China set to displace North America with carbon capture projects

China is expected to displace North America and take the lead in the next wave of carbon capture and storage projects after its first large-scale endeavor with the technology advanced.

Construction on the Yanchang Integrated Carbon Capture and Storage Project will begin after a final investment decision was taken to go ahead with the demonstration site, according to the Global CCS Institute, a non-profit organization that has provided technical and advisory support for the initiative.

The project was undertaken as a part of China’s 2015 deal with the U.S. to combat climate change. When complete, it will be able to capture 410,000 metric tons of carbon a year. It’s one of eight large-scale CCS projects — in varying stages of evaluation and subject to approval — that China is considering, according to Tony Zhang, senior adviser at the institute.

Of the 16 large-scale CCS projects operating around the world, two-thirds are in North America, according to the Paris-based International Energy Agency. Four out of five new projects under construction are also based in Canada or the U.S.

The next wave of projects, though, is expected to happen in China, which accounts for about half of all CCS projects under serious consideration or planning, IEA analyst Samantha McCulloch said in a presentation in Beijing on Monday. In 2020, China will have 330 gigawatts of coal-fired plants that could potentially be retrofitted with emission-reduction technology, she said.

Important Technology

CCS “is an important set of technologies for reducing emissions from fossil fuel use, while enabling important resources such as coal to continue to contribute to energy security and economic objectives,” McCulloch said.

The project in Yulin, an a mining region located about 900 kilometers (497 miles) southwest of Beijing, injects carbon dioxide released from coal into depleted fields, where it mixes with crude inside the formation, allowing oil destined for production to be moved into adjoining wells.

It’s working at about 12 percent of eventual capacity, or 50,000 tons a year, according to the institute. China currently has about 950,000 tons of operational capture capacity, said Zhang at the CCS institute.

Time Lag

Project developer Shaanxi Yanchang Petroleum Group Co. didn’t respond to multiple phone calls seeking comment.

The technology will need to contribute about 15 percent of global emissions reductions in order to achieve the Paris agreement goal of keeping atmospheric warming well below 2 degrees Celsius (3.6 degrees Fahrenheit). Investments in CCS have nevertheless stalled and were unchanged in 2016 at $184.4 billion, according to Bloomberg New Energy Finance.

Large up front capital investment, time lag from achieving returns and lack of sufficient business cases are among concerns holding back investments in CCS, the IEA’s McCulloch said.

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