driving ccus forwards in china: what should be considered ... · driving ccus forwards in china:...
TRANSCRIPT
Driving CCUS Forwards in China: What should be considered?
在中国推动CCUS发展: 下一步需要考虑什么?
Senior Lecturer in Energy Finance (能源金融副教授)
Business School, University of Edinburgh (爱丁堡大学商学院)
the 8th Annual European Carbon Capture and Storage Conference, 18-19 Feb 2014, Brussels,
Belgium
Dr Xi Liang CFA (梁希 博士,特许金融分析师)
20 February, 2014 3
Content (摘要)
• Project
• Policy
• Financing
• Projects
• International Collaboration
• Progress in Guangdong
All the presentation only reflects my personal view. No institute or other
individual should be responsible.
Total and per million capita CO2 Emissions from Consumption and Flaring of Fossil Fuel
Source: EIA, 2012 4
Total Emissions:
million tonne CO2
Per Capita Emissions:
tonne CO2
5
《Atmosphere Air Pollution Control Action Plan》(released in August 2013)
…… 3. Reduce atmosphere air pollution by 30% by 2017 4. Adjust energy structure, increasing natural gas, coal bed methane … …… 10. Local governments need to be responsible for environmental targets …
6
煤炭的未来? The Future of Coal in China?
Source: China Taiyuan Coal Exchange, 2013
China Taiyuan Coal
Price Index
Some of Current CCUS Pilot Projects in China
• 中石油 Jilin Oilfield, EOR, 100,000 t/a (2007- )
• 中科金龙 CO2 Chemical Utilization, 10,000 t/a (2007- )
• 华能 Gaobeidian post-combustion capture, 3000 t/a (2008 -)
• 中海油 biodegradable plastic CO2 utilisation, 2100 t/a (2009- )
• 华能 Shidongkou post-combustion capture, 120,000 t/a (2009- )
• 中电投 Chongqing Shuanghuai post-combustion capture, 10,000 t/a (2010- )
• 中石化 Shengli Oil Field post-combustion and EOR, 40,000 t/a (2010 - )
• 神华 CTL capture and saline aquifer storage, 100,000 t/a (2011 - )
• 新奥 Microalgae Bio-fuel Demonstration, 20,000 t/a (2011 - )
• 华能 Green-gen IGCC CCS Pilot, up to 100,000t/a capture (2014 - )
• 华中理工 HUST 30MWth Oxy-combustion (2014 - )
• 华能 Gas CO2 Capture Test Rig (2012 - )
• 大唐 Gaojin Gas CO2 Capture Pilot (2014 - )
8
The Development Cycle of Large-scale Integrated CCS Projects in China are STILL all at an early stage (2013)
Source: GCCSI, 2013
Large-scale CCUS Projects under Development
• 中石化 SINOPEC Shengli Oilfield, Post-combustion-EOR, 0.8 – 1 million t/a
• 大唐 Datang,Oxy-combustion, EOR, 1 million t /a
• 华能 Tianjin IGCC, 1.8 million t/a
• 华润-中海油 China Resources Power – CNOOC, post-combustion / pre-combustion, saline aquifer storage, 1-1.6 million t/a
• 延长 Yanchang Oil Field, CO2 EOR
Source: NZE Magazine, 2013
Centre Plate Awarded by Chief Climate Negotiator Minister Xie Zhenhua and Guangdong Deputy Governor Xu Shaohua (19/Dec2013)
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Study Name Year Sample size
Number of Responses
Data collection method
Notable Features
BP/DTI (Reiner et al, 2007)
2006 186 115 Face-to-face, telephone
Long-term deployment, focus
on Beijing, Wuhan and Guangdong
CAPPCCO (Reiner and Liang, 2009)
2008 202 103 Face-to-face, telephone
Industry opinions and
stakeholder behavioural patterns
HIT Study (Liang and Wu, 2010)
2008 37 31 Face-to-face Barriers and incentives for CCS deployment (industry focus)
STRACO2 (STRACO2, 2009)
2009 60 35 n/a Technology and policy preferences
NZEC (Liang et al,
2011; Reiner and Liang, 2012)
2009 256 140 Online, face-to-face
Commercial CCS Demonstration
GDCCSR (Li et al, 2012)
2010 82 31 Online, focus group
CCS Ready, focus on Guangdong
Energy Security (Liang and Reiner, 2012)
2011 38 23 Face-to-face CCS and energy security
Core Deployment Barriers
2012 141 59 Online, face-to-face
Opportunities and barriers for deploying CCS at large-scale
IEA GHG
(Li et al, 2013)
2013 21 12 Email and
Telecom
Impact of Impurities on
Operating CCUS Project
GDICCUS (Liang et al,
2013)
2014 15 11 Face-to-face Financing Large-scale
Integrated CCUS Project
13
Review: Perceived Policy Drivers (1)
• In the 2006 CCP2 study, whether CCS could qualify for CDM (Clean Development Mechanism) credit was considered as a critical factor of implementing CCS.
• In 2009 UK-EU-China Near Zero Emission Coal (NZEC) study,
(a) ‘Demonstrate the Chinese government’s efforts in combating climate change’ and ‘creating an advantage for Chinese companies investing in CCS’ were considered to be two key benefits of demonstrating CCS at scale in China.
(b) There were widely divergent views on the hurdle rates for
demonstrating CCS projects (i.e. from 5% to 20%) ; (c) gave hope to ‘foreign government support’, ‘development bank loan’ and ‘policy loan’ (Reiner and Liang, 2012).
14
Review: Perceived Policy Drivers (2)
• In 2012: (a) The most important drivers of deploying CCS in China was deemed to be
‘Improving the Chinese government’s international credibility in combating climate change’ (average of 3.8 on a scale of 1-5), followed by EOR (3.6) and ‘achieving a deep cut in greenhouse gas emissions in China’ (3.5).
(b) more than half of the stakeholders in the follow-up survey acknowledged that support by foreign governments is not likely to be realistic in funding all additional financial requirement for the first large-scale CCS demonstration projects in China.
15
Review: Scatter diagram of perceived hurdle rate and equity capital ratio for the extra investment needed for
capture facilities (2009) N=16
16
List of Institutes Invited for Project Financing Face-to-Face Survey in Nov and Dec 2013
Institute Name Type of Business Region Response China Development Bank Public China Yes Asian Development Bank International Multilateral Yes China Export Import Bank Public China No
The World Bank International Multilateral No Pudong Developmet Bank Commercial China Yes
Bank of China State-owned China Yes China Merchant Bank Commercial China Yes
China Construction Bank State-owned China Yes Pingan Bank Commercial China Yes
China Industrial Bank Commercial China Yes CITIC International Finance Commercial HK Yes
CITIC Bank Commercial China Yes Guangdong Development Bank Province-owned China Yes
China Communication Bank State-owned China No Ministry of Finance CDM Fund State-owned China No
17
Scatter diagram of hurdle rate and equity capital ratio for the extra investment needed for large-scale capture
facilities at CRP Haifeng Project (Red Dots, n=11) Blue Dots were responses from NZEC 2009 Survey (n=16)
20
Source: Liang et al, 2009
Capture Ready investment reduces the closure possibility and increase the option value (a study of generic 600MW power plant in China)
20 February, 2014 21
Distribution of Cement Production
世界水泥产量分布
Li, J., Tharakan, P., Douglas, M., Liang, X. (2013). Technological, Economic and Financial Prospect of Carbon Dioxide Capture in the
Cement Industry. Energy Policy, 61, 1377 – 1387.
李佳,Tharakan, P., Douglas, M.,梁希(2013). 水泥行业二氧化碳捕集的技术、经济和金融展望,《能源政策》,61, 1377-1387.
20 February, 2014 Scottish CCS Industry CO2 Capture Workshop 22
Economic assumptions and normalized results of
existing literature
现有研究对水泥厂碳捕集评估的假设条件和结果
Opportunities for Piloting CO2 Capture from Cement Plants
20 February, 2014 23
Foshan Hengyi Power
Yuebao Cement
CRP Luoding Cement
CRP Haifeng Power
Project Phase II 2x1GW
CNOOC Huizhou
Refinery Phase II
Can Chinese CCS be the ‘White Knight’?
25
Foreign exchange reserves (billion of US$)
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
People's Republic of China
Japan
Eurozone
Saudi Arabia
Switzerland
Russia
Taiwan
Brazil
Republic of Korea
Hong Kong
India
Singapore
Germany
Algeria
Mexico
Thailand
France
Italy
United States
Malaysia
United Kingdom
Held by Nations by Dec 2013
Potential Drivers for Chinese Overseas Investment in CCS
- Industry Benefits
e.g. Manufacturing Opportunities, Diversify Investments
- Government Policy
e.g. ‘Go Global’ Policy, Pressure to increase sales and revenue (state owned enterprises)
- Low Cost Capital
e.g. low cost loan from China Development Banks or large State-owned Banks
27
20 February, 2014 28
The Next Move in China
• Million tonne scale integrated project
- Ideally opportunities to learn from large-scale project development from Europe and North America
- Chinese Domestic and International Supports
• Province-wide and nation-wide CCS Ready Policy
• Industry CO2 Capture
• Viable Business and Political Models (Dynamic / beyond CCS)
• Investment to Overseas CCS
• International Collaboration
20 February, 2014 29
UK-China (Guangdong) CCUS Centre
• Open Platform (welcome new members and partners, forge true collaboration)
• Government – Industry – Academia
• Focus on project (large-scale million tonne project with CO2 storage in saline aquifer)
• Consider Industry CO2 Capture
• Government suggested setting up three working groups:
- Technology (Led by GEDI and UoE, Post-combustion, Gasification)
- Demonstration (led by CRP, CRP-CNOOC)
- Policy and Finance (Led by UoE)
• One International Advisory Board
• 8 people in Secretariat (3 from GEDI, 3 from CFEDI, 2 from Edinburgh)
• Bilingual magazine and website
• Secretariat actively looks after IPR, Health Safety issues and other cultural aspects (work out practical mechanisms)
20 February, 2014 30
Acknowledgement
感谢支持
The following institutes’ supports for centre establishment and industry project support:
For the following institutes’ support and works through the earlier Guangdong
CCS Readiness Research Project:
32
Welcome to Share your thoughts at ‘Near Zero Emission’ – A
new trade magazine, supported by Guangdong Government, to
introduce and promote clean fossil fuel technologies in China
20 February, 2014 35
Emissions regulations in US, EU and China
美国,欧盟与中国水泥厂排放监管对比
注释:在欧盟,每立方米的基础是含10%氧的零度干燥气体。而在美国,氧的含量通常为7%
¹ 提议的新规定目前在公开听证中,转换近似值为1 lb/MWh=34 mg/m³
² 300兆瓦及以上新建燃煤电厂的BAT排放标准
³ 法规草案2012年1月1日开始生效
Li, J., Tharakan, P., Douglas, M., Liang, X. (2013). Technological, Economic and Financial Prospect of Carbon Dioxide Capture in the
Cement Industry. Energy Policy, Corrected Proof.
李佳,Tharakan, P., Douglas, M.,梁希(2013). 水泥行业二氧化碳捕集的技术、经济和金融展望,《能源政策》,初较版.
20 February, 2014 36
Comparison of estimated cost structure for CO2 capture
technologies in the UK and China
中英水泥厂碳捕集成本结构比较
增加的非燃料可变运营成本(包括胺)
增加的固定运营成本
增加的燃料(煤和电力)
额外的成本支出
IEA GHG富氧燃烧
IEA GHG燃烧后捕
集 中国广东燃烧后捕集 中国广东燃烧后捕集(调整为英国
地点、燃料成本和贴现率)
20 February, 2014 37
Comparison of 5-year average return on equity (ROE) and
current financial leverage (long term debt/equity) between the
construction material industry, the power generation
industry,the oil and gas industry, and S&P500 index average
水泥行业与发电,石油天然气行业与标普500指数,平均净资产回报率和资本成本的比较
建设材料(%) 发电(%) 石油气(%) 标准普尔500平均值
5年平均股本回报率 16.88 8.07 20.31 21.37 (长期负债)/股本 20.41 72.82 12.24 110.70 名义加权平均资本成本(假设负债成本=5%) 14.90 6.80 18.64 10.65 名义加权平均资本成本(假设负债成本=8%) 15.40 8.00 18.97 10.95 实际加权平均资本成本(假设负债成本=5%) 12.65 4.71 16.31 8.48 实际加权平均资本成本(假设负债成本=8%) 13.14 5.88 16.64 8.77