Facing China's Coal Future - IEA

© OECD/IEA 2012 Facing China’s Coal Future
Prospects and Challenges for Carbon Capture and Storage
to have considerable potential for retrofitting of CCS onto existing plants and on those being built
today. This would however depend on criteria not limited to proximity to storage, physical space
at plant, and plant efficiency. This should be considered when setting policy and technical
priorities for this and the coming decades.
Technology and industrial development
China has accumulated a significant level of knowledge on CCS technologies and continues to
promote CCS‐related R&D. The priority areas of current R&D efforts are reduction of costs for
CCS technologies (and specifically capture technologies) and reduction of energy consumption
during the capture phase across all capture technologies.
China has considerable domestic resources to support the development of the CCS industry. In
addition to R&D efforts, China could deploy policies to support domestic demand for CCS
technologies and to position its companies to export technology and/or generate CO 2 emissions
reduction through CCS projects for the international carbon market. China’s policies to promote
new technologies typically include: providing capital and other incentives for technology
adoption; forcing industry to upgrade power and industrial facilities; and entering into voluntary
agreements with industry to adopt technology. In addition, China’s lower cost structure and short
timelines for project approvals and construction provide the rationale for a positive outlook on
CCS in China compared to other parts of the world. However, as mentioned, costs, viability of
storage and scale of capacity, along with creating markets and financing channels, are key
challenges that need to be addressed for CCS to be feasible in China in the long term.
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Considering the environment
A potential scale of development of CCS in China would require significant use of coal resources
to offset the energy penalty for CCS, creating additional pressures on an already high demand for
coal. Additional external costs would need to be considered across the coal development chain
from extraction to generation, creating heightened environmental stresses and demand for
water and other resources necessary for extraction, processing, transportation and utilisation of
coal. In China, these resources are already stretched and will require significant added
investment in infrastructure to provide for further development, such as water transport to coalrich
areas in the traditional dry climates and arid north and northwest coal regions. Any advances
in R&D on minimisation of the energy penalty during carbon capture will have significant impact
on resource efficiency, CCS cost and CCS development in China.
Climate policy considerations
China’s actions on CCS are also partly driven by important global climate policy considerations,
although except for a recently adopted decision to authorise CCS under the CDM, no other direct
international CCS‐related policy drivers are yet in place. Facing rapidly rising GHG emissions,
China’s government is one of the most pro‐active in using incentives to stimulate adoption of
clean energy technology, and has proven itself a global leader in deploying renewable energy
technologies, such as hydroelectric, wind and solar thermal applications. In these efforts, China
commonly relies on policy tools such as direct subsidies to project developers, tax credits and
special power tariffs. Introduction of carbon taxes and various types of emissions‐trading pilot
programmes is also under consideration in China as a possible prelude to a domestic carbon
market, both of which would establish a Chinese price for carbon.