Resolving the Tension between CCS Deployment and Chinese Energy Security

Abstract

T energy penalty associated with carbon dioxide capture and storage (CCS) technologies is a key barrier to largescale deployment in China, because consuming extra fossil fuels to capture CO2 could be considered as conflicting with domestic priorities favoring energy conservation, diversity, and self-sufficiency. Flexible CO2 capture designs could, however, allow CCS power plants to temporarily reduce the level of CO2 capture, thus, in the short term, the energy penalty could potentially act as a “strategic virtual reserve” that could reduce the risk of fossil fuel supply interruptions and provide extra reserve capacity margin. Furthermore, an upgradable futureproof design for CO2 capture could help avoid “energy penalty lock-in” during a plant’s lifetime as technology learning takes place. In 2011, global emissions of carbon dioxide increased by 1 Gt, of which 720 Mt of the increase was attributable to China. China’s share of global emissions increased to 24%, now far ahead of the United States, the next largest emitter, at 15%. Overall, 45% of global CO2 emissions are produced from coal and fully half of those emissions are from China, the vast majority of which is used in the power sector. Therefore, CCS, as the only technology that can decarbonize fossil fuels, should logically be central to any plausible strategy for significant cuts in emissions. On the other hand, China is the second largest importer of crude oil in the world in 2012. Even more dramatically, China shifted from being a net exporter to a net importer of coal in 2009 and by 2011 became the largest net importer of coal in the world, though there is still debate on whether China will need to increase coal imports in the future. Energy conservation is a top Chinese national development target, but energy demand will inevitably grow substantially in the next two decades given that Chinese per capita energy consumption remains much lower than the OECD average level even though its per capita CO2 emissions are reaching European levels. Despite these pressures, security of primary energy supply has become a major national priority. In 2011, the Chinese government (National Development and Reform Commission and Ministry of Finance) launched the emergency coal reserve program that encourages large coal-mining companies, large power generation companies, and major coal transportation terminals to develop a strategic coal reserve. Deploying state-of-the-art CCS technologies in the power generation sector would avoid roughly 85% of CO2 emissions with an energy penalty of 20−30%. An aggressive strategy to capture CO2 at, say, 40% of Chinese coal-fired power plants would then lead to a rise of approximately 10% in national coal consumption, equivalent to 1.5 times net coal imports in 2010. In other words, significant extra fossil fuel consumption and power plant infrastructure would be required if CCS technologies were widely deployed. This explains why even though CCS is widely recognized as a key technology to decarbonize the Chinese fossil fuel dominated energy system, there is very limited financial support for demonstrating and deploying CCS projects at large-scale. CCS is therefore not currently a high priority on the list of possible climate technology options also compatible with energy supply security and energy efficiency priorities. The extra energy infrastructure requirement for CCS to meet peak electricity demand could be minimized through flexibility in operating CCS systems (e.g., by shutting down CO2 capture during supply shocks) while the experience curve could reduce the energy penalty in the long term. To do so will require investing in flexible, future-proof designs for CO2 capture power plants. With a flexible CO2 capture design, CCS power plants could temporarily reduce the level of CO2 capture in order to generate more power to complement intermittent and inflexible technologies in the energy system. Notably, the