In a bid to meet pollution targets, China is launching a trial program to contract out work to desulfurize coal-fired electricity generators.

The nation's five largest state-owned power producing groups are asked to select two projects for a pilot run, according to a circular from the National Development and Reform Commission and the State Environmental Protection Administration.

 

Specialist firms will be commissioned to install desulfurizing equipment in coal-fired generators. They will be responsible for the operation and maintenance, and in return will enjoy tax benefits and collect a subsidy of 15 yuan (US$2) per megawatt-hour from the government.

 

"Contracting out desulfurization projects will improve quality and the take-up rate, as well as accelerate technological progress," the circular said.

 

China has a nationwide target to cut sulfur dioxide emissions and other major pollutants by 10 percent in the five years to 2010.

 

But growth-driven local officials and industries ignored the target last year. Instead, sulfur dioxide output grew by 1.8 percent year on year.

 

Pollutant

 

Sulfur dioxide, which causes acid rain, can damage crops and threaten food security.

 

As one of the major contributors of sulfur dioxide emissions, coal-burning power plants are urged and required to install equipment to capture the contaminants before they can be released.

 

In March, the NDRC, the country's top industry planner, said China would cut sulfur dioxide emissions at coal-fired power plants by 61.4 percent to 5.02 million tons in 2010, from 13 million tons in 2005. This will be achieved by shutting aging generators, using cleaner coal and boosting energy efficiency.

 

A total capacity of 137,000 megawatts at existing plants would need desulfurization equipment in that period, according to the planner.

 

However, about half of China's coal-fired power plants haven't installed the pollution-reducing equipment, and some don't use it even if they have installed a system because of high construction and running costs.

 

The current cost of desulfurization equipment for each megawatt of generating capacity is between 200,000 yuan and 250,000 yuan. The cost used to be up to one million yuan per megawatt, when China had to rely on imported equipment.

 

According to Guotai Jun'an Securities analyst Wang Zhen, competition in the desulfurization sector is fierce, and the technological barriers are no longer so high.

 

Market benefits

 

"The new program may be a chance to boost the desulfurization market and benefit leading players," Wang said.

 

The latest circular said the market environment, industry policy and technological development are all in place for power firms to hire contractors for desulfurization projects. It said the trial will run for three years.

 

In other efforts, the government has said it would punish firms that let equipment stand idle, while plants that have pollution-reducing equipment will also be given favored access to the electricity grid.

 

Environmentally Friendly Technology

 

China may soon issue policies to encourage a clean coal technology in power plants to cut pollution and improve efficiency, according to industry and company officials.

 

Integrated gasification combined cycle, or IGCC - gasifies coal and removes impurities from the coal gas before it is burned. It's considered one of the most environmentally friendly processes.

 

But high costs are the main hurdle for developing IGCC in China, said a director at the industry department of the National Development and Reform Commission. Power generated from IGCC plants generally costs 20 percent to 25 percent more than from ordinary plants.

 

"China's know-how in IGCC has lagged behind. A lower ratio of localization in IGCC design and construction is supporting higher costs," the NDRC official said. "We must map out unified industry standards to pave the way for large-scale use."

 

Compared with traditional coal-fired power plants, IGCC plants produce power from coal by emitting 93 percent less sulfur, 75 percent less nitrogen oxide and 33 percent less solid particulates, as well as consuming 30 percent less water, according to General Electric, a leader in IGCC technology.

 

"IGCC technology provides a cleaner, economical solution for coal-fired power generation, and I think China will issue an encouraging policy soon," said Jack Wen, president of GE Energy China. "If you take environmental and social issues into account, IGCC power plants can pay off. Government support is crucial to successful commercialization," Wen said.

 

(Shanghai Daily July 27, 2007)