the Australian Government) and jointly managed by Geoscience Australia and
MOSTS’s ACCA21 (Australian funding of AUD 4 million). Australia’s Commonwealth Scientific and
Industrial Research Organisation (CSIRO) was also involved in China’s first post‐combustion
capture plant with Huaneng Group and has projects relating to geological storage assessments.
China and Japan: Co‐operation between China and Japan is directed under China’s NDRC and
Japan’s Ministry of Economy, Trade and Industry (METI). It currently focuses on a USD 300 million
CO 2 EOR project that plans to capture and utilise 3 Mt to 4 Mt of CO 2 per year from two 600 MW
coal‐fired power plants in China’s north‐east province of Heilongjiang. Lead partners include
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