China and South Africa pursue coal liquefaction

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Energy Quarterly

China and South Africa pursue coal liquefaction By Prachi Patel Feature Editor Rocco Fiato

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eneath the steppes of northern China’s Inner Mongolia autonomous region lie some of the world’s largest coal deposits. Every year, 3.45 million tons of the black stuff is trucked to a huge factory in Ordos, 150 kilometers south of the region’s largest city, Baotou. There it is transformed into 1 million tons of liquid fuels, mainly diesel and gasoline, to satiate some of China’s escalating hunger for transport fuels. China consumed about 250 million tons of gasoline, diesel, and jet kerosene for transport in 2009, according to the International Energy Agency. About half of the petroleum the country needs to make these fuels is imported; imports could go up to 67% by 2020. With a burgeoning economy, the largest automobile market in the world, and a dearth of domestic oil, China is turning to its vast coal reserves—114.5 billion tons at last count— to meet the country’s oil needs. Shenhua Group, the owner of the Ordos liquefaction facility, plans to triple the plant’s capacity by 2013. And many other large-scale projects are in the

pipeline in China. Three coal-to-liquids (CTL) plants undergoing construction will together pump out close to nine million tons of transport fuels a year. Other companies are building factories to convert coal into synthetic natural gas and chemical commodities such as olefins, methanol, and naphtha that would otherwise be derived from petroleum. “Coal-to-chemicals is a hot topic in China,” said Per Bakkerud, a managing director in Beijing for Danish company Haldor Topsøe, which makes CTL catalysts and is rapidly expanding business in China. “We expect to see a number of projects being approved by the central government in the coming years.” Coal-derived fuels look no different than their petroleum counterparts and work with the same transport pipelines and engines. When burned, they release the same amount of carbon dioxide but fewer sulfur and aromatics emissions. The big downside is the environmental impact from converting coal into fuels. In addition to using copious amounts of water, the process releases twice the amount of carbon dioxide as extracting and refining fuels from petroleum. Yet, for coal-rich, oil-poor countries such as China, the proven, decadesold technology promises independence from foreign oil. It also makes economic sense: CTL fuels are competitive with petroleum at $50 a barrel. While Australia, Indonesia, and the United States are investigating the technology, China has become only the second country in the world after South Africa to adopt CTL on a commercial scale. And with mounting climate change and resource use concerns, the Chinese government and industry aim to reduce the environmental footprint of making fuels from coal. Coal liquefaction technology dates back to Germany in the 1920s. In 1923, Franz Fischer and Hans Tropsch discovered what remains to be the most common process for making synthetic liquid fuel today. Fischer–Tropsch synthesis, als