Key Opportunities for U.S.-China Cooperation on Coal and CCS

Summary

This paper outlines the current situation regarding advanced coal and carbon capture and storage (CCS) in the United States and China. The strategic interest in cooperation on coal and CCS is explored, and then three options for collaboration are identified and discussed. None of the options are mutually exclusive. Remaining questions for discussion are provided at the end.

One of the most striking commonalities between China and the United States is that both countries are blessed with large coal reserves,and naturally, both rely heavily on coal for their primary energy supply. U.S. coal reserves are estimated at 243 billion tons (29% of world total), and Chinese at 115 billion tons (14% of world total). China's reserves-to-production ratio, however, is much shorter than that of the United States with only 41 years of currently-estimated economically recoverable coal compared with 224 years in the United States at current production rates (BP Statistical Review 2009). As the most abundant fossil energy resource in both countries, it is virtually certain that both will continue to rely heavily on coal due to its relatively low cost and the energy security benefits related to not having to import substantial foreign supplies of primary energy.

The utilization of coal will be increasingly limited by the climate change problem, however, unless advanced coal and carbon capture and storage (CCS) technologies can be developed, demonstrated, and rendered cost-effective within the next 5–15 years. Coal is the most polluting fuel from the standpoint of climate change; more carbon dioxide (CO₂) is polluted from coal than from any other fuel on a gram-per-gram basis. The climate change threat is very serious and may require dramatic cuts in global greenhouse-gas emissions in the next 10–20 years (see, for example, IPCC 2007, Anderson and Bows 2008, and Meinshausen et. al 2009). In short, both China and the United States will be required to dramatically reduce GHG emissions much sooner than either country would like if prevention of dangerous climate change is to be achieved.

The two main options for reducing the CO₂ emissions that result from burning coal are to increase the efficiency of coal use and to capture and sequester the CO₂ emitted from major coal-consuming industries. CCS is the process of separating CO₂ from industrial and power sources, transporting the CO₂ to a storage location, and injecting it into the storage site such as a depleted oil reservoir to prevent emission into the atmosphere (IPCC 2005, 3). CO₂ can be injected into depleted oil and gas reservoirs, deep saline aquifers, unmineable coal seams, deep-sea sediments, and elsewhere. In fact, CO₂ is routinely injected into oil fields for enhanced oil recovery (EOR) and, less frequently, for enhanced natural gas recovery.

Although some of the technologies associated with CCS are well established, the integrated process of capturing CO₂, compressing and transporting it, and storing it has not been done at a commercial scale in very many places around the world. And many capture technologies are still immature and expensive. There are, however, a few important existing integrated demonstrations of CCS, most notably the Weyburn project in Canada (EOR), In Salah in Algeria (gas field), and Sleipner in Norway (saline formation) (IPCC 2005, 33).

CO₂ can be captured from most large point sources (e.g. power plants, chemical production facilities). There are different kinds of carbon capture: precombustion usually refers to capturing CO₂ from coal gasification (such as polygeneration, coal-toliquids, or IGCC) processes, post-combustion is associated with capturing carbon from the waste gases from conventional combustion (such as supercritical or ultra-super critical power plants), and oxy-fuel combustion is separation post oxygen-rich combustion. CCS is not restricted to coal, but it is often considered to be a good carbon mitigation option for coal since it is the only way to dramatically reduce the emissions from coal-consuming factories and power plants.

The cost of capturing carbon dioxide varies considerably and is quite uncertain. The conventional wisdom is that pre-combustion capture is cheaper, but recent progress in post-combustion capture technologies is challenging this conventional wisdom. A recent study based on U.S. project data indicated that the cost of first-of-a-kind plants based on coal gasification with carbon capture (not including compression and storage) could cost well over $150/ton CO₂, with a range of $120–180/ton CO₂ (Al-Juaied and Whitmore 2009). As more R&D is conducted and demonstrations built out, however, the costs could come down dramatically, estimated to eventually reach $35–70/ton CO₂ with economies of scale and learning. If the CO₂ is used for EOR, the costs are further reduced because the CO₂ can be sold.

It is critical to note that the costs could be quite different in the Chinese context. A study utilizing Chinese data regarding the cost of IGCC vs. USC power plants (without carbon capture) indicated that the cost of constructing an IGCC plant in China is almost half the cost of constructing an equivalent plant in the United States (Zhao et. al 2008).¹ Labor costs, in particular, make the construction of major facilities less expensive in China. But, the costs associated with transport and storage of CO2 in China could be higher than in the United States due to the lack of knowledge about the storage prospectivity, CO₂ pipeline availability, and so forth. Research is badly needed about the costs of CCS in the Chinese context, and data is very limited to answer this question.

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¹ In this study we determined that the capital costs of IGCC in China were between 7500–9000 yuan/kW ($1010/kW–1300/kW at current exchange rates). This compares with estimates in the United States of nearly $4000/kW for the Duke Edwardsport (assuming no capture).