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Peak Coal in China, or Long and High Plateau?

China coal power is one of the world’s largest single contributors to carbon dioxide emissions, which will likely need to be reduced to near-zero levels over the next few decades to manage climate change. So when two reports came out in the last few weeks that project a peak in Chinese coal consumption within the next couple of decades, many environmental and energy commentators concluded that the problem has been tamed, and that coal will be swiftly replaced by wind, solar and gas.

Unfortunately, a closer look at the findings refutes that conclusion.  After China’s coal growth stops, the installed base of coal plants will remain, and that fleet will be the largest in the world—more than three times the capacity of all the coal plants in the United States.  And unlike the US, most of China’s coal plants were built after 2000 and are young; they will operate economically for 40-60 years. New wind, nuclear, and solar plants in China will help at the margins, but the imperative need is to install carbon capture and storage (CCS) that can cut these plants’ CO2 emissions by 90%.  Otherwise, the sheer size and remaining life of China’s coal fleet will make it impossible to achieve aggressive climate management targets.

The first report, by Bloomberg New Energy Finance last month, carried the hopeful title: “The Future of China’s Power Sector: From Centralized and Coal-Powered to Distributed and Renewable?”  The key finding, as reported in the press, was that “renewables will contribute to more than half of new capacity growth and by 2030 installed renewable capacity will be equal to that of coal.”  And Bloomberg’s projections do show a great deal of new wind and solar generation over the next 15 years.

But the report fails to highlight that, at the same time as China renewables grow, the absolute amount of China coal fired generation will continue to skyrocket. According to Bloomberg, 343-450 Gigawatts of new coal generation will be built in China over the next fifteen years, more than the total capacity of the entire current US coal fleet, which is roughly 300 Gigawatts.  Put another way, even in the Bloomberg best case, with the most aggressive solar and wind investments in the world, China will continue to bring on line roughly an average of one large 500 MW coal plant per week through 2030.  This is on top of China’s existing 750 GW coal fleet, already more than twice the size of America’s.

Furthermore, the report doesn’t compare the energy produced from all these sources.  Because the sun doesn’t always shine and the wind doesn’t always blow, solar panels typically produce less than 20% of their peak capacity on an annual basis outside of the sunniest regions, and wind about 35%. By contrast, newer coal (as well as nuclear) plants in China typically produce at more than 80% of their peak capacity. Since China wind and solar have much lower capacity factors than fossil fuel plants, as well as nuclear, their 2030 contribution, especially on top of existing coal, will be relatively small even in the best case, as the figure below, drawn from the Bloomberg report data, shows — even assuming generous capacity factors of 25% and 40% for solar and wind, respectively. In all cases, including the most optimistic, well over half of China’s power in 2030 will come from coal.


Above: CATF depiction of China’s projected power generation by source in 2030, based on installed capacity figures contained in Bloomberg New Energy Finance, “The Future of China’s Power Sector: From Centralized and Coal-Powered to Distributed and Renewable?” (2013). Assumed capacity factors: Wind (onshore and offshore): 40%; Solar (utility and distributed): 25%; Gas and coal: 80%; Nuclear: 90%; Hydro: 40%. Fuel types excluded due to data unavailability from the source: geothermal, waste, biomass, solar thermal, oil. The share of offshore wind in the generation mix was estimated visually due to data unavailability from the source.

The second report, from Citigroup Research, titled “The Unimaginable: Peak Coal in China”, also received a lot of media attention when released early last month. The report points to a variety of trends in China – the drive for pollution reduction, general growth slowdown, slowdown in energy intensity of GDP, government support for nuclear and renewables, the potential for expanded gas use, and increases on coal plant and end use efficiency – which it suggests could moderate coal electric growth.  It is worth, noting, though, that, under Citi’s stable economic growth scenario, coal generation continues to grow beyond 2020. Under two alternative scenarios, which received most of the media attention, coal generation either plateaus in 2020 or begins a modest decline.

As Citi acknowledges at page 26 of its report, these latter two peak scenarios embody a number of highly optimistic assumptions: that China’s growth in natural gas will result in 100 GW of new gas plants; that China’s nuclear development will hit its 2020 target of 58 GW; that GDP growth will not rebound to historic levels above 8%; and that renewables will be easy to integrate into the China grid at their current blistering development pace.  Each of these assumptions can be challenged; for example, while it is widely hoped that abundant gas will lower the cost of new gas fired power plants, it is likely that any fracking revolution in China will take decades to develop – if the geology is suitable at all.

But, even indulging these optimistic assumptions, Citi’s “transition” case still shows that coal provides nearly 60% of China’s power in 2020, seven times more than wind and solar combined:


Above: CATF depiction of power generation, adapted from Citigroup Research, “The Unimaginable: Peak Coal in China” (2013), Figure 19, page 20.

In short, the China coal plateau is high. It is also likely to be quite wide and will dominate the China power landscape for decades. Why? Because coal plants are long-lived capital assets, typically with a 50-60 year accounting life, and the China coal plant building boom really only began a decade ago. By 2030, the vast majority of China’s coal plants will be less than thirty years old, with many decades of useful life left. Moreover, most coal plants being built today in China, unlike those in the United States, are highly efficient ultra-supercritical plants. If air pollution remains a growing concern, China doesn’t need to bulldoze its newer coal plants; it can deploy relatively low-cost add-on scrubbers, which are already installed on many of China’s coal plants but reportedly underutilized. Unless renewables, nuclear or gas options materialize in China that are, on an all-in “greenfield” basis, demonstrably less expensive than the marginal costs of running existing coal units, they will be running for a very long time.

Whatever the story in China, it may be worse in other parts of Southeast Asia. The International Energy Agency reported recently that coal will replace natural gas as the dominant fuel for producing electricity in the 10 ASEAN nations, as the region almost doubles its energy consumption in the next two decades. ASEAN’s energy demand is growing at more than two times the global average rate, and 75% of the region’s annual new power capacity is coal, meaning more than 90% of its actual new power generation is coal based.

Which brings us to carbon capture and storage (CCS), a technology which separates carbon dioxide from coal and stores it deeply underground. This technology has been demonstrated extensively in the United States and has begun to scale up commercially here with a new plant under construction in Mississippiand another permitted in Texas. CATF is also building partnerships between Chinese and US companies to demonstrate and scale up CCS in China and drive down global costs of the technology.

Without CCS applied widely in China, the nation’s coal fleet will remain the largest global clustered source of carbon dioxide emissions, with a “long tail” that could last for much of the 21st century – making most climate management plans, such as the “trillion ton cap” that was implied this month by the Intergovernmental Panel on Climate Change, nearly impossible to reach.

So, let’s celebrate the expansion of solar and wind and natural gas and nuclear in China, and the slowing of growth in coal generation. But let’s not let our celebration distract us from the need to directly address the multi-decade carbon emissions from China’s coal fleet as it exists today and as it will exist in 2020 and 2030. Advancing CCS for coal in China and elsewhere must be among the world’s top climate priorities.

Kexin Liu, Research Associate at Clean Air Task Force, is a co-author of this article, which originally appeared at CATF.us.

Armond Cohen's picture

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Schalk Cloete's picture
Schalk Cloete on Oct 9, 2013 2:28 pm GMT

Good post pointing out the energy realities in the developing world. Because of these developing world realities, coal has been easily the fastest growing global energy source since the turn of the century (growth of 1388 Mtoe from 2000-2012). This is followed by gas at 810 Mtoe, oil at 602 Mtoe, hydropower at 229 Mtoe, all other renewables (primarily wind) at 186 Mtoe and nuclear at -24 Mtoe (BP Statistical Review). This is a very obvious result from the fact that developing nations have consistently grown 3-6% faster than developed nations over the past decade. 

It should also be pointed out that the solar and wind capacity factors you used are very optimistic. Real world wind capacity factors in China are below 20%. Same for Germany. Essentially the only large wind deployer that gets capacity factors anywhere close to the 40% used in this article is the USA which, due to the enormous wind resouce in the interior, manages a capacity factor of about 30%. For solar the global capacity factor is about 13% at present although it must be mentioned that this is low simply because a large chunk of this is located in sun-poor Germany where capacity factors less than 10% are achieved. 

In fairness, coal/gas plants also typically operate at capacity factors around 60% due to load following. When comparing to renewables, however, it is correct to use the maximum real world achievable capacity factor which is about 80-85% because renewables enjoying priority dispatch are allowed to operate at the maximum achievable capacity factors (something which is only practically viable at low penetrations). 

Robert Hargraves's picture
Robert Hargraves on Oct 10, 2013 11:51 am GMT

Armond Cohen, Do you know the thermal/electric efficiencies of China’s new coal plants? The new ultrasupercritical pulverized coal technologies achieve 44% efficiency, compared to 33% or less in older plants such as built in the US. Thus China might burn 1/4 less coal and releases 1/4 less CO2 than implied; still, a lot of CO2.

Your stateement about CCS “This technology has been demonstrated extensively in the United States and has begun to scale up commercially” is misleading. There are no commercial CCS systems working with power plants in the US, and there are unlikely to be any; all such projects have stopped; they are too expensive in the face of natural gas.

Also, from today’s New York Times, http://www.nytimes.com/2013/10/11/science/earth/study-finds-setbacks-in-...


Nathaniel Pearre's picture
Nathaniel Pearre on Oct 11, 2013 4:43 pm GMT

I was under the impression that the effects of water scercity in Northern China were on the path to having a very significant impact on all thermal generation.  I don’t know if that was taken into account in either of the analyses presented, but on the list of things you need in life, water comes ahead of electricity.

Armond Cohen's picture
Armond Cohen on Oct 11, 2013 5:03 pm GMT

Robert —

With respect to your first point, I am well aware of the higher thermal efficiency of the new SCPCs and USCPCs; whether Bloomberg or Citi took them into account is not clear, as their reports tend to be opaque on assumptions. That said, if the plants’ actual efficiencies are higher than assumed, this would tend to INCREASE rather than DECREASE the reports’ estimated amount of coal TWh — although, as you properly note, less coal and CO2 per TWh would result. The offsetting factors could be a wash and, as you say, it hardly matters, as the CO2 levels are so high in either case.

I disagree with your second statement that CCS is not commercially in play.   Large, integrated CCS projects began in the United States in the 1970 and 1980s at industrial facilities where CO2 was sold for enhanced oil recovery (EOR).  These facilities still operate, capturing between 1 million and 5 million tons of CO2 each year, depending on the plant. From this beginning at industrial facilities, CCS has migrated to power plants where it can reduce CO2 emissions by greater than 90%.  Plant Barry in Alabama is already capturing and storing its carbon in a demonstration project. SaskPower is adding CCS technology to an existing pulverized coal plant at Boundary Dam that will capture 90% of its emissions (1 million tons/year) for EOR and deep saline storage.  Start up of the CCS plant will begin later this year and be fully operational in the spring of 2014.  Southern Company’s 582 MW Plant Radcliffe in Kemper County, Mississippi is set to open early next year and will capture 65% of its emissions and store them deep underground.  Outside Odessa, Texas, Summit Power’s Texas Clean Energy Project (TCEP) is expected to break ground later this year, and will turn coal into base load power, fertilizer and capture 90% of its CO2 emissions and pipeline them down the road to depleted oil fields for enhanced oil recovery (EOR), with the CO2 remaining permanently underground.   So to say “all [CCS] projects have stopped” is incorrect.

I have admired your writing on advanced nuclear, and hope you will be a little more careful when you address this companion carbon mitigation option.

 

Armond

 

Armond Cohen's picture
Armond Cohen on Oct 11, 2013 5:03 pm GMT

Robert —

With respect to your first point, I am well aware of the higher thermal efficiency of the new SCPCs and USCPCs; whether Bloomberg or Citi took them into account is not clear, as their reports tend to be opaque on assumptions. That said, if the plants’ actual efficiencies are higher than assumed, this would tend to INCREASE rather than DECREASE the reports’ estimated amount of coal TWh — although, as you properly note, less coal and CO2 per TWh would result. The offsetting factors could be a wash and, as you say, it hardly matters, as the CO2 levels are so high in either case.

I disagree with your second statement that CCS is not commercially in play.   Large, integrated CCS projects began in the United States in the 1970 and 1980s at industrial facilities where CO2 was sold for enhanced oil recovery (EOR).  These facilities still operate, capturing between 1 million and 5 million tons of CO2 each year, depending on the plant. From this beginning at industrial facilities, CCS has migrated to power plants where it can reduce CO2 emissions by greater than 90%.  Plant Barry in Alabama is already capturing and storing its carbon in a demonstration project. SaskPower is adding CCS technology to an existing pulverized coal plant at Boundary Dam that will capture 90% of its emissions (1 million tons/year) for EOR and deep saline storage.  Start up of the CCS plant will begin later this year and be fully operational in the spring of 2014.  Southern Company’s 582 MW Plant Radcliffe in Kemper County, Mississippi is set to open early next year and will capture 65% of its emissions and store them deep underground.  Outside Odessa, Texas, Summit Power’s Texas Clean Energy Project (TCEP) is expected to break ground later this year, and will turn coal into base load power, fertilizer and capture 90% of its CO2 emissions and pipeline them down the road to depleted oil fields for enhanced oil recovery (EOR), with the CO2 remaining permanently underground.   So to say “all [CCS] projects have stopped” is incorrect.

I have admired your writing on advanced nuclear, and hope you will be a little more careful when you address this companion carbon mitigation option.

 

Armond

 

Armond Cohen's picture
Armond Cohen on Oct 11, 2013 5:07 pm GMT

Nathaniel — These issues are alluded to in the reports but not quantified. The water issue is serious, but not a showstopper for thermal power. Dry cooling and water recycling technolgies are commercially in place on thermal plants worldwide. They cost more, but coal power is so cheap relative to other options in China that, should the Chinese become seriously concerned about water supply, these technolgies can be added without hugely affecting unabated coal’s relative economic position, sadly.

Robert Hargraves's picture
Robert Hargraves on Oct 12, 2013 2:44 am GMT

Armond, I was not aware of the Plant Barry power plant CCS demonstration project. It is the only power plant project you mentioned that is up and running. Here’s a link to MIT’s CCS database, updated Aug 2013.

http://sequestration.mit.edu/tools/projects/plant_barry.html

“Southern Company withdrew its Alabama Plant Barry project from the CCPI program on February 22, 2010, slightly more than two months after DOE Secretary Chu announced $295 million in DOE funding for the 11-year, $665 million project that would have captured up to 1 million tons of CO2 per year from a 160 megawatt coal-fired generation unit. According to some sources, Southern Company’s decision was based on concern about the size of the company’s needed commitment (approximately $350 million) to the project, and its need for more time to perform due diligence on its financial commitment, among other reasons.Southern Company continues work on a much smaller CCS project that would capture CO2 from a 25 MW unit at Plant Barry.”

 

Armond Cohen's picture
Armond Cohen on Oct 11, 2013 9:19 pm GMT

Ned,

With respect to your statement, “Let’s make an important distinction between CCS and enhanced oil recovery (EOR).  EOR doesn’t produce oil that would be produced anyways.  It produces oil that is unlikely to be “recovered” without the emissions” — there is substantal evidence to the contrary. Elasticities of suply are reasonably strong and OPEC producers have historically tended to compensate for new supply with reduced production; there is a substantial literature on this point. Given the significant amount of CO2 needed to produce one barrel of oil, the carbon balances look negatve on most scenarios. Even if that weren’t the case, EOR is very useful as a transition phase to commercialize CCS; the ultimate payoff is in the paying down of the infrastructure for capture, transport and injection into saline aquifers, which exist below EOR fields and other locations.

Your second point — “For real CCS the capital cost plus the energy penalty (the energy needed to compress the gas to a liquid, which is necessary to get it into a stable formation is about 70% of the cost of a new coal plant.  (about 40% and 35% respectively).  Given this, wind and PV are likely to be cheaper than retrofitting new or old coal plants” — is not supported by the evidence, except in the case of onshore wind. For example, the latest EIA AEO 2013 pegs even greenfield coal CCS at a lower cost than PV, solar thermal and offshore wind; retrofit will be less expensive. See http://www.eia.gov/forecasts/aeo/er/electricity_generation.cfm.  This is also true if you look at it from the standpoint of carbon abatement costs.  See  http://www.catf.us/resources/factsheets/files/CO2_Abatement_cost_compari... Unless you believe 25-35% capacity factor onshore wind can replace all coal and gas plant electricity production in China and globally (with some kind of zero carbon storage replacing natural gas load following), or that solar PV at < 20% capacity factor will do so, taking CCS (or nuclear) out of the running crimps your chances for a zero carbon energy system.  I wouldn’t take that bet.

Finally, you attrbute great opportunity for further decreases in the cost of wind and PV, while not allowing for similar potental with CCS.  There is in fact a solid literature showing substantial learning curves on abatement technology and large thermal plant construction.


Armond

Armond

Nathaniel Pearre's picture
Nathaniel Pearre on Oct 11, 2013 9:57 pm GMT

Why are there so many CCS projects in the works?  Are such a large proportion of companies (big mining companies with very deep pockets) so confident that a carbon price is on the way, rr is it all paid for by various research grants, and they’re just cashing in on R&D projects?

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