By Chris Logan

Shell World 31August 2007 KingCoalcomesclean[ ]

No wonder Linfen has been identified by a New York-based environmental organisation, the Blacksmith Institute, as one of the most polluted places on earth alongside Chernobyl.

Yet China is set on a course of economic expansion that will see its use of coal the dirtiest but cheapest and most abundant fossil fuel double by 2030. A similar trend is occurring in other coal-rich coun-tries like India, South Africa, Russia and the USA, which see coal as a secure source of energy. Global coal use has accelerated in recent years. By 2030, predicts the International Energy Agency (IEA), consumption of coal will have gone up 59%, with

most of the rise due to the rapid expansion of Asian economies.

However, as Linfen shows, this surge in coal use could have serious environmental repercussions. Burning coal produces sulphur dioxide and nitrogen oxides, which cause the acid rain that pollutes lakes, forests and crops; poisonous heavy metals like mercury; and, of course, carbon dioxide (CO2), the main greenhouse gas. Coal, in fact, is the most carbon-intensive fossil fuel burning it in power plants, for example, produces nearly twice as much CO2 per kilowatt hour of electricity than burning natural gas.

The sun rarely visits Linfen. The city of 3.5 million people lies at

the heart of one of Chinas most densely-packed industrial regions

and its biggest coal-producing area. Smokestacks from coal-fired

power stations, iron foundries and cement factories for many

kilometres around belch out noxious fumes which form a heavy

yellowish layer of smog, blocking out most of the suns rays.

[ ] KingCoalcomesclean 31August 2007 Shell World

Yet countries such as China with scarce oil and natu-ral gas resources must burn coal to feed the increasing energy demands of their expanding economies.

More energy, less wasteTo reduce coals environmental hazards, many coun-tries are looking at more efficient and cleaner ways of converting coal into energy. One of the most effective is coal gasification. Gasifying coal produces syngas, a mixture of carbon monoxide and hydrogen that can drive gas turbines to generate electricity or provide a more affordable feedstock for fertiliser or to make chemicals.

It costs more to build and operate a coal gasification power plant than a conventional one, but the environ-mental benefits are clear: syngas can be stripped of sulphur and most of the noxious nitrogen oxides, heavy metals and particulates, which are harder to remove from smokestacks when coal is burnt in a conventional power station. There is little waste: the sulphur can be used in industrial processes and the mineral residue that melts and falls to the bottom of the gasifier as slag can be used as road-building material.

Moreover, as governments debate policies and trading frameworks to ensure the responsible management of CO2 from power plants, coal gasification could

provide a technical solution. It is more energy efficient than a conventional coal-fired plant, emit-ting less CO2 for the same amount of electricity produced. Coal gasification also offers the potential of a cheaper and easier way of capturing CO2, so that it can be piped away for underground storage or injected into ageing oil reservoirs to help produce more crude. Stripping it from the syngas before combustion, when the CO2 is highly-concentrated and the gases are at high pressure, is simpler and less costly than capturing CO2 from flue gases, where it is at lower pressure and diluted with other exhaust gases.

A number of companies develop and market coal gasification technology Shell, General Electric, Siemens and Mitsubishi among them but the processes differ. For example, GE uses a slurry of water to feed the coal into the gasifier. Shell tech-nology uses compressed nitrogen to send a dense stream of pulverised coal into the gasifier, where it mixes with steam and oxygen at 1,400-1,600 degrees Celsius (2,552-2,912 degrees Fahrenheit).

Cost is still an obstacle to the widespread adoption of coal gasification for power generation. A typical coal gasification plant is between 10% and 20% more expensive to build and run per unit of elec-tricity produced. Work to develop better and

global coal reserves top 10 countries

Shell World 31August 2007 KingCoalcomesclean[ ]

USA 24.2%

World total1,019 billion tonnes

246

161

49

Source: BGR (Germany)

Billions of tonnes Share of reserves

RUSSIA 15.8%

34

UKRAINE 3.4%

4%

41

GERMANY

SOUTH AFRICA 4.8%

16

POLAND 1.6%

16

SERBIA 1.6%

78

AUSTRALIA 7.7%

192

CHINA 18.8%

96

INDIA 9.4%

in combination with coal gasification is seen as being several years away from commercial viability. This places some companies in a dilemma: whether to invest in long-life power plant projects without knowing the financial impact CO2 emissions might cause.

Nicols Ximnez Bruidegom, Shell General Manager, Clean Coal Energy Europe, believes setting up a framework which will reward companies for managing CO2 responsibly is vital to making coal gasification more cost effective, and therefore more widespread. Capturing CO2 from a traditional coal-fired power plant is more costly than from a gasifier.

Whatever price CO2 might fetch in an emissions trading scheme such as Europes, for example, it would have to be more than the cost of building the technology to make it commercially worthwhile. At todays prices it would not be economical. At the moment no one is willing to make major

more cost-effective technology is under way and, according to the IEA, costs are likely to fall as coal gasification becomes more common. Countries such as China must weigh the environmental benefits against the additional cost and may wait until the price tag falls before adopting coal gasification to generate power. According to Martin Solomon, General Manager Global Strategy and Portoflio Management for Shells clean coal energy business, The Chinese are looking to clean up the produc-tion of power from coal near big cities, which coal gasification is best-placed to serve.

CO2 dilemmaAdding equipment to capture CO2 and store it would add substantially more cost, a critical factor that is proving a major stumbling block to progress. Without such technology, the increased use of fossil fuels such as coal poses an ever-greater threat to the environment. So far only demonstration projects exist. Indeed, carbon capture and storage technology

a giant conveyor belt transports coal into the gasifier unitItcostsmoretobuIldAndoperAteAcoAlgAsIfIcAtIonpowerplAntthAnAconventIonAlone,buttheenvIronmentAlbenefItsArecleAr.

[ ] KingCoalcomesclean 31August 2007 Shell World

investments in carbon capture because things are at a standstill over CO2, said Ximnez Bruidegom. Governments must set up the frameworks necessary to make it feasible.

His view is mirrored by Brian Ricketts, energy analyst for coal at the IEA: There needs to be a value in reducing CO2 before projects can proceed in competitive markets.

To underline the point, demonstration projects under way depend heavily on public funding.

An international alliance of energy companies and state firms is working on a $1.7 billion coal gasifica-tion project in the USA, backed by the Department of Energy, which will include capturing CO2 and storing it underground. The FutureGen project,

due to start up in 2012, will produce electricity enough to power 150,000 homes and hydrogen in what will be one of the worlds first zero-emission power plants.

A similar project is under way in Queensland, Australia. The ZeroGen project will use Shells coal gasification technology to produce electricity in a project mostly funded by the state government. If feasibility studies show it works, CO2 will be cap-tured from the syngas and piped to a storage site underground either a vast saltwater deposit, which will absorb the CO2, or a depleted gas field.

Shells coal gasification process will also be used at a planned power plant in the UK to be run by Powerfuel, which aims to capture CO2 and store it, possibly in a depleted gas field in the North Sea.

how a typical coal gasification power plant works

Shell World 31August 2007 KingCoalcomesclean[ ]

Coal stored before gasification

Road to ChinaCoal gasification is hardly new. It was first developed in Germany in the early 20th century and later helped power the Nazi war machine during World War II. Apartheid South Africa also relied on it for fuel in the face of oil sanctions. Coal gasification drew wider interest after the oil crisis of the early 1970s turned attention to other energy sources. Shell started up a pilot coal gasification plant in Amsterdam, followed in 1987 by a demonstration plant at its Deer Park refinery in Houston.

Since 1994 Shells technology has been in use at the 253-megawatt Buggenum plant in the Netherlands. The plants owner, utility company Nuon, plans to use Shell gasification technology in a much larger proposed power plant, which may employ carbon capture technology.

So far China has gone furthest in adopting coal gasification, but for producing chemical feedstock rather than power generation. The country has the worlds second largest reserves of coal, relying on it for 70% of its energy. With the rising cost of naphtha making gasifying coal more economic, China mainly produces syngas as a feedstock for chemicals

and fertiliser, as well as hydrogen for refineries. GE coal gasification plants in China, for example, produce syngas for feedstock.

To date Shell has sold 15 coal gasification licences to China, with the syngas mainly used to make chemi-cals and fertiliser, but also to produce hydrogen. Five plants are currently operating Shell technology, including a 50:50 joint venture at Yueyang between Shell and Sinopec, Chinas biggest oil refiner. There are also plans separately involving Shell and Sasol for several coal gasification plants to produce synthetic liquid fuel.

Back in Linfen, as well as in many of Chinas smog-covered cities, the hope must be that this cleaner way of using coal will continue to be adopted there not just to produce chemicals feedstock or synthetic fuel but, in future, to help generate the power the country needs to sustain its economic growth.

[ ] KingCoalcomesclean 31August 2007 Shell World

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