Coal cleaning:
A viable strategy for
reduced carbon emissions
and
improved environment in China?
• Cooperation between National Bureau of
Statistics of China and Statistics Norway
1998-2002
• Methods for environmental accounting
• Analytical tools, energy-environmentaleconomic analysis
• NORAD funded
3E-analysis
• General equilibrium model (CGE) with
emphasis on energy use and emissions to air
• Coal cleaning – measure to reduce CO2emissions and local pollutants (WB, Govt)
• Mechanical coal washing
Pilot study of coal cleaning
• Two coal varieties in the CGE – raw coal
and washed coal
• Users may fairly easily switch
• Input of thermal energy per unit produced
kept constant
• Incentives for switch: cost per unit thermal
energy
Coal washing
• Particulate matter washed out
• Less carbon and PM emissions per unit
thermal energy
Saving transportation
• More heat value per
tonne means lower
transportation costs
• Coal transportation
about 40 percent of
transportation
capacity.
CDM-project
• Capital allocated to coal cleaning as part of
a CDM project
• Cleaned coal twice as costly as raw coal
• Coal cleaning unprofitable at project level –
acceptable as CDM project
• Increase in total energy use 2.5 %
• Increase in total coal use 10 %
• Higher economic growth 0.2 %
• Reduced particle emissions 2 %
At project level
• users switch to cleaned coal, hence more
raw coal is available to other users –at a
lower price
• less transportation is needed, hence more Tservices are available to other users – at a
lower price.
Price
Supply of raw coal
Demand of raw coal
Demand of raw coal after CDM
Quantity
K1
K0
CDM and the leakage problem
• Leakage – an unanticipated CO2-emission
in a CDM project
• The Kyoto process: much less focus on
leakage in Energy related projects than in
Land use change-projects.
Böhringer et al. (2003)
• Simulate CDM project in India – inproved
energy efficiency incoal based electricity
production
• CGE model including host (India) and
purchasers of ER (Germany)
• Result: 56 percent of credited carbon
reductions are lost in indirect market
effects.
Leakage effects
• Leakage in CDM
energy projects are
probably huge
• Leakage in all CDM
projects should be
considered more
closely
• Tax schemes should
follow the project
approach
China and CDM?
• Interim measures for
management of CDM
June 2004
• Requires project
developer to share the
benefits from CERtransfers with the govt.
• Only projects with
50% pluss Chinese
ownership