Shenhua’s Evolution From Coal Producer to Clean Energy Supplier

By Ling Wen
President and Chief Executive Officer, Shenhua Group

China’s resource endowment has resulted in an energy mix dominated by coal—a fact unlikely to change for the foreseeable future. However, the continued large-scale extensive production and utilization of coal has resulted in considerable environmental impacts. If China’s current approach to coal production and utilization remains unchanged, such problems could worsen. Therefore, the Chinese government has placed an emphasis on environmentally friendly development in the future, actively reforming the methods used in the production and consumption of energy resources, improving the state of the natural environment, and generally working to increase sustainability. As China’s largest coal producer, Shenhua Group has an inexorable responsibility in this transformation process.

Shenhua Group’s operating strategy hinges on the integration of key business areas, including coal production, electricity production, railway transportation, ports management, seaborne shipping, and coal conversion to liquids and chemicals. Therefore, Shenhua has explored the fields of reducing the environmental impact of coal supply, utilization, and conversion; the joint development of coal-based energy and alternative energy; and carbon capture and storage (CCS). Through practice, we believe that environmentally benign, highly efficient development of the coal industrial chain is technically and economically feasible.

Shenhua is working to reduce the environmental impact from all its integrated key business areas.

Shenhua is working to reduce the environmental impact from all its integrated key business areas.

CLEAN COAL PRODUCTION

In the process of safely and efficiently producing coal, Shenhua has actively worked in the areas of water resource protection and land reclamation. For example, at its Shendong mining area—an area that contains the only mine in the world operating at a scale of 200 million tonnes of coal per year—building underground water reservoirs in the coal mine allows for mine water that would otherwise be discharged and subject to evaporation (and thus lost) to now be stored, purified, and utilized. This process currently provides over 95% of the water used in the mining area.

In the early stages of mine construction at Shendong, the vegetation coverage rate was only about 10%. Since then, Shenhua has been actively pursuing environmental remediation and land reclamation by strengthening the ability of the surface environment to withstand the impact of coal mining subsidence and adopting innovative environmental protection technologies. Today, vegetation covers 60–70% of the mining area. Given the fragility of the local ecosystem, Shenhua and its subsidiary coal companies set up a special fund for land reclamation: For each tonne of coal produced by the company, a percentage of the revenue is reserved for restorative purposes.

The vegetation coverage at the Shendong mining site has increased dramatically through environmental restoration practices.

The vegetation coverage at the Shendong mining site has increased dramatically through environmental restoration practices.

Shenhua produces a variety of coals. High-quality coal ac-counts for a large percentage; such coal contains a fairly small amount of undesirable components (e.g., sulfur and phosphorus). Nevertheless, Shenhua carries out onsite processing and beneficiation on this high-quality coal, effectively removing gangue and some sulfur and phosphorus. To mitigate the environmental impact of transportation, dust suppressant is applied after the coal is loaded into railcars.

During both production and transportation, coal is kept from any contact with the ground so that reliable quality can be ensured. Supplying high-quality coal (i.e., ash content ≤15% and sulfur content ≤0.5%) to the Beijing-Tianjin-Hebei area, Yangtze River Delta, Pearl River Delta, and other economically developed regions contributes to reducing emissions from coal utilization and thus limits the impact on air quality.

With respect to the low-rank coal that accounts for about 50% of China’s total coal reserves, Shenhua has developed proprietary graded refining technologies and is now able to upgrade low-rank coal so that it contains less sulfur and mercury (see Table 1).

Ling Table 1

ULTRA-LOW EMISSIONS COAL-FIRED POWER

Coal-fired power is the foundation of electricity generation in China because it generates large amounts of power, creates a stable supply, employs mature technologies, and is minimally impacted by weather or other natural conditions. It currently provides 80% of electricity in China, and by all projections will continue to be the country’s most important means of power generation for the foreseeable future. However, emissions from coal-fired power plants can be significant. Such emissions are major contributors to the air-quality issues recently observed in China. The development of highly efficient coal utilization technologies, especially high-efficiency, low-emissions coal-fired power, is imperative. Thus, the Chinese government has begun to implement stricter emission standards for coal-fired power plants.

Shenhua is currently the fifth largest coal-fired power provider in China, with a total installed coal-fired power capacity of 68.85 GW at the end of 2014. The company recently carried out extensive revamping and retrofitting of its coal-fired power plants to reduce emissions. Units already in service have been, or are being, upgraded and retrofitted to meet the ultra-low emissions standards, while newly built units are being constructed based on a high-efficiency, low-emissions model.

The domestically designed and constructed 350-MW supercritical coal-fired power unit (No. 4) owned by Shenhua Guohua Zhoushan Power is a prime example of the newer plants being built. On 25 June 2014, the unit’s 168-hr trial was completed and it was officially placed into commercial operation. The emissions are far lower than the limits established in the latest “Emission Standard for Air Pollutants of Coal-Fired Power Plants” issued by China’s Ministry of Environmental Protection. In fact, the plant’s emissions are less than half the limits required for gas-fired power units (see Table 2).

Ling Table 2

The Guohua Zhoushan plant provides yet another example that ultra-low emissions from coal-fired power plants can be fully realized as long as suitable technical solutions are employed and environmental protection technologies are integrated. The increased investment to accomplish this is no greater than 6%. The increased cost per kilowatt is less than 0.01 yuan, which is a realistic cost to bear.

Currently, the technological transformation to achieve ultra-low emissions has been implemented successively at 48 of the 61 coal-fired units owned and operated by the Guohua Electricity Company, Shenhua’s main power company. It is projected that the fleet-wide transformation will be complete in 2017. Meanwhile, all new coal-fired units constructed by the Guohua Electricity Company will adopt ultra-low emissions technologies and all new units will meet or surpass the emissions standards for gas-fired units.

The ultra-low emissions Guohua Zhoushan power plant

The ultra-low emissions Guohua Zhoushan power plant

CLEAN COAL CONVERSION

Clean coal conversion offers the opportunity for coal to evolve from being exclusively a fuel to being both a fuel and a raw ma-terial. The development of the clean coal conversion industry can reduce China’s dependence on petroleum and gas imports and also greatly reduce emissions from coal utilization. Thus, Shenhua has constructed and operates several demonstration projects, including facilities converting coal-to-liquids and coal-to-olefins. These projects have demonstrated stable operation.

Approaches to coal-to-liquids conversion include direct coal liquefaction (DCL) and indirect coal liquefaction (ICL) technologies. Shenhua’s DCL demonstration project (1.08 million tonnes of liquids produced per year) and ICL demonstration project (180,000 tonnes of liquids per year) are located in Ordos, Inner Mongolia, China.

Shenhua’s DCL project is the only such project in the world operating at the million tonnes per year scale. On 30 December 2008, processes throughout the plant were successfully tested in the first plant-wide trial and qualified products were made. Commercial operation officially commenced in January 2011. In 2014 alone, the facility produced 900,000 tonnes of liquid product, and as of the end of 2014, a cumulative total of 3.94 million tonnes of liquid products had been manufactured at the facility. Products from the DCL plant include diesel, naphtha, and liquefied petroleum gas. The sulfur content of the diesel produced is less than 1 ppm, far lower than the 10-ppm limit specified in the National V standard (the most stringent domestic standard for diesel). The use of diesel produced through DCL can significantly reduce air pollution from vehicle emissions.

Through years of development, Shenhua’s DCL demonstration project has not only realized near-zero wastewater discharge, but also a major reduction in freshwater consumption. The water consumed per tonne of product has decreased from the design value of approximately 10 tonnes to the present value of 5.8 tonnes. The water consumption per product value is 17.8 tonnes/10,000 yuan, far less than the national industrial average (68.2 tonnes/10,000 yuan).

Shenhua also owns three coal-to-olefins projects that have been placed into commercial operation. The combined production capacity of these facilities is 1.6 million tonnes per year. This successful demonstration of commercial coal-to-olefins conversion has great practical significance in satisfying China’s rapidly growing demand for olefins. Shenhua is also actively exploring new coal-to-olefins technologies to reduce water and coal consumption. As technologies progress, freshwater consumption is continually decreasing. The water consumption per product unit of the coal-to-olefins project in Baotou in the second-phase design has been reduced from the original 30 tonnes of water per tonne of products to 22.

Shenhua Group’s original coal-to-olefins plant in Baotou

Shenhua Group’s original coal-to-olefins plant in Baotou

DEVELOPMENT OF ALTERNATIVE AND RENEWABLE ENERGY

Shenhua is dedicated to developing both alternative and renewable energy sources and effectively integrating them with coal-based energy so that they can play a more significant role in changing China’s energy mix. Shenhua is also actively exploring energy coupling and optimization technologies to improve the efficiency of energy conversion and utilization. Today Shenhua’s installed renewable energy capacity exceeds 5 GW.

In June 2014, the drilling of Shenhua’s Baoye Well No. 2 in Baojing County, Hunan Province, marked Shenhua’s first shale gas exploratory well. This well officially signified the company’s entrance into the field of domestic exploration and development of shale gas.

Shenhua’s activities are not only limited to China. In fact, Shenhua is actively implementing an increasingly international strategy. One example is the successful acquisition of a wind power project in Australia with a total installed capacity of 300 MW. This project is the largest overseas wind power project owned by a Chinese energy company. Similarly, Shenhua has also invested in shale gas in the U.S.; such projects have also yielded positive economic returns.

Shenhua holds 75% ownership of the Woolnorth wind power plant in Australia.

Shenhua holds 75% ownership of the Woolnorth wind power plant in Australia.

In order to improve the utilization efficiency of renewable energy and to optimize the integration of renewable and coal-based energy systems, Shenhua is developing energy storage technologies, renewable energy-based hydrogen production, and coal-fired power peaking technology improve the utilization efficacy of renewable energy.

CCS INDUSTRIAL DEMONSTRATION

In November 2014, the U.S.–China Joint Statement on Climate Change was issued. For its part, the Chinese government committed that the country’s CO2 emissions will peak by 2030 with an attempt to do so earlier. Considering that carbon capture and storage could significantly reduce greenhouse gas emissions from the fossil-fuel power sector, Shenhua is working to advance the technology, starting with a pilot-scale CCS demonstration project.

Shenhua constructed the first 100,000 tonnes CO2/year CCS demonstration project in China. CO2 from Shenhua’s DCL facility is purified, liquefied, injected, and stored as part of the project. In 2011, the entire process was completed and supercritical liquefied CO2 was successfully injected into an underground saline aquifer. Thus, 100,000 tonnes of CO2 emissions are mitigated each year—equivalent to a 276.7-hectare forest carbon sink. As of the end of 2014, a cumulative 245,000 tonnes of CO2 had been injected and stored. This demonstration project is building the foundation for a coal-based low-carbon energy system in China. It is hoped that the knowledge gained can provide technical support for further development of CCS in China.

OUTLOOK

Ling Figure 1

The transformation of Shenhua from a coal producer to a clean energy supplier reflects not only a change in its business strategy, but also its willingness to actively embrace an energy revolution by promoting clean energy utilization and technological innovation. Shenhua’s path forward to establish itself as a world-class clean energy supplier will be built on clean coal production, utilization, and conversion (see Figure 1). The company is constantly working to develop and implement leading technologies, advanced management, value creation, and be innovation driven to further enhance its core competitiveness centering on its model of integration. As the largest coal producer and supplier in China, Shenhua is willing and able to bear the social responsibility of a large energy enterprise looking to provide cleaner energy to the world.

 

The content in Cornerstone does not necessarily reflect the views of the World Coal Association or its members.
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