Achieve profitability while fostering harmony

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It is necessary to achieve profitability while also fostering harmony. -------------------------------------------------------------------------------- [Author: Qian Min; Source: China Chemical Industry News; Views: 61; Article submitted by:] Popular. In July 2006, the **Development and Reform Commission urgently halted coal chemical projects. The National Development and Reform Commission stated that it **will formulate a development plan for the coal chemical industry, and will suspend the approval or registration of coal chemical projects until such a plan is ready. As a result, many coal chemical projects across the country were put on hold. The \"Medium- and Long-Term Development Plan for the Coal Chemical Industry,\" which was originally supposed to be released soon, still hasn’t seen the light of day – since a draft of this plan was made available for feedback at the end of 2006, there has been no clear timeline for its release to date. Recently, a journalist interviewed Wu Bo, director of the Environmental Engineering Assessment Center at the State Environmental Protection Administration, regarding the significance of the medium- and long-term plans for the coal chemical industry and the issues that need attention. Not only coal but also water needs to be taken into consideration. Journalist: At the end of 2007, after hearing a report on the \"Medium- and Long-Term Development Plan for the Coal Chemical Industry,\" Zhang Guobao, vice chairman of the National Development and Reform Commission, ordered the Commission’s Industrial Department to further refine and improve this plan. Could you please explain what shortcomings still exist in the currently planned development plan for the coal chemical industry? To this day, it remains difficult to determine exactly what the problems are. Wu Bo: The plans currently drafted for the development of coal chemical industries at the local level focus solely on the coal chemical industry itself; they represent plans that consider coal resources as the primary factor in development, without sufficient consideration given to factors such as water resources and environmental capacity. As a result, it is hard to address issues such as water shortages, fragile ecosystems, and proximity problems related to market access. For example, the proposed Medium- and Long-Term Development Plan for the coal chemical industry outlines 7 major coal chemical bases, namely the middle and lower reaches of the Yellow River, Eastern Mongolia, Eastern Heilongjiang, Jiangsu, Shandong, Henan, Anhui, the Central Plains, Yunnan, Guizhou, and Xinjiang. There are some shortcomings in this regard. Firstly, the proposed coal chemical industry bases are mostly located in water-scarce areas, whereas the coal chemical industry is a water-intensive sector. In our country, coal resources and water resources are distributed in an inverse pattern: areas rich in coal resources often lack water resources. The coal resources in the areas north of the Kunlun Mountains-Qinling Mountains-Dabie Mountains line in our country account for 90.3% of the total national supply, while those in the areas south of this line account for only 9.7% ； In our country as well, the distribution of water resources is divided by the line formed by the Kunlun Mountains, Qinling Mountains, and Dabie Mountains; water resources are more abundant in the southern region, accounting for 78.6%, while they are scarce in the northern region, accounting for only 21.4%. Among them, the four regions of Shanxi, Shaanxi, Inner Mongolia, and Ningxia account for 67% of the identified coal resources, Gansu, Qinghai, Xinjiang, Sichuan, Chongqing, Guizhou, and Yunnan account for 20%, while the other regions account for only 13%. Meanwhile, the water resources in these four regions make up just 3.85% of the country’s total water resources. The planned coal chemical industry base in the middle and lower reaches of the Yellow River is located at the border of Shaanxi, Inner Mongolia, and Ningxia, an area that is clearly suffering from severe water shortages. The large-scale development of coal chemical industries here will inevitably encroach on water used for agriculture and ecology, degrade the environmental ecosystem, and threaten environmental safety. Secondly, the consumption market for coal chemical products in our country is highly concentrated in the provinces along the southeast coast, where coal resources are scarce and the economies are developed. This will inevitably lead to the long-distance transportation of coal chemical products, increasing the transportation pressure on our country. At the same time, most coal chemical products are hazardous chemicals, which inevitably increases the risk of accidents during long-distance transportation. Reporter: At the meeting on the medium- and long-term development plan for the coal chemical industry at the end of 2007, Deputy Director Zhang Guobao emphasized that the development of coal chemistry must take into account not only the rational utilization of coal resources but also constraints such as environmental capacity, water resources, and the market. Is this the way to set the tone for the development plan of the coal chemical industry? Wu Bo: Yes. Developing the coal chemical industry requires not only sufficient coal resources but also support in the form of water resources, environmental capacity, technical equipment, product markets, and funding. In principle, coal chemical industry bases should be established first in areas rich in coal and water, in order to extend the coal chemical industry chain as far as possible to end-market products, thereby reducing the pressure associated with chemical transportation and environmental risks. In coal-rich areas with sufficient water resources, actions should be taken based on water availability; the construction of large-scale coal-to-methanol projects is encouraged, with the methanol being transported via pipelines to market areas for further processing. In coal-rich areas with limited water resources, it is not appropriate to develop the coal chemical industry. Eliminate outdated technologies through institutional mandates. Reporter: Deputy Director Zhang Guobao also emphasized the need to comprehensively assess the energy efficiency of coal chemical products as well as the environmental impact of their carbon dioxide emissions. How should this sentence be understood? Wu Bo: In other words, when assessing the development of coal chemical industry, it is necessary to consider not only the economic benefits it generates but also its impact on the environment; an assessment of the gains and losses associated with industrial development and environmental protection must be made. China’s existing coal chemical industry has a high proportion of outdated production capacity, features high energy consumption and severe pollution, and its products lack competitiveness in the market. In 2005, China ranked first in the world in production of major traditional coal-based chemical products such as coke, calcium carbide, coal-based fertilizers, and coal-based methanol. The production capacity for coke and calcium carbide exceeded the market demand anticipated during the 11th Five-Year Plan period by 1/4 and 1/2, respectively. The technical level of China’s existing coal chemical industry is also relatively low. For example, the production equipment in the calcium carbide industry mainly consists of open-type calcium carbide furnaces; the gas and coal tar produced in coking are not fully utilized, and coal-based fertilizers are primarily produced using fixed-bed batch gas generation methods, and so on. Furthermore, the existing coal chemical enterprises are generally small in scale, and most of them are not long-chain processing enterprises. In our country, there are many small-scale traditional coal chemical enterprises involved in the production of coke, calcium carbide, and coal-based methanol. Taking the methanol industry as an example, in 2006, China had 167 methanol production enterprises, with a production capacity of 13.44 million tons and actual output of 8.74 million tons. Among them, there are about 135 enterprises with a methanol production capacity of over 10,000 tons; those with a capacity of less than 100,000 tons account for 60%, and these enterprises are spread across the whole country except Beijing and Tibet. Moreover, a considerable number of existing coal chemical enterprises are major sources of regional environmental pollution and are the types of \"high-emission, high-consumption, and resource-intensive\" enterprises that need to be phased out. This current situation does not meet our requirements. Reporter: Which coal chemical products do you think our country should focus on developing? What technologies are better to adopt? Wu Bo: Our country has outlined the development direction for the coal chemical industry: first, to promote the standardized production of energy-intensive products such as calcium carbide and coke ； Second, it encourages the development of products such as coal-based fertilizers ； Third, steadily develop petroleum substitutes such as coal-based oil products, methanol, dimethyl ether, and olefins. Multi-product production through the deep processing of coal should be the technological development direction for large-scale coal chemical and integrated energy industries in the future. Coal chemical processing technologies such as gasification for methanol and synthetic ammonia production, coal coking, and calcium carbide production are highly complementary to each other. Different processes can be optimized and combined to achieve co-production, and through the efficient utilization of resources and co-production systems, a closed industrial chain can be formed. In this closed industrial chain, the waste from the upstream stage becomes raw material for the downstream stage, enabling the reuse of wastewater and the comprehensive utilization of waste residues. It also allows for centralized treatment of pollution on a large scale, thereby reducing pollutant emissions. Cogeneration can enable a circular economy within a region, allowing for maximum utilization of resources and minimal emission of pollutants, thereby improving the economic viability and environmental benefits of the overall project. Overall, modern coal chemical technology has a strong adaptability to different coal qualities; it can make effective use of China’s abundant, widely distributed, and inexpensive high-sulfur coals and low-quality coals, as well as inferior resources such as petroleum coke, thereby improving the recovery rate and utilization efficiency of China’s coal resources. Modern coal chemical engineering covers a wider range of areas such as power generation, coal-to-oil conversion, and carbon dioxide recovery, which will greatly improve the utilization rate of resources such as coal and water. It will also lead to significant reductions in pollutants such as carbon dioxide, sulfur dioxide, nitrogen oxides, dust, and slag, while enabling the recovery of large amounts of resources. It is urgent to improve the environmental impact assessment approval mechanism. Reporter: The document No. 164 [2004] issued regarding environmental affairs does not clearly define the authorities for approving environmental impact assessments for coal-based oil and coal-based olefin projects, as well as other related coal chemical projects. This results in many shortcomings in the approval process for such projects within the coal chemical industry, leading to local authorities approving such projects indiscriminately. So, how will corresponding provisions be made in the medium- to long-term development plan to improve the approval mechanism? Wu Bo: In terms of the purpose of planning, the coal chemical industry must adhere to the concepts of circular economy and sustainable development. It is necessary to take into account the distribution of coal resources, as well as the distribution and utilization of water resources, transportation options, and regional market demands. The industry should pursue a development model characterized by large-scale operations, integration, and multiple product outputs, while also planning carefully for a development path that is resource-efficient and environmentally friendly. We will recommend improving the supervision and management mechanism for environmental impact assessment approvals in order to promote the steady and orderly development of the coal chemical industry. By orderly development, it is meant not only following advanced clean technologies in a timely manner but also arranging the use of resources such as water and markets in a systematic and rational way; it certainly does not refer to blind development characterized by unilateral actions and hasty rushes. From the perspective of the **Environmental Protection Administration, we would like to put forward the following suggestions: First, it is recommended to act in the interest of a common goal, rather than acting independently. To properly resolve the conflicts over water, coal, and market resources within a region, it is necessary to take into account the global trends in modern coal chemical industry development, and to proactively foster super-large-scale integrated coal chemical industry clusters that combine coal utilization, power generation, and chemical production. This approach ensures the full utilization of resources and helps avoid irreversible environmental damage in the region resulting from uncontrolled development. Second, formulate an overall circular economy policy for the large-scale coal chemical industry as soon as possible. At present, **although industrial policies have been introduced for individual industries such as calcium carbide and coking, which are characterized by high energy consumption and high pollution, these policies focus on one aspect at the expense of another, which hinders the coordinated development and efficient progress of the entire coal chemical industry. This comprehensive circular economy policy should focus on the recycling of carbon, with the goal of reducing greenhouse gas emissions in the form of carbon dioxide. It involves integrating industries such as calcium carbide production, coking, chlor-alkali manufacturing, power generation, and cement production in order to maximize the utilization of resources such as carbon and sulfur present in coal. In addition, it is recommended to **expedite the development of economic policies related to carbon dioxide emissions in order to promote the circular use of carbon** ； Establish clean production standards or relevant emission standards for coal chemical industry as soon as possible. Third, it is recommended to evaluate resource utilization rates. The most effective means of reducing energy consumption and emissions is to significantly improve resource utilization. Although our country is rich in coal resources, the per capita amount of these resources is only about half of the world average, and it is equivalent to roughly one-tenth of the average level in most countries with abundant coal resources. Moreover, coal is also a non-renewable fossil resource. So we should make good use of it. In particular, assessment criteria for the utilization rate of key resources such as carbon, sulfur, and slag in coal use should be established to promote resource utilization as well as energy conservation and emission reduction through economic measures. Fourth, it is recommended to concentrate technical and financial resources on developing key technologies, such as economically viable hydrogen production methods, in order to overcome the limitations related to hydrogen sources in coal chemical processing. This will enable the near-complete utilization of all major elements, including carbon sources, in coal chemical processes, as well as doubling production capacity, thereby achieving a win-win situation in terms of environmental protection and economic efficiency. Of course, for technologies such as coal-to-oil and coal-to-olefins that lack practical engineering examples, blind development in various regions should be strictly restricted. Fifth, it is recommended to conduct strategic environmental impact assessments and improve the supervision and management mechanism for environmental impact assessment approvals. The planning should focus on addressing issues such as the location of mining sites, the distribution and utilization of water resources, conflicts with the ecological environment, and environmental carrying capacity. It is necessary to clearly classify coal resource areas across the country into three categories: those unsuitable for development, those suitable for moderate development, and those suitable for large-scale development. This will help determine the direction for the development of coal chemical industries, thereby avoiding any misguidance of local governments and enterprises. 　　 Background link: Coal chemical industry represents the most efficient way of utilizing coal. According to the mineral resources report issued by the Ministry of Land and Resources in 2006, China’s total coal resources are estimated at 5.57 trillion tons, of which 1.04 trillion tons have been confirmed as reserves ； In 2006, China’s coal consumption was 2.37 billion tons. Coal consumption in our country is primarily concentrated in four major sectors: power generation, building materials, steel, and chemicals, accounting for over 85% of the total consumption. Among these, the power industry consumes the most coal, accounting for 53%; the construction materials industry uses 15% of the coal; the steel industry (including coke used in steel production) accounts for 13%; and the chemical industry uses 5% of the coal. China ranks first in the world in terms of production capacity for the main products of its coal chemical industry; calcium carbide and coke account for nearly 2/3 of the global production. Currently, coal is mainly used for direct combustion. Of this, 53% is used for power generation; when coal used for domestic purposes and other industrial applications is added, the overall proportion reaches 70%–80%, while coal used as a raw material in the chemical industry accounts for only 5%. Through comparative analysis, in terms of resource conversion efficiency, utilization efficiency, and pollutant emissions, coal used in coal chemical processing is **superior to coal used for direct combustion**. In 2006, the national sulfur dioxide emissions amounted to 25.88 million tons, the majority of which came from the direct combustion of coal. Installing desulfurization systems in all thermal power plants would require hundreds of millions of yuan in investment, and such systems can only convert sulfur dioxide from the atmosphere into solid waste, which in turn requires large amounts of land for storage. However, through coal chemical technology, not only are the final emissions only about 1/20 of those from power plants after desulfurization, but nearly ten million tons of sulfur can also be recovered, effectively addressing the shortage of sulfur resources in China (China imported 8.81 million tons of sulfur in 2006, and this figure exceeded 10 million tons in 2007). The methanol economy and new coal chemical industries: The molecular structure of methanol possesses organic properties such as oxidation, rearrangement, and polymerization. Starting from methanol, hundreds of chemical products can be manufactured; it is the fourth most important basic organic chemical raw material and finds wide-ranging applications in various chemical products. At the same time, methanol can be used as a fuel for automobile engines, and with ongoing technological advancements, it will become an important alternative energy source as oil resources become increasingly scarce and depleted. With the issuance of standards for dimethyl ether as a domestic fuel, coal has become a raw material for producing clean fuels such as dimethyl ether. The most typical example of the development of coal chemical industry is the related industrial chain represented by coal-to-methanol. Recently, Professor Olah, a renowned organic chemist at the University of Southern California and Nobel Prize winner in Chemistry in 1994, proposed the concept of a “methanol economy.” The main idea behind this concept is to use methanol as a convenient and relatively safe liquid medium for energy storage, as a fuel, as a raw material for the chemical industry, and as a product derived from carbon dioxide capture, in order to address global issues related to energy, chemicals, and the environment in the post-oil and gas era. However, this is not the traditional coal chemical industry as it exists today, but rather the orderly development of a new type of coal chemical industry that includes thermal power generation. This includes both a timely and orderly adoption of advanced clean technologies, as well as a rational and organized allocation of resources such as water and markets in terms of location.