November 30, 2010 / 3:13 AM / in 7 years

China's Shenhua says CTL plant to begin storing carbon in '11

BEIJING, Nov 30 (Reuters) - A pilot carbon capture and storage (CCS) facility built by China’s Shenhua Group will begin storing carbon dioxide early next year, an official with the firm said on Tuesday.

Gu Dazhao, general manager of science and technology department told an industry conference that the facility, installed at the firm’s coal-to-liquids plant in Inner Mongolia, will start injecting captured CO2 into underground storage facilities in January 2011.

China has already built two small pilot CCS plants in Beijing and Shanghai, but officials remain sceptical about the feasibility of the technology, which is expensive to install and will require about 25 percent more energy to run. CCS technology captures carbon dioxide produced during the coal combustion process and aims to store it underground indefinitely.

Apart from increased fuel and construction costs, experts suggest a plant could also have to pay as much as $70 per tonne to store the CO2 safely, with no guarantee that the gas wouldn’t leak out into the atmosphere.

Shenhua’s coal-to-liquid plant is the first of its kind to go into operation in China, and Gu said the company plans to produce 3 million tonnes of oil products from coal in 2015, up from 500,000 tonnes this year.

It also aims to produce 11 million tonnes of oil products and 18.3 billion cubic metres of gas from coal by 2020.

China, the world’s largest producer of CO2, started pushing for the widespread adoption of coal conversion technologies in 2006 to help cut dependence on expensive foreign oil, but it went cold on coal-to-liquids in 2008, cancelling dozens of projects.

    The National Development and Reform Commission said the technology was too expensive, used too much water in already arid regions and also did nothing to resolve the problem of CO2.

    It allowed the construction of Shenhua’s facility in Inner Mongolia to go ahead, and also permitted research to continue into another CTL plant in Ningxia, jointly invested by Shenhua and the South African energy giant Sasol (SOLJ.J).

    Gu told reporters that the Ningxia plant, with a proposed annual capacity of 3 million tonnes, was still awaiting NDRC approval.

    Reporting by Jim Bai and David Stanway; Editing by Ken Wills

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