Research and analysis

China: carbon capture and storage (CCS)

Published 23 October 2014

This research and analysis was withdrawn on

This publication was archived on 1 August 2016

This article is no longer current. Please refer to Overseas Business Risk - China

This publication was archived on 4 July 2016

This article is no longer current. Please refer to Overseas Business Risk - China

Summary

Asian Development Bank (ADB) agreement to finance two Carbon Capture Utilisation and Storage (CCS) Centres in China. Significant milestone that will push CCS development in two of China’s most influential regions.

Detail

With coal at 65% of national energy use, China will need to deploy CCS as part of its response to climate change. FCO Prosperity Fund work on CCS has focussed on Guangdong - China’s richest province, and one of its most progressive on climate change.

A 2013 Prosperity Funded project produced a CCS Roadmap for Guangdong which identified large CO₂offshore storage capacity as well as demonstration opportunities. With support from colleagues in DECC, we took officials to the UK to meet experts from academia, government and industry, helping to build their understanding of the potential for CCS in Guangdong. Following the visit, DRC built CCS into their provincial low carbon action plan.

The next step was to consolidate Guangdong’s progress. We used the Prosperity Fund to support the initial establishment of a joint UK - Guangdong CCS Centre. Launched in December 2013 with Climate Minister Xie in attendance, the Centre brings together UK representatives from industry and academia with their Chinese counterparts, including heavy hitters like the China Resources Power Company (CRP), ranked 143rd in the Fortune Global 500.

The UK-Guangdong CCS Centre has been quick to develop its activity. A conference in May brought together a wide range of international experts to help knowledge transfer (Greg Barker, then Minister of State at DECC, gave the keynote address). The Centre has also forged links with influential players such as Shell and the IEA. This international collaboration has increased their ambition and they now plan to establish a capture technology test facility at CRP’s Haifeng plant by autumn 2015. They are also working with the Chinese National Offshore Oil Company (CNOOC) on CO₂ test injection research. And through the Prosperity Fund, the Centre is undertaking a pre-feasibility study for a 1 million tonne full chain demonstration project.

Asian Development Bank

International Climate Fund support to the Asian Development Bank (ADB) for CCS development in China and Indonesia has opened up new opportunities. Working with colleagues in DECC, we have been seeking ADB’s support and use of their network to increase awareness of some of the practical developments taking place at a provincial level. At our request, in September 2014 the ADB agreed funding for two CCS Centres in China, expected to be around US$ 600K each. This will put the Centre in Guangdong on a more sustainable footing, and give it real capacity to drive the agenda. It will also fund a similar, new centre in Shanghai at Jiaotong University, a leading science and engineering university with strong channels into the government, as well as the country’s top ranked power plant equipment manufacturer, also based in Shanghai. The expectation is that this centre will leverage these networks to push CCS development in the energy intensive east China region.

We are also now starting to build up work in South West China, where the economy and greenhouse gas emissions are growing more rapidly than in any other part of the country.

Comment

CCS is a solution that will deliver in the medium rather than the short term and will require sustained engagement from all stakeholders. And although the authorities in Beijing are more positive than before on CCS, their focus remains on utilisation, rather than long term storage of carbon and are steering the provinces towards activity which has an economic return (especially Enhanced Oil Recovery). The key now will be to overcome the barriers to full chain demonstration, including driving technology costs down, and establishing a regulatory framework. The level of ambition which China has to commit to internationally to control emissions will set the tone for how ambitiously they pursue long term storage. They’ll also want to have the technology ready to export once there is a global market for CCS.

Disclaimer

The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.