Transforming coal for sustainability: a strategy for China

1. The Three E’s of Sustainable Development In October 2002 the 16th Party Congress established the goal of expanding China’s economy fourfold by 2020 and defined the Three E’s strategy for economic development, energy security, and environmental protection. In pursuing these goals, China’s energy system cannot continue to expand using the current approach. The risks are that: • China will become overly dependent on oil imports as a result of the rapidly growing demand for liquid fuels, especially in the transportation sector; • severe additional public health and environmental damage will occur in China with very large economic consequences (projected to grow from over 7 % of GDP to 13 % of GDP in 2020); and • climate change impacts will become significant, and China will not be able to make its contribution to mitigating greenhouse gas (GHG) emissions under the United Nations Framework Convention on Climate Change. Can these risks be mitigated at reasonable cost? The answer is ‘‘Yes.’’ This is based on specific technical analyses and modeling of China’s integrated energy economy. The Task Force on Energy Strategies and Technologies (TFEST) analyzed two alternative strategies, as shown in Figure 1 using base-case technologies and advanced-case technologies through 2050. The analysis indicates that there are advanced energy technology systems that can support growth objectives while dramatically reducing air pollution and without China’s becoming overly dependent on imports. The base technologies strategy, which continues to rely on coal combustion for power generation and on petroleum-derived fuels, cannot meet the same objectives, especially not the one of energy security. A recent Energy Research Institute (ERI) analysis, shown in Figure 2, indicates that oil imports might exceed 60 % of total consumption by 2020 under a business-as-usual scenario. However, the TFEST analysis shows that the advanced technologies strategy, which provides the same energy services at about the same cost as the base technologies strategy, might limit oil and gas imports to some 30 % of total supply while also meeting constraints for SO2 and long-term carbon emissions. This strategy builds on the combination of energy efficiency, natural gas, renewable energy, and ‘‘modernized’’ coal. By aggressively pursuing the advanced technology strategy now, the TFEST believes China could reduce projected oil imports by up to 2,250 PJ per year in 2020, and by rapidly increasing quantities thereafter. Modernization of coal is a large and necessary component of energy systems that satisfy the Three E’s for China’s sustainable development. Modernization of coal refers to the use of gasification technology to produce synthetic gas for power, clean fuels for transportation and cooking, and heat for both domestic and industrial heating applications, to replace coal combustion technology and oil imports. This strategy is based on technologies that are mostly known and proven, many of which are already in use in China, largely in the chemical sector. What is needed for successful implementation is to promote the integration of, and investment in, those technologies rather than the development of many new ones. Investments in new capacity should be directed to gasification-based systems, with an emphasis on co-production of multiple energy carriers and often chemicals as well at the same site, i.e., polygeneration. A flexible and adaptive strategy needs to be implemented step by step. The TFEST outlines a vision and action plan in this report. Time is running out to implement this strategy because large investments are planned for electricity over the next decade that will lock in the mode of coal use for meeting China’s electricity requirements through 2020 and for many decades thereafter. Figure 3 indicates that two-thirds of the coal plant capacity that will be operating in 2020 is yet to be built. The recommended strategy seeks to shift a significant portion of this new capacity onto a sustainable, modern path. Equally, decisions must be made now to allow for investments in new types of transportation fuels and infrastructure.