Yahua Consulting: **Preferential policies for the utilization of carbon dioxide should be established**

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This post was last edited by jordan569 on 2013-1-6 at 20:50. It is estimated that by 2020, fossil fuels will still account for 85% of China’s energy consumption, as of 2010-9-1. Yahua Consulting believes that, in response to the demands of a low-carbon economy, **it is necessary to promote the development of carbon dioxide capture, storage, and utilization (CCSU) technologies from the perspective of industrial policy, and to explore a development path that suits China’s national conditions and energy structure. Three dimensions of the carbon dioxide issue: Yaxia Consulting believes that the issue of climate change and carbon dioxide, which is a major topic of concern in the world today, actually encompasses three dimensions. First: Is the rising CO2 concentration in the atmosphere a major cause of climate change? This is a scientific question. Second: How should countries share the responsibility for climate change and control CO2 emissions? This is a **problem**. Third: **How to promote the development of low-carbon technologies in order to reduce CO2 emissions is a matter related to industrial policy guidelines and engineering techniques.** Regarding the first question, namely the relationship between CO2 concentrations in the atmosphere and climate change, the **Intergovernmental Panel on Climate Change (IPCC) issued four assessment reports on climate change in 1990, 1995, 2001, and 2007, which constitute authoritative and mainstream consensus documents on the scientific understanding of climate change within the international community. The IPCC’s Fourth Assessment Report states that there is a probability of over 90% that most of the increase in global average temperatures observed over the past 50 years is caused by rising concentrations of human-made greenhouse gases. Regarding this scientific issue, the IPCC is still conducting further research and will release its fifth assessment report in 2014. Regarding the second question, as the two countries with the highest levels of energy consumption and greenhouse gas emissions in the world, the United States and China have both made commitments. The United States **announced that by 2020, greenhouse gas emissions would be reduced by 17% compared to the 2005 level. China **has pledged that carbon dioxide emissions per unit of GDP will be reduced by 40%-45% by 2020 compared to 2005 levels** ； Meanwhile, by 2020, the share of non-fossil energy consumption in China is set to reach 15%. Regarding the third question, given that fossil fuels still accounted for 85% of the energy mix in 2020, and in light of the demands of a low-carbon economy, it will be an important challenge for China’s energy and chemical industries over the next 10 years to promote the development of carbon capture, storage, and utilization (CCSU) technologies from an industrial policy perspective, so as to make efficient and clean use of resources such as coal. Advances in carbon capture, storage, and utilization: In recent years, efforts to capture, store, and utilize carbon dioxide have been undertaken both domestically and internationally, and certain progress has been achieved. There is a collaboration between the Great Plains coal-to-natural gas project in North Dakota, United States, and the Weyburn oil field in Canada for carbon dioxide-enhanced oil recovery (CO2-EOR), which enables both carbon dioxide sequestration and improved oil recovery rates. Multinational oil companies such as BP and Total have carried out demonstrations of carbon dioxide capture and storage (CCS). Huaneng has carried out post-combustion carbon capture demonstrations in Beijing and Shanghai ； SPIC has also completed the pilot-scale testing for carbon capture and utilization in ##. Shenhua Group is building a carbon dioxide capture and storage demonstration project for coal-to-oil production in Ordos. CNPC and Sinopec have each launched pilot projects for CO2-EOR, while CNCG has also conducted experiments on using carbon dioxide to improve coalbed methane recovery (CO2-ECBM). Furthermore, Japanese company Mitsui Chemicals has completed pilot-scale tests for the synthesis of methanol from carbon dioxide and hydrogen, and is seeking further industrialization. CNOOC and companies such as Zhongke Jinlong have successfully used carbon dioxide to produce biodegradable plastics. **Incentives should be established for carbon capture and utilization. According to Ayaha Consulting, in light of the requirements of a low-carbon economy, it is necessary to promote the development of carbon dioxide capture, storage, and utilization (CCSU) technologies from the perspective of industrial policy, and to explore a development path that suits China’s national conditions and energy structure. **According to data from the Bureau of Statistics, China’s per capita GDP in 2009 was around $3,600, ranking it around 100th in the world. During the same period, China’s total energy consumption amounted to 3.066 billion tons of standard coal. Coal still accounts for about 70% of primary energy consumption. For the foreseeable future, coal’s dominant role in China’s energy consumption is not expected to change fundamentally. The scientific issue of the relationship between atmospheric CO2 concentrations and climate change is still under further assessment; given China’s national conditions and energy structure, coal remains dominant. Alongside improving energy efficiency and developing renewable energy sources, CCS technology is considered one of the best ways to reduce carbon dioxide emissions. However, its high cost makes it difficult to implement on a large scale for commercial use. If pure CCS is widely adopted in our country, companies that make unilateral investments without receiving any economic returns will face significant risks. Therefore, it is wise to steadily advance demonstrations of the resource utilization of carbon dioxide, and **cooperation and support from industrial policies are essential. In 2010, the Ministry of Finance, the **National Development and Reform Commission, and relevant research teams conducted investigations and prepared a special report titled “Design of a Carbon Tax System Framework for China”. It is recommended that by 2012, a carbon tax of 10–20 yuan per ton of CO2 emissions be imposed ； In 2020, a carbon tax of 40–50 yuan per ton of CO2 was imposed. For businesses, a carbon tax is a unilateral penalty mechanism. If a carbon tax is introduced, it will significantly increase the costs for industries such as domestic power generation, coal chemistry, petrochemicals, steel, and cement, thereby making it more difficult for businesses to operate. In areas such as wind energy, solar energy, and nuclear energy, **a series of support policies have been introduced. Yahua Consulting suggests that, for the capture, storage, and utilization of carbon dioxide, **complementary incentive mechanisms, namely appropriate industrial support policies, should also be established to encourage enterprises to engage in carbon dioxide-enhanced oil recovery (CO2-EOR) and other forms of resource utilization, thereby putting China’s efforts to reduce carbon emissions and make use of carbon dioxide on a stable and positive development track. The first “Technical and Economic Symposium on Carbon Dioxide Capture, Storage, and Utilization” will be held in Shanghai from September 15-16, 2010. Experts from the Ministry of Finance, the Chinese Academy of Sciences, CNPC, Sinopec, CNOOC, Shenhua, Huaneng, Total, Dow, Yaha Consulting, and CNCG will discuss issues such as the design principles and policy prospects of a carbon tax system, the potential impacts of a carbon tax on industries like domestic power generation, coal chemicals, petrochemicals, steel, and cement, the technical and economic aspects of carbon dioxide capture, storage, and utilization projects, as well as the feasibility of carrying out CCSU demonstrations through inter-industry cooperation in sectors such as power generation, coal chemicals, and oil extraction. . Note $ # , $ $