China sceptical as foreign firms push carbon capture

* China doubtful about economics of carbon capture

* Experts urge widescale deployment to bring costs down

* Industrial use of captured CO2 not the answer

By David Stanway

TIANJIN, China, Feb 1 (Reuters) - China needs to overcome its scepticism about carbon capture technologies if it is to bring down the costs of meeting its CO2 targets, experts at a clean coal conference said.

Many in Chinese government circles remain uncertain about the economic value of removing carbon dioxide from the process of burning coal, even as foreign companies look to Beijing as a testing ground for technologies that could revolutionise the way fossil fuels are consumed.

CCS traps, transports and buries CO2 underground.

The complex idea is seen by some governments as a way to curb the growth of planet-warming emissions in the fight against climate change but there is still uncertainty about the idea working on a global-scale.

China has two commercially operating CCS sites at power plants in Beijing and Shanghai, and many other demonstration projects are being built -- including one at Shenhua Group's coal-to-oil plant in Inner Mongolia.

But Yue Guo, vice-president of the Shenhua Coal Liquefaction Co. Ltd, summed up the country's reservations, saying the "energy penalty" of CCS made the sequestration process self-defeating by transferring emissions elsewhere.

"If you bury large amounts of CO2 underground, you have to lay lots of pipelines, install compression technology -- all of which requires a lot of energy itself," he said.

He said his firm's coal liquefaction plant had the ability to bury all 5 million tonnes of CO2 it produces each year, but the procedure would be meaningless if it required more steel and other materials produced at plants that were not making similar efforts to store carbon.

COST FEARS

Gao Guangsheng, director of the National Development and Reform Commission's department of climate change, said ahead of the Copenhagen talks in December last year that CCS's expensive installation and running costs represented a "fatal weakness".

He said the "energy penalty" required to run the technology would amount to around 20-30 percent of the capacity of an individual power plant, and that overall CO2 storage costs would amount to around $70 per tonne.

"We are willing to go along with international research, but (CCS) isn't currently our main focus when it comes to cutting emissions," he said.

Julio Friedmann, who heads the carbon storage programme at the Lawrence Livermore National Laboratory in California, said that while there was "no Moore's Law for energy" he still expected CCS costs to fall to around $20 per tonne within 10 years. And China was key.

"China may well build the 'nth' plant before the United States or Europe builds their first, and that actually has tremendous opportunity for all countries," he said.

NO MAGIC PILL

Many in China are hoping the industrial use of CO2 will help drive down costs. A number of companies are exploring using captured carbon dioxide in fizzy drinks or injecting it into depleted oil and gas wells to boost recovery rates.

But currently, the widespread use of CO2 is merely a pipedream, said Barry Isherwood, manager of coal technology at the Australian mining group, Xstrata.

"(Utilisation) is an admirable concept but the quantity of CO2 globally is far in excess of what could be possibly utilised," he said.

While CCS would be a crucial component, there are no easy options in global efforts to cut greenhouse emissions, and the world would be "very lucky" if it managed to utilise 5-10 percent of captured carbon dioxide, said Friedmann.

"I think utilisation is fun... but I think people also like to believe that they don't have to clean their rooms. They like to believe that there is a secret diet pill where they can eat everything they want and still lose weight." (Reporting by David Stanway; Editing by David Fogarty)