22 April 2019

POLICY WATCH: Uncertainties at China’s SNG coalface

China’s fresh push for coal-powered synthetic natural gas (SNG) plants in Xinjiang may lead to major pollution and water consumption, outcomes that clearly run counter to Beijing’s pledge to shift to a greener growth model.

The National Development and Reform Commission, the nation’s top economic planning body, has already approved the nation’s largest SNG plant in Zhundong, Xinjiang, to tap into rich coal reserves there, the official Xinhua News reported on Oct. 6.

The country is pressing ahead with SNG, or coal-to-gas, plants to meet its rising energy demand. The projects are that much more economically viable now because of falling coal prices but they could prove an environmental disaster for Asia’s largest economy, observers said.

The Zhundong project is expected to have an annual capacity of 30 billion cubic meters and be completed in June 2017. China Petroleum & Chemical (Sinopec) (00386.HK), the nation’s second-largest oil and gas producer, will build the plant with seven other state-owned power and coal producers.

Sinopec will also spend another 159 billion yuan (US$25.98 billion) on its new Xinjiang-Guangdong-Zhejiang gas pipeline project, which will have a transmission capacity of 30 billion cubic meters and link up to the Xinjiang plant.

The Xinjiang plant will cost 183 billon yuan in total and consume 90 million metric tons of coal per year, the report said. The remote, sparsely populated Huaidong region has proven coal deposits of 213.6 billion metric tons.

The coal-powered SNG plants on the drawing board in China would produce seven times more greenhouse gas emissions than conventional natural gas plants, and use up to 100 times the amount of water as shale gas production, according to a study by Duke University.

The most aggressive supporters of these projects are state-owned energy firms, which are eager to tap into China’s growing energy demand. These projects are also off the public radar as most of them are in remote areas like Xinjiang and Inner Mongolia.

The idea of converting coal into natural gas was first pursued in the United States during the oil crisis in the 1970s, but the US has only applied this technology to one large plant in North Dakota. China has shown keen interest in adopting the technology, and regulators have given the green light to at least nine big SNG projects so far, which together would produce some 37.1 billion cubic meters of natural gas each year.

It remains unclear whether these projects will come on stream as scheduled amid growing public discontent about pollution. Critics, including environmentalists and investors, are questioning the environmental costs and sustainability of these coal-conversion projects.

It is estimated that a coal-powered SNG plant would emit 40 percent more carbon dioxide than a traditional power plant, which means the projects would effectively shift carbon dioxide emissions to western provinces, according to a report from UBS.

– Contact the reporter at [email protected]



Freelance journalist

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