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environmental consequences of the "runaway development"
of synthetic-oil and chemical plants, which it said will con-
sume tens of millions of cubic meters of water annually.
That prediction sounds particularly ominous in northern
China, where water is scarce. Erdos is a mix of scr ub and
desert whose meager water supplies are already overtaxed
by population growth and existing power plants. Zhou Ji
Sheng, who as vice manager of ZMMF, one of Shenhua s
Erdos-based competitors, is seeking nancing for a gasi -
cation project, acknowledges that water scarcity could put
an end to coal gasi cation in the area. "Even though we
have so much coal, if we have no water, we will just have
to use the traditional way---to dig it out and transport it,"
he says. "Water is the key factor for us to develop this new
industry." Zhou says his r m plans to supplement its water
supply by building a 120-kilometer pipeline to the Yellow
River. But evaporation from hydroelectric reser voirs, the
increased demand of growing cities and industries, and
the e ects of climate change mean that in the summer, the
Yellow River barely reaches the sea.
While China s desire to end its dependence on foreign oil
is helping to drive huge capital investments in liquefac-
tion technology, the country s power producers are moving
much more slowly to take advantage of coal gasi cation.
What they, like their American counterparts, are missing is
an incentive to upgrade from conventional pulverized-coal
plants to the more expensive gasi cation plants. Accord-
ing to Li Wenhua, the former 863 program manager (who
now directs gasi cation research in China for General Elec-
tric), Chinese industrialists perceive pulverized-coal plants
as a license to print money. "People say you shouldn t call
it a power plant; it s a money-making machine," says Li.
As yet, no power company has been willing to be the rst
to hit the o switch.
Ironically, China s move to a more open economy has
hampered e orts to deploy more innovative technologies.
In the 1990s, it looked as if China s power sector was headed
for its own gasi cation revolution. In 1993, China s leading
power engineering rm, China Power Engineering Consult-
ing in Beijing, began designing the country s rst gasi ca-
tion power plant. The monopoly utility of the era, the State
Power Corporation, planned to build the commercial-scale
plant in Yantai, a thriving seaport not far from the Bohai Sea.
The Yantai plant was to be the beginning of a transition to
cleaner coal technology, says Zhao Jie, the plant s designer,
now vice president of China Power Engineering. "China
wanted to take a cleaner and more e cient way to produce
power," says Zhao. Instead, the demonstration plant she
designed went on a roller-coaster ride to nowhere. Design
work was temporarily halted in 1994 when the cost of the
technology was deemed unacceptably high, revived in the
late 1990s, and then cut adrift after 2002 by the breakup of
the State Power Corporation.
The Yantai power plant was based on integrated
gasi cation combined cycle (IGCC) technology. IGCC
plants resemble natural-gas- red power plants---they use
two turbines to capture mechanical and heat energy from
expanding combustion gases---but are fueled with syngas
from an integrated coal gasi cation plant. They re not emis-
sions free, but their gas streams are more concentrated,
so the sulfurous soot, carbon dioxide, and other pollut-
ants they generate are easier to separate and capture. Of
course, once the carbon dioxide---the main greenhouse gas---
is captured, engineers still need to nd a place to stow it.
The most promising strategy is to sequester it deep within
saline aquifers and oil reser voirs. In preliminary analyses,
Chinese geologists have estimated that aging oil elds and
aquifers could absorb more than a trillion tons of carbon
dioxide---more than China s coal- red plants would emit,
at their current rate, for hundreds of years.
The Huaneng Group, a power producer based in Beijing,
has pulled together a consortium of power and coal interests
(Shenhua included) called GreenGen to build the rst Chi-
nese IGCC demo plant by 2010; like the related FutureGen
project organized by the U.S. Department of Energy, Green-
Gen is to start with power production, then add carbon cap-
ture and storage. China s vice premier, Zeng Peiyan, made
an appearance at GreenGen s ceremonial debut last sum-
mer, indicating Beijing s support for the project.
The problem is that IGCC plants still cost about 10 per-
cent to 20 percent more per megawatt than pulverized-
coal- red power plants. (And that s without carbon dioxide
capture.) China s power producers---much like their coun-
terparts in the United States and Europe---are waiting for
a nancial or political reason to make the switch. In part,
what s been missing is regulation that penalizes conven-
tional coal plants. And China s environmental agencies
lack the resources and power to make companies comply
even with regulations already on the books. Top o cials in
Beijing admit that their edicts are widely ignored, as new
power plants are erected without environmental assess-
ments and, according to some sources, without required
equipment for pollution control.
Even advocates of IGCC technology expect that its wide-
spread deployment in China will take at least another decade.
Indeed, Du Minghua, a director for coal chemistry at the
Chinese Coal Research Institute, predicts that it will be 2020
before application of IGCC technology begins in earnest.
Waiting to Inhale
Despite such pessimistic predictions, China s vast experi-
ence with advanced coal technologies and its proven ability
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