Study on Clean Coal Technology Project

Transcription

1 Fiscal 2010 Study on Clean Coal Technology Project Study Report March 2011 The Institute of Energy Economics, Japan

2 Introduction Coal will continue to be one of the essential energy sources because of its abundant reserves and our expectation of more stable and less expensive energy supply compared to other fossil fuels. As economy grows in developing countries in recent years, their demand for energy is soaring. The high share of coal of total energy resources, particularly in East Asia including China and India, forecasts a continuous increase in the demand for coal. Besides its higher CO 2 emission per calorific value than other fossil fuels, however, coal generates air pollutants such as SOx and NOx. For this reason, the introduction and penetration of environmentally friendly Clean Coal Technology (CCT) is one of our themes of having more coal utilized. Especially in the countries in East Asia, where a significant increase in the demand for coal is forecasted, the introduction of CCT would contribute a great deal to reduce environmental impact and to moderate the increasing demand for coal. Furthermore, driving the clean use of low rank coal, a type of coal for limited applications today, would lead to more stable supply of coal. For the purpose of having our country's CCT penetrated into our counterpart countries in East Asia, this project is to understand the current status of a variety of coal utilization and the future demand for coal there, and at the same time, to study the approaches necessary to get rid of the barriers hindering the penetration of CCT. On top of that, best-practice policies relating to the penetration of CCT are studied and shared through the deepened mutual understanding among the member countries. For this purpose, this research is conducting studies for the two themes, "Spread of Low Rank Coal Utilization Technology" and "Spread of High-Efficiency Coal-Fired Thermal Power Plants," in the member countries of Economic Research Institute for ASEAN and East Asia (ERIA). With the information of ERIA members collected, organized and shared, the political, economic, and technical barriers in respective countries, which are hindering the penetration of low rank coal utilization technology and high-efficiency coal-fired thermal power plants, have been studied this year. In addition to this effort, the challenges, associated with the penetration of low rank coal utilization technology and high-efficiency coal-fired thermal power plants, have been summarized. Following last year, a meeting of Working Group consisting of the experts from major coal user countries was held, where the approaches and challenges toward the penetration of CCT in respective countries were laid out and shared. The members of Working Group offered valuable information about each country's status related to the themes now under study. Taking this opportunity, we acknowledge the contribution made by these participants. March 2011

3 Contents 1. Study on the environmentally conscious use of low rank coal resources in ERIA member countries The demand/need and policy goal for low rank coal utilization technology Political, economic, and technological barriers hindering the spread of low rank coal utilization technology Study on the promotion of high-efficiency coal-fired thermal power plants in ERIA member countries The need and policy goal for high-efficiency coal-fired thermal power plants Political, economic and technological barriers hindering the spread of high-efficiency coal-fired thermal power plants Challenges for Spread of Low Rank Coal Utilization Technology and High-Efficiency Coal-Fired Power Plant Challenges for introduction and spread of low rank coal utilization technology Challenges for introduction and spread of high-efficiency coal-fired thermal power plant Outlook for demand of energy and coal in ERIA member countries Coal among primary energy consumption in the world and Asia Coal used for electrical power generation in the world and Asia Outlook for demand for energy and coal in ERIA member countries i

4 List of Figures Figure 1.1 Technology Development by ETIS... 2 Figure 1.2 Domestic Coal Quotas Policy by the Indonesian Government... 6 Figure 2.1 Coal-fired Thermal Power Plants in Australia (by Capacity and Years of Service) Figure 2.2 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in Australia Figure 2.3 Steam Condition at the Coal-fired Thermal Power Plants in Australia Figure 2.4 Coal-fired Thermal Power Plants in China (by Capacity and Years of Service) Figure 2.5 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in China Figure 2.6 Steam Condition at the Coal-fired Thermal Power Plants in China Figure 2.7 Coal-fired Thermal Power Plants in India (by Capacity and Years of Service) Figure 2.8 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in India Figure 2.9 Steam Condition at the Coal-fired Thermal Power Plants in India Figure 2.10 Coal-fired Thermal Power Plants in Indonesia (by Capacity and Years of Service) Figure 2.11 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in Indonesia Figure 2.12 Steam Condition at the Coal-fired Thermal Power Plants in Indonesia Figure 2.13 Coal-fired Thermal Power Plants in South Korea (by Capacity and Years of Service) Figure 2.14 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in South Korea Figure 2.15 Steam Condition at the Coal-fired Thermal Power Plants in South Korea Figure 2.16 Coal-fired Thermal Power Plants in Thailand (by Capacity and Years of Service) Figure 2.17 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in Thailand Figure 2.18 Steam Condition at the Coal-fired Thermal Power Plants in Thailand Figure 4.1 Primary Energy Consumption by Region (World) Figure 4.2 Share of Primary Energy Consumption Figure 4.3 Primary Energy Consumption by Country and Region (Asia) Figure 4.4 Primary Energy Consumption in the World (Comparison between Reference Scenario and Technologically Advanced Scenario) Figure 4.5 Primary Energy Consumption in Asia (Comparison between Reference Scenario and Technologically Advanced Scenario) Figure 4.6 Primary Energy Consumption by Energy Source (World) Figure 4.7 Primary Energy Consumption by Energy Source (Asia) Figure 4.8 Coal Consumption by Region (World) ii

5 Figure 4.9 Coal Consumption by Country and Region (Asia) Figure 4.10 Coal Consumption by Sector (Reference Scenario) Figure 4.11 Power Generation Mix(World) Figure 4.12 Power Generation Mix(Asia) Figure 4.13 Power Generation Mix(World / Asia) Figure 4.14 Primary Energy Consumption in China Figure 4.15 Coal Consumption by Sector in China Figure 4.16 Power Generation Mix in China Figure 4.17 Primary Energy Consumption in India Figure 4.18 Coal Consumption by Sector in India Figure 4.19 Power Generation Mix in India Figure 4.20 Primary Energy Consumption in Indonesia Figure 4.21 Power Generation Mix in Indonesia Figure 4.22 Primary Energy Consumption in Thailand Figure 4.23 Power Generation Mix in Thailand Figure 4.24 Primary Energy Consumption in Malaysia Figure 4.25 Power Generation Mix in Malaysia Figure 4.26 Primary Energy Consumption in Vietnam Figure 4.27 Power Generation Mix in Vietnam Figure 4.28 Primary Energy Consumption in Australia Figure 4.29 Power Generation Mix in Australia Figure 4.30 Primary Energy Consumption in Korea Figure 4.31 Power Generation Mix in Korea iii

6 List of Tables Table 1.1 Distribution of Brown Coal in China... 4 Table 1.2 Trend of Brown Coal Production in China... 4 Table 1.3 Indonesia's Domestic Coal Quotas Relating to Coal Utilization Volume and Quality in Table 1.4 Indonesia's Low Rank Coal Utilization Technologies under Development, Tests, Demonstration, or Commercialization (plan)... 7 Table 1.5 Trend of Lignite Production and Consumption in Thailand... 8 Table 1.6 Actual and Forecasted Demand for Coal in South Korea Table 1.7 List of the Items Considered as Barriers by Country on Intorduction and Spread of Low Rank Coal Utilization Technology Table 2.1 High-efficiency Coal-fired Thermal Power Plants Listed on China's Construction Plan Table 2.2 NTPC's High-efficiency Coal-fired Thermal Power Plants Under Construction and in the Planning Stage Table 2.3 List of the Coal-fired Thermal Power Plants tendered in Indonesia Table 2.4 Construction Plan for Ultra-supercritical Pressure Coal-fired Thermal Power Plants in South Korea Table 2.5 List of the Items Considered as Barriers by Country on Intorduction and Spread of High-Efficiency Coal-Fired Thermal Power Plants iv

7 1. Study on the environmentally conscious use of low rank coal resources in ERIA member countries 1.1 The demand/need and policy goal for low rank coal utilization technology (1) Australia 1) The industrial fields that are considered to use low rank coal and their current utilization status The majority of the low rank coal produced in Australia is used for local power generation. The current utilization status of the low rank coal in respective states is as follows: Victoria: South Australia: The annual production of lignite is million tons, most of which is for power generation. Brown coal accounts for about 85% of the total power being generated in Victoria. Besides that, thousand tons/year of lignite is used for the production of briquettes. 3-4 million tons/year of the low rank coal (sub-bituminous coal) from Leigh Creek Coalfield is used for power generation, accounting for about 40% of the total power being generated in South Australia. Western Australia: The low rank coal (sub-bituminous coal) from Collie Coalfield is used in mineral industry, cogeneration, and power generation (300MW). 2) Policy for the promotion of low rank coal utilization It is only the State of Victoria that has a definite position relating to policies to promote the low rank coal utilization in Australia. The Government of Victoria, an aggressive advocate in developing low CO 2 emissions technology in pursuit of the clean use of lignite, has been providing the lignite industry with its financial support for the lignite joint R&D program through the scheme of Energy Technology Innovation Strategy (ETIS) worked out in Brown Coal Innovation Australia (BCIA), set up in 2009 with the financial support from the Government of Victoria, is moving forward a R&D program relating to the clean use of lignite. 3) The development & introduction status of low rank coal utilization technology and government support The following technology developments are under way in those states involved with low rank coal utilization: (a) Victoria i) The status of developments Direct liquefaction: - They took on the development of liquefaction technology in collaboration with Japan in the early 1980s. Cooperative Research relating to low rank coal utilization (Lignite CRC): - CFBC pilot plant test: It was carried out in Gasification by pressurized fluidized bed: It is under way at SECV (State Electricity - 1 -

8 Commission of Victoria authority)/hrl - Transport reactor gasification: It was carried out in 2003 Coal to Diesel: Monash Energy (pending) Assessment of coal to DME production Drying/dehydration: It is under way at Monash University, SECV/HRL, Brown lignite CRC, Exergen, RWE/International Power and others. Assessment of Oxy-fuel: It is under way at Monash University and the power generation companies in Victoria Current efforts: - The Government of Victoria (ETIS, BCIA, and Clean Coal Victoria) and the power generation companies are working jointly on lignite utilization technology. ii) Government supports Financial support for the development of lignite utilization technology by state government: - ETIS 1: AUD 180 million ( June 2010) - ETIS 2: AUD 110 million (for 6 years from 2011) for the Carbon Capture and Storage Project - BCIA: AUD 16 million (for 4 years from 2010) The concept of the technology development by ETIS is shown in Figure It is expected that Australian Commonwealth Government will fund AUD 100 million for HRL's demonstration project of IDGCC (Integrated Drying Gasification Combined Cycle) Source: Data of the Government of Victoria's Department of Primary Industry (December 2010) Figure 1.1 Technology Development by ETIS - 2 -

9 (b) South Australia Assessment of gasification: Bowmans coal, Lochiel coal, and Kingston coal - Under way at the Electricity Trust of South Australia, Lignite CRC, and Hybrid Energy Australia - Tests in Australia, Germany, and the United States Assessment of GTL with Kingston coal FS on CTL utilizing lignite: Syngas Australia CFBC pilot plant test with Lochiel coal : Under way in Lignite CRC Potential assessment of coal seam methane (c) Western Australia Assessment of gasification: Collie coal - Entrained bed gasification Direct liquefaction of Esperance coal: The status is unknown 4) Requests to the countries possessing relevant technologies None in particular. 5) Technical cooperation of Japan for spread of low rank coal utilization Australian WG members expressed their expectation during the 3rd WG meeting held on January 27, 2011 that, for accelerating the development of low rank coal utilization technology, we should aggressively drive interaction among the students, researchers, and engineers between Japan and Australia, and that the roles that can be played by Japanese companies and its coal industry are substantial in lignite utilization technologies (drying, gasification and conversion to hydrogen) with which multiple countries are involved. For developing low rank coal utilization technology, there are two MOUs reached between Japan and Victoria: one between JCOAL and the Department of Primary Industries (DPI) on the R&D relating to lignite, and the other between Kyushu Electric Power and DPI on FS concerning the IGCC process and power generation. Technical exchanges and joint R&D activities are going on in the respective initiatives. (2) China 1) The industrial fields that are considered to use low rank coal and their current utilization status Most of the brown coal is consumed as the fuel for power generation directly or blending with other types of coal. Brown coal is consumed in the eastern part of Inner Mongolia, the northeast area including Jilin province, and Yunnan province where brown coal deposits are abundant. Other applications than electric power generation include a small amount of brown coal used for recovery of trace metals (e.g., germanium (Ge)) or for the production of other chemical products such as brown coal wax. The amount of brown coal deposit is said to be 130 billion tons. The recent production volume is - 3 -

10 approx. 200 million tons/year with a growth rate of 10-20% in the past 1-2 years. Table 1.1 Distribution of Brown Coal in China Area Deposit Rank Inner Mongolia Yunnan Province The other areas Source: Data submitted by WG members 78% of the total brown coal resource 12% of the total brown coal resource 10% of the total brown coal resource High rank brown coal Low rank brown coal High rank brown coal for the most part Table 1.2 Trend of Brown Coal Production in China Year Production (M tons) >200 Source: Data submitted by WG members 2) Policy for the promotion of low rank coal utilization As to policy relating to low rank coal utilization, the central government is driving the clean and highly efficient development and utilization of brown coal. On the other hand, local governments are requesting to the owners and developers of brown coal to convert (reform) not less than half the brown coal they mine locally to various coal chemical products. However, those brown coal producers prefer selling part of the brown coal mined directly to the users as the fuel for power generation. 3) The development & introduction status of low rank coal utilization technology and government support (a) The development status of low rank coal utilization technology As to the status of development for low rank coal utilization technology, while having introduced several advanced large-scale coal-fired thermal power generation technologies from overseas, China is independently developing its own technologies. While many of the non-combustion-type brown coal utilization technologies are still under development, on the other hand, some of them are already in a pre-commercial demonstration phase. The technologies for brown coal utilization under development in China are shown as follows: - Drying or dehydration technology to reduce moisture content - Pyrolysis technology to produce gas, liquid, and solid - Direct liquefaction technology to produce fuel oil and chemicals - Coal gasification technology for the production of synthesis gas Purposes: To produce many kinds of downstream products (methane, hydrogen, ammonia, methanol, dimethyl ether, olefine (polyethylene, polypropylene), ethylene glycol, etc

11 (b) Policy relating to R&D and technology introduction With R&D and technology introduction for low rank coal encouraged by various levels of governmental authorities, there is a special policy to approve pilot plants of brown coal reforming and conversion technologies and R&D programs of demonstration projects. In addition, these governmental authorities, gradually expanding their funding supports, are encouraging companies to invest in R&D, demonstration tests, and spread of brown coal utilization technologies. 4) Requests to the countries possessing relevant technologies China wants many opportunities of modern, large-scale upgrading and development of conversion technology of brown coal. For the reason, China is seeking to drive and step up information exchanges and technical cooperation between overseas countries for more R&D and spread of brown coal. China wants technical development cooperation and equipment introduction that are proven to have a high likelihood of success and can be completed in a short period of time. Specific examples include drying/dehydration/briquette technologies for brown coal. 5) Technical cooperation of Japan for spread of low rank coal utilization Our country has been in technical cooperation with China for penetration of Clean Coal Technology (CCT) and other technologies (including training programs) relating to coal drying/dehydration/briquette, coal liquefaction, and coal gasification. In the future, China will likely request from our country technical cooperation particularly in scale-up of conversion equipment and safe transportation of brown coal as well as UBC technology for further utilization, processing technologies such as CWM, and environmental conservation. (3) Indonesia 1) The industrial fields that are considered to use low rank coal and their current utilization status Utilization of low rank coal in Indonesia, with its abundant coal resource including low rank coal, outpaces other ERIA countries. Hearings by Directorate General of Mineral and Coal to the related industries forecast that the fertilizer industry will gradually start using it around 2012 (by gasification and others). Hearing from BPPT gave the information that there are multiple instances of the textile and sugar industries using low rank coal in their CFB boilers. However, Indonesia has not reached the level that it can make use of utilization technologies such as reforming domestically. For this reason, despite the fact that low rank coal is one of its own resources, low rank coal utilization has not developed well with the exception of the electric power sector. It is expected, however, that the future progress in commercialization of the technology would expand the use in relevant industries. 2) Policy for the promotion of low rank coal utilization The Indonesian Government set forth a definite policy relating to supply and demand of low - 5 -

12 rank coal. The Ministry of Energy and Mineral Resources announced the coal utilization strategy comprising the effective use of coal by rank (Figure 1.2). Further, the Decree of Minister of Energy and Mineral Resources in 2010 specified in details the supply rates of coal for respective industrial sectors together with the calorific value (Table 1.3). High rank (>6,100 kcal/kg) Export Coal resource Medium rank (5,100 ~ 6,100 kcal/kg) Domestic uses Upgrading Low rank (<5,100 kcal/kg) Mine-mouth power Gasification Liquefaction Power generation Industry Source: Based on the announcement by the Ministry of Energy and Mineral Resources Figure 1.2 Domestic Coal Quotas Policy by the Indonesian Government Table 1.3 Indonesia's Domestic Coal Quotas Relating to Coal Utilization Volume and Quality in 2010 Sector/Company Quota (M tons) % of total quotas Unit calorific value (kcal/kg) A Coal-fired power plant 1. PT PLN % 4,000 ~ 5, IPP % 4,000 ~ 5, PT FREEPORT INDONESIA % 5,650 ~ 6, PT NEWMONT NUSA TENGGARA % 5,900 B Metallurgy (coke) 1. PT INCO % 6, PT ANTAM Tbk % 6,000 C. Cement, fertilizer, and textile 1. Cement % 4,000 ~ 6, Fertilizer % 4,000 ~ 5, Textile & textile products % 5,000 ~ 6,500 Total % Source: From the Minister Decree in 2010 (made public at the website of the Ministry of Energy and Mineral Resources) With policy making relating to low rank coal developing on the supplier side in this way, however, no high-profile progress has been seen when it comes to implementing specific measures to promote utilization. Nevertheless, Sasol (South Africa) reached an MOU with the Investment Coordination Board of Indonesia. Such an individual technology-based move may lead to business-based activities accelerating in respective sectors, developing relevant systems and policies

13 3) The development & introduction status of low rank coal utilization technology and government support For low rank coal utilization technology, multiple technologies are under development in the phase of pilot plant/demonstration. Table 1.4 outlines the technologies in the ongoing projects in Indonesia that are likely be commercialized in the future. Table 1.4 Indonesia's Low Rank Coal Utilization Technologies under Development, Tests, Demonstration, or Commercialization (plan) Name of technology Name of related companies Scale of project Coal for use Features, progress, etc. BCB (Binderless Coal Briquetting) White Energy, CSIRO (Australia), Bayan (Indonesia) 100Mt/d (comm. equipment under test operation) South Kalimantan low rank coal Suited for sub-bituminous coal due to short dehydration time/moderate processing condition UBC (Upgraded Brown Coal) Kobe Steel 600t/d (demo: METI/JCOAL project) South Kalimantan low rank coal The most moderate processing condition, stabilized by adsorption of heavy oil Hot Water Treating-cs Method JGC 1,0000t/y (demo: NEDO project) Australian lignite coal, Indonesian sub-bituminous coal (2 types) Applicable to biomass carbonization Indirect Liquefaction Sasol (S. Africa) Not publicized (MOU between ICBI in 2009) Indonesian low rank coal Technically established TIGAR IHI, Sojitz, PT Pusri METI-supported pilot project under way Indonesian low rank coal Applicable to high moisture content coal by the use of twin fluidized-bed gasifier Source: Based on the internal information of JCOAL 4) Requests to the countries possessing relevant technologies As it is difficult to extract the consensus of all the Indonesian government-affiliated organizations at this point of time, their individual requests are listed below: Directorate General of Mineral and Coal: BPPT: The result of ERIA study on low rank coal is required for policy making purpose. Though UBC is a very good technology, its HGI is high and brittle. Because UBC is considered too fine to affect equipment in some cases, the dehydration/drying technologies better suited for Indonesian low rank coal and its use is needed. Assistance from Japan is required. 5) Technical cooperation of Japan for spread of low rank coal utilization Indonesia's expectation to low rank coal and Japan's cooperation is high from the standpoint of - 7 -

14 not only political supports but also costs. Spread of low rank coal utilization is considered promising by overcoming the bottlenecks as mentioned below and providing technical and financial assistance from Japan simultaneously. (4) Thailand 1) The industrial fields that are considered to use low rank coal and their current utilization status Table 1.5 shows the trend of brown coal production and consumption in Thailand. The total lignite production in 2009 was million tons. Mae Moh Power Plant consumes million tons (or 88%) of the total consumption of million tons. The electric power generated by Mae Moh power plant accounts for 18.9% of the total power output in the country. For other than power generation purpose, lignite is consumed in cement, tobacco, and other industries. But the downward trend is seen in those industries. Table 1.5 Trend of Lignite Production and Consumption in Thailand Year Production (unit: 1,000 tons) Consumption Power Cement Tobbaco Others Total ,001 15,825 2, , ,239 15,811 1, , ,982 16,408 1, , ,786 15,848 1, ,843 Source: "Thailand Energy Situation 2009" by the National Energy Policy Office of the Kingdom of Thailand 2) Policy for the promotion of low rank coal utilization Though Thailand has not made any particular policy relating to low rank coal utilization, the Department of Alternative Energy Development and Efficiency (DEDE) and relevant organizations are in the process of working out the roadmap on the clean use of coal. 3) The development & introduction status of low rank coal utilization technology and government support (a) The development status of low rank coal utilization technology In Thailand, DEDE is carrying out studies and research of the following low rank coal utilization technologies: Study relating to Clean Coal Technology (CCT) : Study appropriate CCT in Thai the industry : Study and research for Coal Water Mixture(CWM)utilization in proper industry : Study and research for CWM utilization in proper industry - Future plans: Study for brown coal upgrading Study and demonstration for small-scale coal-fired boiler Study and demonstration for co-firing (coal and biomass) for energy generation - 8 -

15 Study and research for prototype coal gasification (2008) - Study and literature review for coal gasification technology - Establish the prototype equipment of coal gasification - Demonstration in selected industry: Unique Mining Services was selected - Evaluate for economic, environmental impact and methodology for promotion Study and research for CWM utilization in proper industry (2007) - Study for CWM technology and application which proper for Thai industry - Establish the prototype of CWM boiler (with capacity of 1 ton-steam/hour) - Demonstration in selected industry - Evaluate for economic, environmental impact and methodology for promotion (b) Government support relating to development & introduction of low rank coal utilization technology With R&D and technology introduction of low rank coal encouraged by various levels of governmental authorities, there is a special policy to approve pilot plants of upgrading and conversion technologies of lignite and R&D programs of demonstration projects. For the R&D relating to low rank coal, Energy Conservation Promotion Fund and other governmental funds (National Science and Technology Development Agency, the Thailand Research Fund, etc.) are available. The government's incentives to coal utilization follow: Tax incentives (Board of Investments) - Priority is given to the projects relating to renewable energy and energy conservation activities - Income tax exemption for the period of 8 years - On top of that, 50% income tax reduction for the following 5 years Support on the technical side: DEDE set up One-Stop Service Center, a provider of the energy-related information, where the relevant information (investment manuals, technical data, Q&A, etc.) is available. Government soft loan (up to 50 million baht/project at a 4% interest rate) ESCO fund (DEDE set up): Support to encourage private investment in the projects of renewable energy and energy conservation 4) Requests to the countries possessing relevant technologies The following requests were made by Thailand's WG members at WG meeting: Support for the technology transfer relating to low rank coal utilization such as operation and maintenance (O&M) Support for demonstrations relating to prototype low rank coal utilization technologies (e.g., IGCC) - 9 -

16 Support relating to the public acceptance of coal utilization 5) Technical cooperation of Japan for spread of low rank coal utilization With respect to the coal-related technical cooperation between Japan and Thailand, training on CCT in Japan is being given to young engineers invited from Asian countries including Thailand as part of the CCT technology transfer projects that are pursued by NEDO or METI. From 1996 to 2009, 155 trainees invited from Thailand have participated in this program. In addition, the coal industry of Thailand aims at the foundation of its representing organization (tentatively named: Center for Coal Utilization of Thailand) in pursuit of the long-term growth of Thailand's coal industry. JCOAL is in cooperation with them in providing necessary information. (5) South Korea 1) The industrial fields that are considered to use low rank coal and their current utilization status Almost all the low rank coal (mostly imported from Indonesia) is used as the fuel for power generation. The demand for coal in 2009 was broken down into 66.3 million tons for power generation, 19.0 million tons for steel, and 7.6 million tons for cement and other industries. Low rank coal in the form of blend coal accounted for nearly 40% or approx million tons of the total coal consumed for power generation. Most of the low rank coal is sub-bituminous coal imported from Indonesia with total moisture of about 25% and calorific value of 5,300-5,500kcal/kg. A small amount of brown coal (total moisture 35%, calorific value 4,200kcal/kg) is also imported. Table 1.6 Actual and Forecasted Demand for Coal in South Korea (Unit: M tons) Electricity Steel Cement & etc Total Source: APEC Clean Fossil Energy Technical and Policy Seminar 2010, Fukuoka, Japan, October, 2010: Sung Chul Kim Project Leader, KEPCO Research Institute According to KEPCO Research Institute, it is forecasted that the demand of coal for power generation will continue to grow in the future, with the scheduled plans to build seven additional coal-fired thermal power plants (6,240MW) between 2009 and By the way, the demand of coal for power generation in 2016 is estimated to be 73.5 million tons, which expectedly will require nearly 30.0 million tons of low rank coal. 2) Policy for the promotion of low rank coal utilization Though South Korea at the moment does not have any particular policy relating to low rank coal utilization, the Energy Technology Team of the Ministry of Knowledge Economy shows in recent years interest in the increasing amount of low rank coal import and its utilization technologies. Energy-related R&D policies are under jurisdiction of Korea Institute of Energy Technology

17 Evaluation and Planning, but there are no ongoing programs in connection with Clean Coal Technology. But 2-3 R&D projects relating to low rank coal utilization technologies were conducted in 2008 and 2009 at the request of the industry. 3) The development & introduction status of low rank coal utilization technology and government support Korean electric power companies have operating guidelines, in which blend rates, particle sizes, and inlet gas temperature adjustment are included, for low rank coal utilization at their existing coal-fired thermal power plants. As low rank coal utilization requires the technical development of dehydration, combustion, and conversion, the following upgrading and gasification technologies have been developed under the framework of government R&D programs. Upgrading: Fluidized bed drying technology - Development of the multi-step fluidized bed drying technology planned by Korean Institute of Energy Research (KIER) - Demonstration plant (500 tons/day) to be constructed in Construction plan of the first commercial-based plant (3,000 tons/day) in 2013 at an existing coal-fired thermal power plant - Drying the low rank coal with total moisture of 36% and calorific value of 4,200kcal/kg to 10% and 5,700kcal/kg, respectively. Gasification: Low rank coal gasification technology under development at SK Energy and KIER - Developing the five key technologies (effective drying, catalyst, partial oxidation, shift reaction of synthetic gas, and utilization of CO 2 ) to reduce CO 2 emissions - Lab-scale in December Bench scale (0.05 tons/day) in July Pilot plant (3 tons/day) in October Construction plan of the first commercial-based plant (2,000 tons/day) is planned for 2015 Gasification: Low rank coal gasification technology under development at KIER and Institute for Advanced Engineering(IAE) - KIER has 10 years of experience with coal gasification (1 ton/day, slurry feed) which is applied to gasification of low rank coal. - IAE, who had been developing since 1999 a plant with coal gasification system at a rate of 3 tons/day, developed jointly with SK Energy a small-sized gasifier for low rank coal utilization. 4) Requests to the countries possessing relevant technologies Joint multilateral and bilateral R&D activities are important for the introduction and spread of low rank coal utilization technologies in the Asian region. South Korean Government is prepared to support the international cooperation programs for the development of low rank coal

18 utilization technologies that are backed by bilateral and multilateral countries. 5) Technical cooperation of Japan for spread of low rank coal utilization At the moment, there is no technical cooperation between Japan and South Korea toward the spread of low rank coal utilization technologies. (6) Japan 1) The industrial fields that are considered to use low rank coal and their current utilization status In our country, coal is used at the power generation plants, steel, cement, paper manufacture, and etc. It is expected that low rank coal will be used as the fuel for power generation, the coal for pulverized coal injection (PCI) in steel blast furnaces cement kiln, and the fuel for boilers of general industries such as paper manufacture. As low rank coal dehydrated simply has little cokability, at the moment, expensive binders are required for the use as raw material of coke. Thus, low rank coal is considered not suited for coke applications. Reforming processes such as hydrogenation reaction are necessary for the use as chemical raw materials. While sub-bituminous coal with relatively-high calorific value, already being imported, it is used for industrial-use boilers, utilization of the coal with high moisture content and low calorific value is a challenge to be addressed in the future. With prices of coal on the rise, if the cost of upgrading such as dehydration is reasonable, there is the possibility to import Upgraded Brown Coal (UBC), now under demonstration tests in Indonesia, to Japan to accelerate the use at the industrial-use boilers. 2) Policy for the promotion of low rank coal utilization Japan's energy policy is based on both market principles and the production/consumption of energy in consideration of stable supply and environment. In that notion, two big pillars constitute the coal policy based on the strategic energy plan of Japan 1 The first pillar is the introduction of a low-carbon energy system into coal-fired thermal power generation. The second pillar is to take measures to ensure a steady supply for coal resource. Meanwhile, for the purpose of promoting the development and introduction of LRC utilization technologies in collaboration with the coal producing countries, the government is driving international technical cooperation in which such incentives as subsidies are granted for implementing the initiative. 3) The development & introduction status of low rank coal utilization technology and government support The following technologies relate to low rank coal utilization, part of which the government is supporting to put in practical use. The names of those technologies are listed below: (a) Dehydration/drying area Steam tube dryer (STD)

19 Coal-in-Tube (CIT), tml UBC(Upgraded Brown Coal)process Hot Water Treating-Coal slurry (HWT-cs) Coal self-heat recuperation drying (b) Low rank coal utilization technology Carbonized briquettes Two-stage entrained bed gasifier Efficient coal flash partial-hydropyrolysis process (ECOPRO) Twin circulating fluidized bed gasifier (Twin IHI Gasifier: TIGAR) Echo Coal Town (ECT) 4) Support as the country possessing relevant technologies Japan's government has been backing the activities of respective Japanese companies through subsidies and other aid in order to keep coal supply stable and help spreading their CCT overseas. In recent cases, Japan is going to jointly conduct feasibility study of an ECOPRO demonstration plant using lignite of Victoria, Australia, and started a new HWT-cs demonstration project in Indonesia after completing the previous demonstration project for low rank coal reforming UBC. Japan is helping the coal producing countries industrialized by demonstrating the low rank coal utilization technologies developed within Japan. 1.2 Political, economic, and technological barriers hindering the spread of low rank coal utilization technology (1) Political barriers 1) Australia Though at present no environmental tax (carbon tax) is imposed in Commonwealth of Australia and its states, the Australian government, in pursuit of emission reduction, is studying the introduction of Carbon Pollution Reduction Scheme (CPRS). The electric power industry in the State of Victoria, the user of a large volume of lignite for power generation, will suffer a huge blow, if CPRS is put in place. Even if it takes place, faced with the need of low emission technology development, they are expected to accelerate the development of lignite utilization technology. Hence, the introduction of CPRS is not necessarily a political barrier. 2) China The government is promoting the clean and highly efficient development (production) and utilization of brown coal. This resulted in the production volume of brown coal in China growing year by year. On the other hand, the local governments are requesting developers to convert not less than half the brown coal mined into various types of chemical products. As described above, with a definite policy set out to promote brown coal utilization, China's

20 central and local governments find in their policies few barriers related to the development and utilization of brown coal. Though no environmental tax (carbon tax) is imposed in China at present, the introduction of a carbon tax for the period of the 12th five-year plan is under consideration. 3) Indonesia For the development of low rank coal utilization technology, tax exemption is available for the equipment used in the intergovernmental projects, and there are many R&D programs going on with assistance from overseas. But these are too narrowly defined support and measures to play an incentive role. Some people familiar with the situation point out that the sequence of R&D - demonstration - commercialization is not working well due to the government regulation that any project over a certain investment amount should be put in a tender. No environmental tax (carbon tax) is imposed in Indonesia at present. 4) Thailand The government of Thailand has its support and incentive system for the development of low rank coal utilization technology. However, the process between application and approval is said complex in applying for such government support. No environmental tax (carbon tax) is imposed in Thailand at present. 5) South Korea No environmental tax (carbon tax) is imposed in South Korea at present, and the government has no plan to put the tax in place in the near future. But the government has expressed its intent to study the introduction of the tax from the medium- and long-term viewpoint. There are no other political barriers concerning the spread of low rank coal utilization technology. 6) Japan Today, Japan imposes oil and coal tax on coal. The government made a cabinet decision to raise the oil and coal tax effective in October 2011 taking into account an additional tax for global warming countermeasures. Nevertheless, revenue from these taxes is to be spent for such measures as stable supply of fuel and the enhancement of the energy supply-demand structure, applicable to various technical development projects devoted to the development of utilization technologies for coal including low rank coal. Hence, the introduction and increase of the oil and coal tax is not necessarily a political barrier. (2) Economic barriers 1) Australia The lignite with high moisture content (60-70%) in the State of Victoria takes a long time to dry, and the high drying/dehydration cost constitutes a substantial barrier. In addition, the processing cost gets higher, as lignite of Victoria has characteristic which pulverize to fine power gradually

21 during the drying process. 2) China Shortcomings of brown coal are its high moisture content and low calorific value. Long distance transportation of the brown coal produced in Inland China as it is to the eastern costal areas constitutes the barriers of higher transportation costs as well as the safety risk of being prone to spontaneous combustion. Despite the need of brown coal converted to liquid for safe long distance transportation, the conversion technology including dehydration/drying process is still under development. There are additional challenges of the huge capital investment needed for, the intellectual property rights and license fees involved with, and the low energy efficiency of the brown coal processing equipment. All of these are considered to be their current economic barriers. 3) Indonesia Despite its abundant brown coal reserves, infrastructure investment is required in the case where the development is made in the inland areas. One conceivable barrier is that today's prices (basically market-based) can hardly justify the development without public financing. Regarding utilization side of low rank coal, to cover the high equipment costs in developing low rank coal utilization technology, Indonesia is in need of funding support from the countries possessing relevant technologies as well as technology introduction. 4) Thailand Low rank coal utilization equipment is generally expensive. There are a few inexpensive ones available, but their low operational efficiency is a drawback. In addition, since there are no low rank coal equipment manufactures in Thailand, they need to import the expensive equipment if it wants. 5) South Korea The high moisture content of low rank coal does not allow the direct use at the existing coal-fired thermal power plants. Instead, those plants blend it with high rank coal. The use of low rank coal without blending requires additional costs for revamping equipment and maintenance. South Korea has BCB (Binderless Coal Briquette) and UBC as existing briquetting technologies, which have not yet reached the level of commercial use due to its low economic efficiency. 6) Japan With the high costs of low rank coal utilization technologies including those for dehydration/drying, further cost reduction is needed by driving the development of innovative utilization technologies. No low rank coal utilization technologies have been commercialized to date. The high cost constitutes a substantial barrier to further penetration. (3) Technological barriers 1) Australia

22 No commercial, economical, and effective dehydration/drying technologies have been developed to date. Implementation of pilot and demonstration tests is anticipated, particularly for the development of dehydration and gasification technologies. Dry lignite, significantly prone to spontaneous combustion, could be a barrier during transportation. Production of the liquid fuel by gasification of lignite is important to be solved this problems. From the aspect of human resources, coal scientists and engineers (utilization side) involved with the development of lignite utilization technologies are short, and the number of engineers who are anticipated to lead technical development activities is declining. This could be another barrier to the promotion of future technical development. This may not be referred to as a barrier, but there is the opinion pointing to the need of the effective use of ash as well. 2) China In recent years, many people are showing great interest in the development of brown coal upgrading and processing technologies including drying for reducing the moisture content, pyrolysis for extracting liquefied materials, CWM materials, and blending technology. One of the major advantages of brown coal being its reactivity, China is lately looking at the technologies to produce fuel gas, fuel oil, and chemical products out of brown coal. Those technologies include direct liquefaction by hydrogenation, IGCC, and brown coal gasification to get synthetic gas for multi-purpose power generation. On the technical side, however, no commercial based drying/dehydration and pyrolysis technologies have yet to be developed. Transportation of dehydrated brown coal and large-scale conversion technologies are still in the demonstration phase. 3) Indonesia In Indonesia, the upgrading technology of low rank coal has not yet been commercialized, but there are some technologies that reached the closest stage to commercialization such as UBC. There are few technologies Indonesia has ever developed on its own, but we heard that Indonesia had Japanese (KHI) technologies localized just like CFB boilers that the textile and sugar industries have started to use. We also heard that Indonesia side had demanded to share the technical information during the negotiation with Sasol toward commercialization of the low rank coal gasification plant. It suggests that Indonesia will likely show its greater interest in technology transfer in the future. In Indonesia, while the total number of the engineers involved with coal utilization is said increasing, competent engineers are a little short. 4) Thailand In Thailand, domestically produced low rank coal is used directly at their thermal power plants. There are no other technologies for low rank coal utilization. There are no O&M experts specialized in utilization equipment, either. The low level of confidence among the industries of Thailand for low rank coal utilization

23 technologies and the quality of domestic low rank constitutes a barrier to the utilization and spread of low rank coal. 5) South Korea The high moisture content of low rank coal does not allow the direct use at the existing coal-fired thermal power plants without revamping equipment. At the moment, those plants blend it with high rank coal. Private companies did the research on the development status of low rank coal utilization technology including those of dehydration/drying for further utilization. The research confirmed that any development had not reached the level of commercialization. 6) Japan Dehydration/drying technologies are still under development. With low rank coal characterized by its high reactivity, it is necessary to drive the technical development to suppress and/or utilize the reactivity (combustibility, gasification, and carbonization) and the development to process high ash coal and high sulfur/nitrogen coal. Succession of technologies including those for low rank coal utilization and continuous technical development are important for Japan. It is considered to be a barrier that training programs for young researchers are not done continually. (3) Other barriers 1) Indonesia In Indonesia, the lack of systematic technical development to move from the test phase to commercialization step by step is taken as one of the barriers. In most cases, open-pit mining is the means for coal development and production including low rank coal. Greenfield development to produce low rank coal at new concession area requires deforestation. In the case, the development itself can constitute a barrier from the standpoint of environmental impacts. 2) Thailand Public acceptance is the greatest barrier in Thailand associated with low rank coal utilization. This came from the pollution damage in Mae Moh Power Plant. Opposition movement against constructing any new coal-fired thermal power plants by the nearby residents and NGO is ongoing even today

24 Table 1.7 List of the Items Considered as Barriers by Country on Introduction and Spread of Low Rank Coal Utilization Technology Other Technical Economic Political Environmental tax (carbon tax, petroleum and coal tax, etc.) Protection of intellectual property rights Government's support for technology development Australia China Indonesia Thailand South Korea Japan No environmental tax (carbon tax) is imposed in the Commonwealth of Australia and its respective states. Introduction of Carbon Pollution Reduction Scheme(CPRS) is under consideration by the Commonwealth Government. If CPRS is put in place, the power industry using lignite for power generation will suffer a huge blow. The continuous use of lignite calls for the promotion of utilization technology development. There are intellectual property protection laws (Intellectual Property Law). The State Government of Victoria proactively supports technology. There are few political barriers. No environmental tax (carbon tax) is imposed. But the introduction of carbon tax in the period of the 12th Five-Year Plan ( ) is under consideration by the Central Government. There are intellectual property protection laws (Patent Law, Trademark Law, and Copyright Law). Government's support is available for basic research, with no direct support for pilot plant and demonstration plant-scale activities, which are now tackled by private sectors. Other - - Cost Barriers The high moisture content (60-70%) of lignite (low rank coal) requires higher dehydration/drying costs. The issues include the safety during transportation and high transportation cost. Huge investment in equipment. High license fees in introducing new technologies. The low energy efficiency of brown coal processing equipment. No environmental tax (carbon tax) is imposed. No environmental tax (carbon tax) is imposed. There are intellectual property protection There are intellectual property protection laws (Intellectual property-related protection laws (Patent Act 2522 (1979), Copyright Act laws such as Patent Law have been 2537 (1994), and Trademark Act 2534 legislated since Law No. 30 of 2000 regarding (1991)). Trade Secret). Some people point out that the sequence of "R&D - demonstration - commercialization" is not working well due to the government regulation that any project over a certain investment amount should be put in a tender. There are the government's support and incentive system, but the process between application and approval is complex in applying for such government support. No environmental tax (carbon tax) Today, Japan imposes petroleum and coal imposed. tax on coal. The government has no plan to put carbon The government made a cabinet decision tax in place in the near future, but expressed to raise the petroleum and coal tax effective its intent to study the introduction of the tax in October 2011 taking into account an from the mid- and long-term viewpoint. additional tax for global warming countermeasures. However, revenue from these taxes is to be spent for such measures as stable supply of fuel and the enhancement of the energy supply-demand structure, applicable to various technical development projects including the development of coal utilization technologies. There are intellectual property protection laws. - There are intellectual property protection laws (Intellectual Property Law). Tax exemption measures available for the equipment for intergovernmental projects The infrastructure investment is required for the development in the inland areas. It is difficult to develop without public financing. The high costs of technology/equipment require public financing and funding support from the countries possessing the technologies. The large amount of investment in the equipment for the use of low rank coal. There are several units of inexpensive equipment but with low efficiency. No equipment manufacturers within Thailand. The use of low rank coal without blending requires additional costs for revamping equipment and maintenance (low rank coal is used as blend coal today). BCB (Binderless Coal Briquette) and UBC are available as the existing briquetting technologies. But they have not yet reached the level of commercial use due to their low economic efficiency. - The high dehydration/drying costs require further cost reduction. Economical low rank coal utilization technologies have yet to be commercialized. Other Commercial, economical, and effective There is the need to expedite the The upgrading technology of low rank coal No other low rank coal utilization The high moisture content of low rank coal drying/dehydration technologies have yet to development of brown coal upgrading and has yet to be commercialized. technologies possessed than thermal power does not allow the direct use at the existing be developed. Particularly, it is called for to conversion technologies. The development of The technologies introduced from generation. coal-fired thermal power plants without transition to pilot tests and demonstration commercial-level drying/dehydration and overseas require localization. Low levels of confidence among the revamping equipment. tests for dehydration and gasification pyrolysis technologies has yet to be done. industries of Thailand for their low rank coal Dehydration/drying technologies to use low Technical issues technology development. Transportation of dehydrated brown coal utilization technologies and the quality of rank coal haven't reached the commercial Dry lignite prone to spontaneous and large-scale brown coal conversion domestic low rank coal. stage yet. combustion constitutes a barrier during technologies are in the demonstration phase. transportation. Production of the liquid fuel by gasification is important to suppress this spontaneous combustion. Engineer shortage and training Public acceptance (PA) for coal utilization A shortage of coal scientists and coal application engineers involved with the development of brown coal utilization technologies. The number of engineers who are anticipated to lead technical development activities is declining. No reference to human resources issues such as engineer shortage. Though the total number of engineers is increasing, competent engineers are a little short Other - - The lack of systematic technical development to move step by step from test phase to commercialization. Coal field development by open-pit mining involving deforestation is subject to environmental regulations. There are few O&M experts for other than thermal power generation. The experience with the pollution damage caused by Mae Moh thermal power plant. There is the strong opposition movement against constructing any new coal-fired thermal power plant by the nearby residents and NGO. No reference to human resources issues such as engineer shortage. - Dehydration/drying technologies are under development. Low rank coal is characterized by its high reactivity. It is necessary to develop technologies to suppress and utilize the reactivity (combustibility, gasification, and carbonization). It is necessary to develop the processing technologies for high ash coal and high sulfur/nitrogen coal. To succession of technologies and continuous technical development, pertinent training programs for young researchers are necessary

25 2. Study on the promotion of high-efficiency coal-fired thermal power plants in ERIA member countries 2.1 The need and policy goal for high-efficiency coal-fired thermal power plants This section discusses the common topics about high-efficiency coal-fired thermal power plants in the Asian countries where energy consumption is remarkably increasing: policies to promote its introduction; the introduction status of relevant domestic technologies; plans of future construction; and the need for international cooperation and assistance. To understand the latest status, data of the coal-fired thermal power plants in the respective countries were sorted out in reference to IEA Clean Coal Centre's Coal Power database dated November (1) Australia 1) The policy to promote introduction of high-efficiency coal-fired thermal power plants No specific plans exist to promote introduction of supercritical pressure and ultra-supercritical pressure coal-fired thermal power plants. With carbon dioxide capture and storage (CCS) and coal gasification technology emphasized, Australia are already in the process of developing CCS projects ranging from pilot-based to medium- and large-scale demonstration. As part of its clean energy initiative, the government appropriated AUD 4,500 million for the budget to promote R&D and demonstration plants conducive to low-carbon. The government is also offering various supports for the development of CCS-related technologies, whether on land or offshore, toward the effective use of the abundant coal resource in the country. In addition, as part of its low-carbon policy, the country will mandate a specific target value (0.86 tons of carbon oxide/mwh) for emissions from all new power plants in operation in 2011 and later. It is expected for regulations to be tightened year by year, with such a target value reviewed to keep abreast of the "Best Practice" technical level. This trend is considered to accelerate the introduction of high-efficiency coal-fired thermal power and CCS technologies in the country. 2) The introduction status of high-efficiency coal-fired thermal power plants Today, the following 4 coal-fired thermal power plants in Australia adopt the supercritical pressure system, but the boilers and turbines are imported from overseas. Kogan Creek Power Station (750MW) Millmerran Power Station (840MW) Callide C Power Station (900MW) Tarong North Power Station (450MW) 3) Construction plans of new high-efficiency coal-fired power plants Australia today attaches importance to the following three technologies for high-efficiency coal-fired thermal power generation (all in a developmental stage):

26 Integrated Gasification Combined Cycle with Carbon Capture and Storage (IGCC-CCS) - Wandoan Power Plant has a plan for a 400MW plant (scheduled to start operation in 2016). Integrated Drying Gasification Combined Cycle (IDGCC) - Latrobe IDGCC Demo Plant has a plan for a 400MW-scale plant in Latrobe, Victoria, where brown coal is produced Oxyfuel Combustion Technology - The project of Callide A 4) The need for international cooperation and assistance Having a lot of experience in such fields as project planning and construction, operation, and maintenance management of power plants, the country is dependent on overseas makers for technical development and manufacture of key equipment. < Reference: The status of coal-fired thermal power plants in Australia > Units MW< MW MW MW 100MW Unknown Years of service Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.1 Coal-fired Thermal Power Plants in Australia (by Capacity and Years of Service) 29% 4% 11% 2% 5% 24% Bituminous coal Sub-bituminous coal Brown coal 28% 28% 100MW MW MW MW 600MW< 38% 7% 24% Coal cocombustion Coalbed methane Unknown Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.2 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in Australia

27 600 7% 0% 10% Ultrasupercritical Supercritical Subcritical Steam temperature( ) % Unknown Note: The circles in the right chart represent the number of units Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Steam pressure(mpa) Figure 2.3 Steam Condition at the Coal-fired Thermal Power Plants in Australia (2) China 1) The policy to promote introduction of high-efficiency coal-fired thermal power plants There are no specific goals for introduction of and/or support measures to promote high-efficiency coal-fired thermal power plants (supercritical and ultra-supercritical pressure). However, under the Energy Conservation Law, stipulating preferential trade of the electric energy coming from the clean power source with lower environmental load, the coal-fired thermal power generated through the ultra-supercritical or supercritical pressure systems take precedence in power trade over the same coal-fired thermal power generated from the subcritical pressure system. 2) The introduction status of high-efficiency coal-fired thermal power plants Since the 1990s, China has been focusing as national policy on the development of its domestic industries. As a result, Dongfang Electric, Shanghai Electric, Harbin Electric and others, in licensing agreements with overseas makers, now possess the majority of the relevant technologies except for specialty steel materials and turbine rotors. For example, China has reached the technical level to be able to construct up to 1,000MW ultra-supercritical pressure coal-fired thermal power plants with its own technologies. As of August 2010, 27 units of 1,000MW class ultra-supercritical pressure coal-fired thermal power plants are in operation. Some people point out, however, that proficient in the basic design as granted in licensing, China has insufficient ability in designing and building tailored to the individual needs of power plants and the coal type used. 3) Construction plans of new high-efficiency coal-fired power plants According to the data of IEA Clean Coal Centre, at present in China, new high-efficiency coal-fired thermal power plants listed on the construction plan include a total of 53 units of supercritical pressure and 30 units of ultra-supercritical pressure. Most are large-scale coal-fired thermal power plants with an output of 600MW or higher. There are 11 units of 300MW subcritical pressure coal-fired thermal power plants currently under construction

28 Table 2.1 High-efficiency Coal-fired Thermal Power Plants Listed on China's Construction Plan (Units) Supercritical Ultra-Supercritical Pressure 300MW MW 3 600MW MW MW 6 4 1,000MW 7 12 Total Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) 4) The need for international cooperation and assistance As well as being capable of manufacturing most equipment with its own technologies, China has ample experience with construction of coal-fired thermal power plants. On the other hand, China wants support and cooperation such as operation and maintenance methods to keep high-efficiency in the mid- and long-term. < Reference: The status of coal-fired thermal power plants in China > Units Unknown 600MW< MW MW MW 100MW Unknown Years of service Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.4 Coal-fired Thermal Power Plants in China (by Capacity and Years of Service)

29 28% 11% 3% 39% 19% 100MW MW MW MW 600MW< 28% 1% 1% 4% 7% 59% Bituminous coal Anthracite coal Coal cocombustion Brown coal Others Unknown Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.5 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in China 5% 28% 18% Ultrasupercritical Supercritical Subcritical Steam temperature( ) % Unknown Note: The circles in the right chart represent the number of units Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Steam pressure(mpa) Figure 2.6 Steam Condition at the Coal-fired Thermal Power Plants in China (3) India 1) The policy to promote introduction of high-efficiency coal-fired thermal power plants India recommends introduction of the supercritical pressure technology for construction of a new coal-fired thermal plant, though it is not a prerequisite. But domestically produced coal is allocated to users in order of priority, with higher priority given to high-efficiency coal-fired thermal power plants including supercritical pressure. This could be an incentive for the business community. In the midst of the ongoing chronic power shortage following the rapid growth of economy, India laid out Ultra Mega Power Project (UMPP) in which the use of supercritical pressure is specified. 2 The project also calls for half the new coal-fired thermal power plants to use supercritical pressure, ultra-supercritical pressure, or coal gasification in the 12th Five Year Plan ( ). Furthermore, the 13th Five Year Plan ( ) is set to call for all the new coal thermal power plants to adopt supercritical pressure or higher. 2 Ministry of Power, Government of India, Ultra Mega Power Projects

30 In February 2010, National Thermal Power Corporation (NTPC) made public its plan to introduce an ultra-supercritical pressure in , taking a proactive investment stance toward improving the efficiency of coal thermal power generation. 3 2) The introduction status of high-efficiency coal-fired thermal power plants At the end of 2010, there are already 9 units of supercritical pressure coal-fired thermal power plants in operation in India. They purchase key components such as boilers and turbines from overseas suppliers or local JV companies between foreign partners. Some time around March 2011, Sipat Coal Thermal Power Station (660MW x 3 units) plans to start its operation as NTPC's first coal-fired thermal power plant using a supercritical pressure boiler. As to developing its own technologies for high-efficiency coal-fired thermal power generation, India is learning the relevant technologies through JV companies between foreign partners. Domestic companies do not have the technology to independently manufacture boilers and turbines. Their involvement is limited to only a part of the necessary components. 3) Construction plans of new high-efficiency coal-fired power plants Construction plans of National Thermal Power Corporation (NTPC) for the coal-fired thermal power plants using supercritical pressure are as follows: Table 2.2 NTPC's High-efficiency Coal-fired Thermal Power Plants Under Construction and in the Planning Stage Power Station Name Output Start of Operation Notes Sipat STPP Stage-1 660MW 3 Barh STPP Stage-1 660MW under construction Barh-II, Bihar 660MW 2 Meja, Uttar Pradesh 660MW 2 Sholapur 660MW 2 Nebinagar 660MW under ordering Mouda II 660MW 2 Darlipali, Orisa 800MW 2 Lara, Chattisgarh 800MW 3 Kudgi, Karnataka 800MW 3 Gajmara, Orissa 800MW 2 under planning/during Tanda-II 660MW 2 tenders Talcher 660MW 2 Barethi 660MW 6 Dhurvan 660MW 2 Source: Data submitted by WG members 4) The need for international cooperation and assistance India is in the process of learning the supercritical and ultra-supercritical pressure technologies through JV companies. India is intended to introduce into the country in the future the most advanced high-efficiency coal-fired power generation such as IGCC and Oxyfuel Combustion Technology and CCS Technology toward low-carbon emission, through joint research and other activities with the technical leader countries. In addition, as measures for improved efficiency at 3 The Electric Daily News, February 15, The plant site appears to have been determined but is not yet made public. Purchases from both domestic and foreign suppliers of equipment and facilities are said under consideration

31 the existing thermal plants, there is the substantial need in equipment modernization such as renewal of equipment via renovation and switch to supercritical pressure and ultra-supercritical pressure via replacement. As its domestic coal has high ash content, India shows great interest in information sharing about ash processing technology (for reuse as construction materials etc.). < Reference: The status of coal-fired thermal power plants in India > Units Unknown 600MW< MW MW MW 100MW Unknown Years of service Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.7 Coal-fired Thermal Power Plants in India (by Capacity and Years of Service) 25% 4% 7% 18% 23% Bituminous coal Brown coal 46% 100MW MW MW MW 600MW< 45% 0.1% 4% 28% Coal cocombustion Others Unknown Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.8 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in India

32 39% 3% 58% Supercritical Subcritical Unknown Note: The circles in the right chart represent the number of units Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Steam temperature( ) Steam pressure(mpa) Figure 2.9 Steam Condition at the Coal-fired Thermal Power Plants in India (4) Indonesia 1) The policy to promote introduction of high-efficiency coal-fired thermal power plants Neither subsidy nor preferential tax treatment is available for supporting the introduction of high-efficiency coal-fired thermal power generation technologies such as supercritical pressure and ultra-supercritical pressure. However, Indonesia set the goal to reduce carbon dioxide emissions by 26% below today's level by 2020 (6% in the energy sector), driving the introduction of high-efficiency coal-fired thermal power generation to cope with global warming issues and coal resources saving. Therefore, project tenders for large-scale coal-fired thermal power plants in 2008 and later call for the use of supercritical or ultra-supercritical pressure. Meanwhile, no tariffs are levied on imported infrastructure equipment. 2) The introduction status of high-efficiency coal-fired thermal power plants At present, there are no high-efficiency coal-fired thermal power plants in operation, but two supercritical pressure coal-fired thermal power plants are being constructed by IPP. Cirebon 1 (660MW) with the boilers and turbines supplied by Doosan Heavy Industries and Construction and Tanjung Enim III (800MW) with those supplied by Mitsubishi Heavy Industries plan to start operation in 2011 and 2012, respectively. 3) Construction plans of new high-efficiency coal-fired power plants For the recent projects tendered in Indonesia, large-scale coal-fired thermal power plants are being constructed and planed on the condition of high-efficiency coal-fired thermal power generation technologies adopted, as shown below

33 Table 2.3 List of the Coal-fired Thermal Power Plants tendered in Indonesia Official Announce Plant Equipment Capacity Conditions Year 2006 Suralaya 1 625MW Subcritical or Supercritical 2006 Paiton 1 660MW Subcritical or Supercritical 2008 Adipala 1 660MW Supercritical 2008 Cirebon IPP 1 660MW Supercritical Central Java IPP 2 1,000MW Supercritical or Ultra-supercritical Source: Data submitted by WG members 4) The need for international cooperation and assistance Indonesia, where there are no high-efficiency coal-fired thermal power plants in operation, seems highly interested in information sharing and training for engineers on the operation and maintenance management sides. Indonesia is also very interested in joint R&D activities relating to supercritical pressure and ultra-supercritical pressure. The fact that PLN's coal-fired thermal power plants have to accept diversified qualities of coal constitutes one of the reasons for its low power generation efficiency. This situation calls for technologies to get the quality of coal for combustion homogenized as much as possible by coal blending. Furthermore, in the future, Indonesia will require supercritical pressure and ultra-supercritical pressure technologies to effectively use 4,000kcal/kg level low rank coal domestically. < Reference: The status of coal-fired thermal power plants in Indonesia > Units MW< MW MW MW 100MW Unknown Years of service Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.10 Coal-fired Thermal Power Plants in Indonesia (by Capacity and Years of Service)

34 42% 10% 0% 4% 12% 2% Bituminous coal Subbituminous coal Brown coal 31% 100MW MW MW MW 600MW< 55% 27% Coal cocombustion Unknown 17% Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.11 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in Indonesia 58% 42% Subcritical Unknown Note: The circles in the right chart represent the number of units. Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Steam temperature( ) Steam pressure(mpa) Figure 2.12 Steam Condition at the Coal-fired Thermal Power Plants in Indonesia (5) South Korea 1) The policy to promote introduction of high-efficiency coal-fired thermal power plants South Korean Government, which set the 5th Long-Term Electric Supply-Demand Plan in December 2010, laid out its decision to increase the share of nuclear power generation and renewable energy as the major policy in pursuit of reduction in carbon dioxide emissions. Though its relative share will decline, coal-fired thermal power is forecasted to grow about 30% from 24,205MW in 2010 (accounting for 32.1% of the total electric power source) to 31,445MW in 2024 (27.9%). Given the situation, the government is bearing 70-90% of the R&D expenses for the basic technologies conducive to high-efficiency coal-fired thermal power. The Ministry of Knowledge Economy, the government's energy agency, laid out the Green Energy Strategy Roadmap in May 2009 in an effort to grow low-carbon and renewable energy related industries, indicating its position to finance the basic research and demonstration tests of IGCC and CCS

35 2) The introduction status of high-efficiency coal-fired thermal power plants With Doosan Heavy Industries and Construction's successful achievement in construction of high-efficiency coal-fired thermal power plants in the 2000s, the country possesses high-level manufacturing technologies of both boilers and turbines. 3) Construction plans of new high-efficiency coal-fired power plants The 5th Long-Term Electric Supply-Demand Plan of South Korea includes construction of 12 units of ultra-supercritical pressure coal-fired thermal power plants with total output of 9,740MW by Together with the three power plants using fluidized bed boilers scheduled to start operation in 2015, a total of 15 units or 12,090MW are to be added. Table 2.4 Construction Plan for Ultra-supercritical Pressure Coal-fired Thermal Power Plants in South Korea Source: Data submitted by WG members Plant Name Output Operation Start (Plan) Yonghung No.5 870MW 2014 Yonghung No.6 870MW 2014 Donghae No.1 500MW 2014 Donghae No.2 500MW 2015 Dongbu No MW 2015 Dongbu No.2 500MW 2015 Dangjin No.9 1,000MW 2015 Dangjin No.10 1,000MW 2016 Taean No.9 1,000MW 2016 Taean No.10 1,000MW 2016 New Boryeong No.1 1,000MW 2016 New Boryeong No.2 1,000MW ) The need for international cooperation and assistance High needs are considered to lie in raw materials and coal combustion technologies used for the major equipment, such as turbines and boilers, and in joint research activities associated with CCS technologies

36 < Reference: The status of coal-fired thermal power plants in South Korea > Units MW< MW MW MW 100MW Unknown Years of service Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.13 Coal-fired Thermal Power Plants in South Korea (by Capacity and Years of Service) 18% 1% 6% 2% 17% 5% Anthracite coal 73% 100MW MW MW MW 600MW< 5% 73% Bituminous coal Coal cocombustion Unknown Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.14 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in South Korea % 13% 12% Ultrasupercritical Supercritical Subcritical Steam temperature( ) Unknown 59% Steam pressure(mpa) Note: The circles in the right chart represent the number of units Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.15 Steam Condition at the Coal-fired Thermal Power Plants in South Korea

37 (6) Thailand 1) The policy to promote introduction of high-efficiency coal-fired thermal power plants Thailand, which announced "Thailand Power Development Plan (PDP2010)," is now working with the task of increasing its power generation capacity. While driving spread of gas turbine combined cycle power plants and cogeneration using domestically produced natural gas, this plan finds a certain level of value in coal-fired thermal power aimed at the effective use of domestic resources as well as power source diversification from the viewpoint of energy security. In consideration of the pollution problems caused by coal-fired thermal power plants in the past, Thailand laid out the policy to drive the utilization of high-efficiency power generation technologies for all the construction of new coal-fired thermal power plants scheduled in the future, to improve the efficiency of power generation and to lower environmental impact. 2) The introduction status of high-efficiency coal-fired thermal power plants At the end of 2010, Thailand has neither high-efficiency coal-fired thermal power plant in operation nor its own technology. 3) Construction plans of new high-efficiency coal-fired power plants GHECO-One Power Plant (660MW), the country's first supercritical pressure coal-fired thermal power, is planned to start its operation within The power plant will be constructed and operated by a JV company between Glow Energy, a subsidiary of GDF Suez, and Hemaraj Land and Development, supplying EGAT with wholesale electric power over the next 25 years. Meanwhile, Doosan Heavy Industries and Construction of South Korea was awarded the order of the power generation equipment. Supercritical pressure and ultra-supercritical pressure will be the condition for constructing new coal-fired thermal power plants in the future. As it is difficult to consider construction of greenfield coal-fired thermal power plants, emphasis will likely be placed on replacement projects for the existing old coal-fired thermal power plants. For example, there is a plan to replace the existing No. 4-7 plants (150MW x 4 units) at Mae Moh Power Plant with a 600MW supercritical pressure. 4 In addition, there are mid- and long-term construction plans of 800MW x 9 units using supercritical pressure or ultra-supercritical pressure in ) The need for international cooperation and assistance Thailand wants international support and joint researches relating to the R&D of Clean Coal Technology. Further, the country strongly looks to international partners for financial support, because the introduction of high-efficiency coal-fired thermal power is very costly. 4 Local hearing research conducted in December

38 < Reference: The status of coal-fired thermal power plants > Units MW< MW MW MW 100MW Unknown Years of service Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.16 Coal-fired Thermal Power Plants in Thailand (by Capacity and Years of Service) 1% 8% 29% 32% Brown coal 0% 100MW MW MW MW 600MW< 42% 50% Coal cocombustion Unknown 38% Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Figure 2.17 Breakdown of Capacity and Types of Coal at the Coal-fired Thermal Power Plants in Thailand % Subcritical Steam temperature( ) % Unknown Note: The circles in the right chart represent the number of units Source: Prepared based on the data of IEA Clean Coal Centre (November 2010) Steam pressure(mpa) Figure 2.18 Steam Condition at the Coal-fired Thermal Power Plants in Thailand

39 2.2 Political, economic and technological barriers hindering the spread of high-efficiency coal-fired thermal power plants An overview on barriers or problems in the spread of the high-efficiency coal-fired power generation technology in Asian countries is given from each viewpoint of the introducing countries of the high-efficiency coal-fired power generation technology (the countries that need this technology) and the supporting countries of the high-efficiency coal-fired power generation technology (the countries that have already established this technology and support the spread of it). < Barriers/Problems from the introducing countries of the high-efficiency coal-fired power generation technology > 1. Importance of coal-fired thermal power in relevant countries The spread of the high-efficiency coal-fired power plants depends on what measures are designed against coal-fired power generation from the viewpoints of such as circumstances of mid- and long-term electric power supply and demand, lowering of environmental load, measures against global warming and energy security in energy policy. If the introduction and spread of the high-efficiency coal-fired power generation technology is not reflected properly to the policy, it will obviously be a big barrier to it. 2. Environmental limitations in relative countries Reduced limitations to flue gas emissions such as SOx, NOx, smoke dust and CO 2 will lower merits to introduce high-efficiency coal-fired thermal power that has high reduction effects in gas emissions, but too strict limitations will make introducing of coal-fired thermal power itself difficult, and lead to developing of nuclear power plants and renewable energies. Therefore, it is very important to aim at environmental limitations to consider its power structure relating to the spread of the high-efficiency coal-fired power generation technology. 3. Economical merits in energy conservation by the high-efficiency coal-fired power generation technology For example, if coal price is cheaper, it is thought that a reduced fuel cost by setting high-efficiency isn't comparable to a highly expensive investment amount, compared to the conventional technology. Also, the economical value of carbon emission by the carbon tax and emission trading isn't determined and the uncertain commercial value of CO 2 by setting high-efficiency can cause a barrier to the spread of the high-efficiency coal-fired power generation technology. 4. Human resources and know-how on the high-efficiency coal-fired power generation technology Insufficient human resources and know-how cannot achieve proper construction, operation and maintenance of high-efficiency coal-fired power plants. It's obvious that cultivation of human resources and initiation or accumulation of know-how is required prior to the selection of the facilities. 5. Research and development on the high-efficiency coal-fired power generation technology For example, the high-efficiency power generation technology in low rank coal needs to be researched and developed continuously in the future. It is, however, assumed that a specific company or country's keeping its research and development will be considerable difficulty in

40 aspects, such as human resources, know-how and funds, and insufficient research and development will also be a barrier to the spread of the high-efficiency coal-fired power generation technology. 6. A mismatch between needs to the technology of the introducing countries and technology seeds of the supporting countries Needs to the high-efficiency coal-fired power generation technology of introducing countries are unique ones reflecting each country-specific circumstances, and the technology that introducing countries have is not good at everything. Therefore, it requires developing and offering of the technology to match the both of them. 7. Circumstances of the provision of electricity infrastructure such as power grids High-efficiency coal-fired power plants have been growing in size to 1,000MW class recently, and power grids also require reasonable performance to systematically work with large power plants. Therefore, it will be a barrier in setting larger high-efficiency coal-fired power plants if the performance in the power grid infrastructure is insufficient. 8. Problems in public acceptance to coal-fired thermal power plants In countries that have experienced a pollution issue due to coal-fired thermal power plants, a movement against it is strongly-rooted and it is difficult to select their location. In such case, constructing of coal-fired thermal power plants can't progress well and it will also affect the spread of the technology. Understanding the background of the protests, the supporting countries first need to work with the government or power suppliers in the introducing countries to receive the understanding and support of the public to coal-fired thermal power. < Barriers/Problems from the supporting countries of the high-efficiency coal-fired power generation technology > 1. Electricity charge level for making investment decisions It is common that electric power suppliers make a capital investment appropriate to electricity charges, and enough charges are required to get in a capital investment for high-efficiency coal-fired power plants. Supercritical pressure and ultra-supercritical pressure technology can be expected to reduce their fuel and CO 2 emission by its high power generation efficiency. Its initial costs (including engineering, equipment and construction cost, etc.), however, are higher than those of the existing subcritical pressure technology, which can interfere with the capital investment depending on the electricity charges. Electricity charges are reflected by many policies in each country, their levels also have many types. Although it is very hard to review these in the immediate term, we should understand that the electricity charge levels are the largest entry barrier for the supporting countries. On the other hand, the supporting countries are required to prompt the introducing countries to comprehensively evaluate merits including running costs (a fuel procurement cost, maintenance cost, etc.), reliability in facilities, operation and maintenance technologies. 2. Investment environment for foreign private companies Private companies are responsible for constructing of high-efficiency coal-fired power plants, and Asia that is growing in economy is an attractive market, but limitation on foreign capital and insufficient development of legal systems on intellectual property protection can cause interference with activities of the private companies

41 On the basis of the barriers/problems above, situations on the WG member countries are respectively described below. (1) Political barriers 1) Australia Australia is the world's biggest coal exporting country, and about the eighty percent of electricity is generated in coal-fired thermal power plants. Power generation using the existing technology (pulverized coal-fired power generation technology) will be the main force for coal-fired thermal power plants for a while, but after 2030, it is estimated to be replaced with coal-fired thermal power plants with CCS or renewable energy. Australia makes efforts in CCS technology and gasification technology for coal, their project is in progress under supporting of the government and they adopt a forward-looking attitude in the implementation of the international cooperative project. On all of this, it can be thought that they have no political barriers to the spread of the high-efficiency coal-fired thermal power plants. They are now discussing the introduction of a carbon tax and carbon trading regulation. Compared to other electrical power sources such as natural-gas-fired thermal power, if the load on coal-fired thermal power is moderate, it will be one of the spread factors of the high-efficiency coal-fired power generation technology, but if it's immoderate, it will cause the interference with using the coal-fired thermal power itself. 2) China China strongly promotes supercritical pressure and ultra-supercritical pressure technology to spread high-efficiency coal-fired thermal power plants. They are also working on electricity policy to replace small sized power plants of 100 MW or lower with large sized power plants and generating the demand of supercritical pressure and ultra-supercritical pressure coal-fired thermal power generation technology. Therefore, it can be thought that they have no barriers on the policy aspects. 3) India The economic growth rate in India is expected to be 8 to 9 percent per year, and the demand of electricity is estimated to increase 220GW (2011) to 861GW (2031). The demand of electricity will drastically increase later, as well. The additional plan for electric power capacity includes 78,700MW on the 11th 5-year plan ( ), 100,00MW on the 12th plan ( ) (hydraulic power: 20,000MW, atomic power: 3,400MW, thermal power: the remaining capacity), 102,000MW on the 13th plan ( ). Under their basic policy of electric power, India presses ahead with spread of the high-efficiency coal-fired thermal power generation technology such as supercritical pressure etc, and is planning to newly construct half of coal-fired thermal power plants as more than supercritical pressure during the 12th plan and all of them as more than supercritical pressure during the 13th plan. It can be thought that high-efficiency coal-fired thermal power plants will spread if this plan is on track. Therefore, India has no political barriers to the spread of the technology

42 4) Indonesia Indonesia drew up the first crash program (power development plan) to construct coal-fired thermal power plants by the total of 10,000MW in 2006 and the second crash program in 2010 (the coal-fired thermal power generation is 3,391MW out of about 10,000MW) to aim at implementation of constructing coal-fired thermal power plants. They are also planning to spread high-efficiency coal-fired thermal power plants for the global warming problem and saving of coal resources, and it already seems that introducing supercritical/ultra-supercritical pressure technology is required for the bid of large coal-fired thermal power plants after On all of this, it can be thought that Indonesia has no political barriers in spreading the high-efficiency coal-fired thermal power plants. 5) Korea Korea is planning to increase the rate of nuclear power and renewable energy as a main policy to decrease CO 2, but it is supposed to construct 15 coal-fired thermal power plants. Although the generation rate of coal-fired thermal power will lower in the future, the generation amount itself is estimated to increase, so it is clear that coals is the main fuel for generation. Especially, the ultra-supercritical pressure technology is necessary in the future to increase consumption of low calorific value coals and keep a low power generation cost. It is also symbolized by pressing ahead with the research and development of the high-efficiency coal-fired thermal power generation technology as the government project. Therefore, it can be thought that Korea has no politic barriers in spreading the technology. 6) Thailand Thailand released "Thailand Power Development Plan (PDP2010)" to work on the approach to improve the generation performance. Natural gas are yielded in this country so the natural-gas-fired thermal power generation accounts for 68% of the total power generation, but according to Thailand Power Development Plan (PDP2010), it is expected that fuel for the power generation will be diversified. For coal-fired thermal power generation, they are planning to make a use of the high-efficiency coal-fired thermal power generation technology in the future to improve the generation efficiency and reduce the environmental load, specifically plan to construct 9 coal-fired thermal power plants with 800MW capacity that use supercritical or ultra-supercritical pressure from 2019 through 2030, and aim at ultra-supercritical pressure politically. The natural gas-fired thermal power is, however, their mainstream after all. It is expected that they plan to introduce nuclear power plants after 2020, and increase importing of electricity from neighboring countries, so their interest in the coal-fired thermal power generation including the high-efficiency coal-fired thermal power generation technology. (2) Economic barriers 1) Australia A high cost in initial investment, compared to the conventional coal-fired thermal power plant, is a barrier to the spread of the high-efficiency coal-fired thermal power generation technology. Lower electricity charge rate than other countries is also a barriers in introducing the new

43 technology. Moreover, no commercial value in reducing CO 2 emissions causes interference with the incentive of introducing high-efficiency coal-fired thermal power plants. 2) China China is working on the cost-cutting by domestically producing the high-efficient coal-fired thermal power generation technology, but the cost for its plants is still expensive, compared to the subcritical coal-fired thermal power plants. There is, however, a political support to spread the high-efficiency coal-fired thermal power generation, so it can be thought that China has no economic barriers. 3) India The post-tax profit margin on sales in NTPC is approximately 16% now, and they hold enough cash for constructing coal-fired thermal power plants. Therefore, it can be thought that India has no barriers in the finance. Some electricity charges such as for agriculture are, however, set to a level lower than power generation cost and state governments tend to cover their deficit. In this case, the insufficient investing capacity of state governments can cause interference in introducing the high-efficiency coal-fired thermal power generation technology with its high initial investment cost. 4) Indonesia The low electricity charges have an impact on the lack of investment funds and selection of IPP s power generation technology. They set down the electricity charges politically in terms of their social security, but they indicate that the high initial cost of the high-efficiency coal-fired thermal power can lead to an increase in electricity charges. Also, the 1st crash program was supposed to be established in 2009 at first, but it was postponed until 2014 due to the financial crisis, financing of Chinese companies who accept a project and the delay of construction work. Thus, there is a case that the plan is delayed due to financing, and it can be though that the finance is one of the barriers. 5) Korea In Korea, the policy strongly affects the setting of the electricity charges, which can be a barrier in spreading of the high-cost high-efficiency coal-fired thermal power generation technology depending on the electricity charge level. 6) Thailand The initial investment cost of the high-efficiency thermal power generation technology is relatively high compared to that of the conventional coal-fired thermal power generation technology, and financing for constructing the power plants can be one of the barriers. (3) Technological barriers 1) Australia For large-scale coal-fired thermal power generation technology, Australia is on the position of introducing it from foreign countries or catching up with the advanced technology, and is

44 comparatively weak in manufacturing technology, particularly boiler, steam turbine, power generator, pump, and control board. On the other hand, in the project planning and operation and maintenance structure, there are abundant human resources in the electricity utilities and engineering. This is the field that Australia is strong at. 2) China China, which has received licensing of technology regarding high-efficiency coal-fired thermal power generation from companies of Japan, US, and Europe, is making technologies home-grown. As the result, China has grown up to manufacture the ultra-supercritical pressure coal-fired thermal power plant of 1,000 MW class on its own. In China, there are 3 major heavy electric manufacturers: Harbin, Shanghai, and Dongfang. These 3 companies can manufacture the boiler and turbine which support supercritical pressure and ultra-supercritical pressure technologies with licensing provided by the foreign manufacturers. However, designing is typically done for each power plant in Japan, whereas in China the specification is standardized to reduce the cost extensively. For such situation, it is considered that there is no particular barrier at the stage when the standard-specification plants are widespread. However, the technology to support various specifications will be a future issue. Also the issue on the software side e.g., operation and maintenance management is left over. In the future, China is planning to export the cost-competitive supercritical pressure and ultra-supercritical pressure coal-fired thermal power plant to overseas. The country seems to play a role of promoting the high-efficiency coal-fired thermal power generation technology in the Asian countries. 3) India India is a coal-producing country, and has abundant coal reserve. However, Indian coal has the characteristics of low sulfur, very high ash content, and low calorific value. Therefore this coal is not suitable for the supercritical pressure and ultra-supercritical pressure coal-fired thermal power generation technology, and a new high-efficiency coal-fired power generation technology for high ash content coal needs to be developed. It can be considered as a barrier in the sense that the domestic resources cannot be effectively utilized. For the manufacturing technology such as boiler and turbine, multiple manufacturers along with the foreign companies holding the manufacturing technology founded the JV, and are acquiring the skill of it. In addition, in some countries, shortage of capability of the transmission network may be the barrier for the large scale high-efficiency coal-fired thermal power plants. However, it is said that strengthening of transmission network accompanied with a large scale coal-fired thermal power plant is not necessary in India. 4) Indonesia On introducing the high-efficiency coal-fired thermal power generation technology, Indonesia needs to acquire the operation skill and the ability to manage complicated equipments. In

45 addition, in the coal-fired thermal power plant in the PLN, use of low rank coal is pursued as well as a variety of quality of coals is accepted. Therefore it is required to develop the high-efficiency coal-fired thermal power generation technology to fit with such usage situation of coals. Furthermore, it can be mentioned that, as an Indonesia-specific circumstance, electric power demand is comparatively small in islands areas, and a large-scale power generation facility of 1,000 MW class is not suitable. 5) Korea In Korea, the supercritical pressure technology has already been introduced, and the ultra-supercritical pressure technology is planned to be adopted in the future. However, Korea is still weak in development of the major equipments and materials related to the ultra-supercritical pressure coal-fired thermal power plant. 6) Thailand It is indicated that the strengthened transmission network is required for constructing the large-scale coal-fired thermal power plant of 800 MW or more. In addition, for planning, development, construction, operation, and maintenance for construction of the coal-fired thermal power plant, Thailand has sufficient engineers with high ability. Meanwhile, the country does not have the manufacturing technology domestically for the major equipments (such as boiler, steam turbine, power generator, pump, and adjustment equipment). Therefore Thailand is assumed to have shortage of engineers directly involved in manufacturing. Furthermore, it is indicated that technical development related to high-efficiency coal-fired thermal power generation has not fully been performed. (3) Other barriers As other barriers, here describes those related to coal-fired thermal power generation in general. 1) Australia In Australia, people strictly evaluate the environment pollution. Shortage of understanding of people for the high-efficiency coal-fired thermal power generation technology is the barrier for popularization. 2) India On using the coal-fired thermal power, there are the problems of high CO 2 emissions compared to other power source, ash processing problem, and capability of the railways to transport coals. Since introduction of the high-efficiency coal-fired thermal power will not be an effective resolution for the coal ash problem, it is highly possible to be one of the barriers. 3) Indonesia Site acquisition may also be included in the scope of service provision in the IPP project. For the countries supporting high-efficiency coal-fired thermal power generation technology, therefore,

46 there is an opinion that the hurdle to get into will be higher in such a case. 4) Thailand In Thailand, people strongly oppose to coal-fired thermal power due to the pollution problem caused by the Mae Moh power plant in EGAT in the past. Previously, when TOMEN Corporation and CHUBU Electric Power Company attempted to construct a coal-fired thermal power plant, the local public opposed this and the construction permit was not granted, then they were forced to change their plan to natural-as-fired thermal power generation. Thus people's awareness to environment is high, and it is difficult to construct a new coal-fired thermal power plant. Understanding of people (public acceptance) for the coal-fired thermal power is the largest barrier in Thailand

47 Table 2.5 List of the Items Considered as Barriers by Country on Introduction and Spread of High-Efficiency Coal-Fired Thermal Power Plants Political Energy saving measures, CO 2, NOx and SOx reduction targets and regulations Environmental tax (carbon tax, petroleum and coal tax, etc.) Protection of intellectual property rights Economic Barriers Australia China India Indonesia South Korea Thailand Japan (Reference) Australia is supporting the development of coal gasification technology and CCS technology. No political barriers seem to exist to the spread of high-efficiency coalfired thermal power. Electrostatic precipitators installed at about 80% of the coal-fired thermal power plants. NOx removal equipment installed at about 30% of them. Installation rates at the power plants constructed in the 1980s and later is higher. There are few political barriers. China is promoting the construction of large-scale and high-efficiency coal-fired thermal power. In 2006, The five largest electricity producers and the six State Grid Corporations submitted pledges spelling out the installation of desulfurization equipment. In March 2007, China posted "the 11th Five-Year Plan on the sulfur dioxide emission targets for the existing coal-fired thermal power plant." No environmental tax (carbon tax) is No environmental tax (carbon tax) is imposed in the Commonwealth of Australia imposed. and its respective states. Introduction of coal tax and carbon emission trading market is under discussion anew. There are intellectual property protection laws (Intellectual Property Law). Cost is one of the important factors in selection one from the various power sources competing in the wholesale electric power market. Commercial value for CO 2 reduction is unclear at present. While introduction of environmental tax and emission trading is under study, the cost competitiveness of coal-fired thermal power is likely to lower compared with other power sources. There are intellectual property protection laws (Patent Law, Trademark Law, and Copyright Law). Cost reduction through domestic demand creation and domestic-made CCT is in progress. The fact that CCT introduction policy is being put in place suggests that the economic efficiency issue does not constitutes a barrier. There are few political barriers, with the 12th Five-Year Plan setting the goal to make half the new coal-fired thermal power plants supercritical pressure or higher, and the 13th Five-Year Plan all of them. As measures to cope with air pollution, many power plants are equipped with electrostatic precipitators, but only a few with desulfurization and denitrification equipment. No environmental tax (carbon tax) is imposed. There are intellectual property protection laws. Based on TRIPS Agreement (Agreement on Trade-Related Aspects of Intellectual Property Rights), India, a WTO member, is in the process of law amendments consistent with the Agreement There are some cases of a part of electricity rates set at the level below the power generation cost for agriculture and others and the loss made up by the state governments. In such a case, the lack of available investment capacity might stay clear of CCT that requires a large amount of initial investment. Some of the IPP tender programs by PLN call for supercritical pressure or higher in their conditions. There are few political barriers. 40% of the coal-fired power plants are equipped with electrostatic precipitators. Only a few with desulfurization and denitrification equipment at present. No environmental tax (carbon tax) is imposed. There are few political barriers, with the coal-fired thermal power plants is planned in its power source development programs. South Korea supports the R&D of CCT. Introduction of desulfurization equipment, denitrification equipment, and electrostatic precipitators is in progress. No environmental tax (carbon tax) is imposed. There are intellectual property protection There are intellectual property protection laws (Intellectual property-related protection laws. laws such as Patent Law have been legislated since Law No. 30 of 2000 regarding Trade Secret). There is the issue of financing in promoting power source development. There is a concern of the introduction of CCT leading to the rise in electricity rates. The priority of coal-fired thermal power in its power source development is low (in the order of renewable power, power import, gas-fired power, nuclear power, and coalfired power), but there are few political barriers. (Example) At New GHECO-One Power Plant, NOx: 56ppm, SOx: 53ppm, soot and dust: 55mg/m 3 N. No environmental tax (carbon tax) is imposed. Coal-fired power makes sense from the standpoint of energy security, but at the same time, is disadvantaged in that Japan is moving toward low-carbon energy sources. Japan is in a position to step up its CO 2 emissions control by introducing environmental tax and emission trade. Every power plant has an agreement with its local government on pollution prevention. (Example) For the new unit No.2 at Isogo Thermal Power Station that started operation in July 2009, NOx: 13ppm, SOx: 10ppm, and soot and dust: 5mg/m 3 N. Today, Japan imposes petroleum and coal tax on coal. The tax on coal is 700 yen/ton. There are intellectual property protection There are intellectual property protection laws (Patent Act 2522 (1979), Copyright Act laws (Intellectual Property Law) (1994), and Trademark Act 2534 (1991)). Coal-fired thermal power is There is issue of financing in promoting disadvantaged, if the cost of CO 2 emissions power source development. such as environmental tax and emission trading is defined and turns out burdensome. As Japan depends on imported coal and has stringent environmental regulations, economic issues would not constitute a barrier. Cost Electricity rate level The level of electricity rates is lower than other countries. - The amount of initial investment in high-efficiency power generation technology is grater than that of the conventional technologies. Financing constitutes a barrier. A part of electricity rates are set at the level below the power generation cost for agriculture and others. The subsidy to control domestic power Lower electricity ratesr. prices results in the lack of investment (South Korea's policy, heavily involved in capacity for power source development. setting electricity rates, could constitutes a The low power prices could constitutes a barrier to the spread of more costly highefficient coal-fired thermal power barrier to investment. generation technologies, depending on the rate level.) - - Technical Possibility of building the maintenance management system Engineer shortage Other The level of understanding on coal-fired power The lack of its domestic manufacturing technologies for high-efficiency coal fired thermal power generation equipment. - Despite its established manufacturing It is necessary to develop the highefficiency coal-fired thermal power technologies, the lack of operation and maintenance-related technologies and a generation technologies suited for its shortage of engineers might make it difficult domestic coal (low rank coal, high ash to keep the high-efficiency constantly. coal). India is in the process of learning the manufacturing technologies of boilers and turbines through JV companies with overseas partners. It is possible that there are unsolved issues in its operation and maintenancerelated technologies. Weakness in manufacturing technology. A shortage of human resources. - - The tough public assessment against environmental pollution. There are some but minor protests against coal-fired thermal power generation. - - There are issues in its ash processing that will enable the use of high ash coal. India's rail transportation capacity is a bottleneck in the coal supply chain. The lack of domestic manufacturing technologies for high-efficiency coal-fired power generation equipment. The technology required to get the quality of coal homogenized by blending various types of coal. It is necessary to learn about the operation technology and management capability of complex equipment. The lack of operation and maintenancerelated technologies and a shortage of engineers. The low demand for power on the small islands. Large-scale power generation equipment is not considered a good choice. South Korea has its own manufacturing technologies for high-efficiency power generation equipment. Weakness in raw material technologies The lack of domestic manufacturing technologies for high-efficiency power generation equipment. Technical development is insufficient. At present, Japan has the world's highest level of technologies. Succession and further development of these technologies are one of its challenges Supposedly, there is a shortage of engineers who are involved directly with manufacturing There is the strong opposition against coal-fired thermal power because of the past experience with the pollution caused by Mae Moh Power Plant. - The increasing awareness of environmental protection makes the image of coal-fired thermal power negative

48 3. Challenges for Spread of Low Rank Coal Utilization Technology and High-Efficiency Coal-Fired Power Plant 3.1 Challenges for introduction and spread of low rank coal utilization technology In the East Asia areas where economic development is significantly in progress, it is forecasted that energy demand will increase. Particularly demand for coal is expected to expand rapidly. Based on such backgrounds, importance is increasing on effectively utilizing the low rank coal which abundantly exists as a resource in the ERIA member countries for mitigating the demand and supply balance of coal and for environment measures. In order to effectively utilize the low rank coal, effort has been made toward development of various utilization technologies. However, currently there are the barriers to hinder introduction and spread of the utilization technology for the low rank coal. Chapter 1 described these barriers in each country categorized them on policy, economy, and technology aspects. This chapter describes the challenges for spread of the low rank coal technology. (1) Challenges in policy aspect Although the most important technology among the low rank coal technologies is dehydration and drying, currently the commercial, economic, and efficient dehydration and drying technology has not been established. Support from the government is considered to be critical for the effort toward commercialization of this technology. In Australia and Japan, the government proactively performs financial support for developing the low rank coal technology. Governmental support for low rank coal technology is also desired for other ERIA member countries. In addition, efforts of each country on its own are important for development of the low rank coal technology. However, efforts for developing solely are restricted on budget and the technologies owned by the country. Therefore it is considered to be important to work together between 2 countries or among multiple countries to address the technical development in order to promote it more effectively and quickly. Since expanding use of low rank coal is largely contributed to consistent energy supply within the EIRA areas, it is important for the countries holding low rank coal resources and the countries holding utilization technology to work together to pursue technical development. In the case of pursuing the technical development by multilateral or bilateral cooperation, naturally it is performed on the precondition that the intellectual property right of the countries holding the utilization technology is protected. For the intellectual property right, the relevant laws have already been in force in each country. The issue is whether the intellectual property of the country holding the technology will be strictly protected in the country to which the technology will be transferred. (2) Challenges in economy aspect In technical development for utilizing low rank coal, firstly development of the dehydration and drying technologies are most important. Large amount of money will be required for capital investment for development of the low rank coal utilization technology including dehydration and drying technologies. As high moisture is included in the low rank coal, the cost of dehydration and drying is high, and

49 reducing this cost is the most important key for commercialization of the upgrading and conversion technologies for the low rank coal. For example, In the UBC (Upgrading Brown Coal) Project performed in cooperation with Japan in Indonesia, development of the utilization technology for the low rank coal is being promoted by the demonstration plant, but currently it has not yet been commercialized due to economic matters. The future challenge will be the effort aiming at demonstration and commercialization of the technology currently in development. Once the dehydration and drying technology of the low rank coal with economic potential is established, development of the conversion technology such as gasification and liquefaction of the low rank coal will progress. Also, in Indonesia, the lignite itself with calorific value of approximately 3,500 kcal/kg is exported. For long-distance land or marine transportation of the low rank coal with high moisture content, the transportation cost per unit energy will be higher. So, import of the low rank coal is limited to neighboring countries. In order to promote effective utilization of the low rank coal, development of the efficient dehydration and drying technology with economic potential is considered to be important taking transportation into account also. For the cost of the low rank coal utilization technology, in the current situation where the technology is under development, there is no quantitative value. The equipment cost would initially estimated by performing the demonstration project. (3) Challenges in technical aspect For the low rank coal technology, in addition to the direct utilization technology with coal blending, there are the upgrading technologies such as dehydration/drying and fluidization (CWM) as well as the conversion technology such as gasification and liquefaction. The most important technology for promoting the use of low rank coal is the dehydration and drying technology in the low rank coal utilization technologies. In the current situation, since development of commercial, economic, and efficient dehydration and dry technology has not been realized, commercialization of the dehydration and dry technology is the top priority issue. Although development of the upgrading technology is in progress in UBC and BCB (Binderless Coal Briquetting) projects, it has not reached to commercialization. The upgrading coal made from low rank coal dehydrated and dried has the nature that it is very easy to generate heat spontaneously and is not suitable for the long-distance transportation such as the marine transportation. Therefore the conversion technology to manufacture the fluid fuel by gasification and liquefaction will be important. Current development of the gasification technology for the low rank coal is performed in the Pilot Plant. However, in Victoria of Australia, it is forecasted that the project to extensively demonstrate dry and gasification using the lignite (IDGCC: Integrated Drying Gasification Combined Cycle) will begin in the near future, and the result is anticipated. On pursuing development of the low rank coal technology, the human resources development is important. The program to cultivate the young engineers and research leaders is required for pursuing technology inheritance and technology development continuously. It is desired to take participation of the young engineers into account on the human development viewpoint

50 (4) Other challenges For increasing future demand for energy in the ERIA areas, coal is expected to play a major role. In order to respond to this increasing energy demand, the construction plan for the coal-fired thermal power plant including low rank coal has been created in these areas. However, as the example of Thailand, there are the countries where the neighboring residents of the planned construction site and NGO continue opposition campaign against construction of a new coal-fired thermal power plant. In such countries, it is important to steadily continue the public acceptance activities to have general public deepen their understandings for coal. (5) Expectation and requests for the future effort for the introduction and spread of the low rank coal utilization technology Here shows the expectation and requests for popularization of the low rank coal utilization technology obtained from the WG members and from the hearing survey. 1) Australia The effort to transfer to the pilot test and demonstration test for developing dehydration and gasification technology is required urgently toward development for the low rank coal technology. If the demonstration test for the dehydration and gasification technology is successful, lignite products will be able to be exported, resulting in emergence of a new market. International cooperation is the key for technical development. For the technology which multiple countries are addressing (dehydration, gasification, use of hydrogen), Japanese companies, which can provide the technology, and the coal industry will be able to play a large role. In order to promote development of the low rank coal technology, it is important to strongly pursue exchange of students, researchers, and engineers between Japan and Australia. In addition, it should be recommended for the engineers in Australian industry to participate in the workshops held by universities as well. Reversely, it should also be recommended for the coal scientist and researchers in the universities to involve in the industry. 2) China Advanced and large scale upgrading and conversion (gasification and liquefaction) technologies for low rank coal are required urgently. Also it is important to strengthen and promote domestic and international information exchange and technical cooperation toward research and development and demonstration for utilizing low rank coal. The following requests were made for dry and dehydration technology for brown coal: Upgrade the raw coal on 3,500 kcal/kg level to 5,000 kcal/kg level at the reasonable cost Dry and dehydration technology and equipments of low consumption energy type, on the scale of 5,000 to 10,000 tons/day T Effective utilization technology of non-used heat source Processing of water collected after dehydration, effective utilization technology

51 3) Indonesia To promote use of low rank coal in Indonesia, the following support is considered to be required. Make haste to demonstrate and commercialize the technology currently under development. For gasification at the stage of not being competitive with natural gas in price, the governments and private sectors to jointly and urgently pursue the industrialization project to become the model. At the same time, pursue study of the barriers in institution and policy, and institutionalize the incentive in taxation system, etc. (e.g., subsidy and tax break for the use of specific technology) Proactively promote bilateral and broad-based multilateral international cooperation with the developed countries toward development of the low rank coal technology. 4) Thailand In Thailand, it is the most important to strengthen the public acceptance activities in order to resolve the opposition campaign by the local residents against coal use. It is required to execute the demonstration test using the prototype equipments for use of the low rank coal. Simultaneously, international support for transfer of technology related to use of the low rank coal is also required. 5) Korea In order to introduce and popularize the low rank coal technology in Asian regions, multilateral and bilateral research and development are required. The Korean government assists the international cooperation program under the jurisdiction of KETEP (Korea Energy Technology Evaluation and Planning). Through this program, Korea is ready to assist the multilateral and bilateral research and development project for developing the low rank coal technology. 6) Japan It was proposed in the WG meeting to work together to study the matters shown below as the technical issues related to use of the low rank coal. Drying and dehydration and stabilization technology for the low rank coal, particularly cost reduction by the innovation technology and linking with latter utilization/processing technology. Prevention and use of reaction activity of the low rank coal, e.g., usage as the combustion additive, setting of mild reaction conditions in gasification, and deployment of the 3-dimension structure in carbonization. Optimization of electrostatic precipitator to process high ash content coal and development of utilization technology for combustion ash. Development of the heavy duty de-sulfuration and de-nitration technologies to process

52 high sulfur and high nitrogen coals Development of the trace element processing technology. Water treatment technology (particularly the type supporting low temperature). 3.2 Challenges for introduction and spread of high-efficiency coal-fired thermal power plant In Asia, coal-fired thermal power plant, which is easier to technically tackle with and fuel cost is cheaper than other fuels, has a major role in electrical power supply. As demand for electricity in Asia is estimated to grow continuously, it s highly possible that the coal-fired thermal power plant continue to have the main role in power supply for coming 20 to 30 years even though other fuels such as natural-gas fired thermal power, nuclear power or renewable energy power will be further introduced. On the other hand, consideration for environment is strongly demanded together with stable supply of energies in order to make a persistent growth of Asian countries. One of the solutions to resolve those challenges at a time is higher efficiency of thermal power generation. High-efficiency coal-fired thermal power plant (such as supercritical and ultra-supercritical pressure) has already been commercialized in some countries and it is expected to be introduced more. However, various issues are needed to be solved for introduction and spread of the high-efficiency coal-fired thermal power plant, (1) Challenges in policy aspect In policy aspect, positioning of the coal-fired thermal power within the energy policy of the relevant country is important. If a high position is assigned in future electric power source development, regulation and fund for high-efficiency coal-fired thermal power plant is more likely to be supported. On the other way around, if the coal-fired thermal power plant is not actively introduced, there will not be sufficient support so it is assumed that high-efficiency coal-fired thermal power plant is not likely to be commonly used. A difficult factor is environmental regulation. As mentioned later, in some cases, the high-efficiency coal-fired thermal power plant has economic challenges thus common use might not be promoted only by an economic principle. Some potential compensating factors are environmental regulations such as air pollution protection and reduction of carbon dioxide emissions. Under a strong environmental regulation, possibility of choice of the coal-fired power plant among power sources will increase because it helps containment of exhaust gasses. However, if the environmental regulation is too strict, the cost of the coal-fired thermal power plant for reducing environment loads might be too much and natural-gas-fired thermal power, nuclear power and renewable energy power will be more likely to be chosen. (2) Challenges in economic aspect In economic aspect, a point is the extent of economic merit provided by the high-efficiency coal-fired thermal power plants. If fuel cost saving made by the high-efficiency of power generation is less than necessary capital investment for the higher efficiency, it is easy to imagine that people would hesitate to make investment. Also, the fact that the containment of exhaust gasses has no direct economic value can be a challenge for common use of the high-efficiency

53 coal-fired thermal power plant. Another important factor is the electricity charge from viewpoints of whether high-efficiency coal-fired thermal power plant justifies the investment. To implement continuous investment for the high-efficiency coal-fired thermal power plant, an environment where an investment can return a reasonable profit has to be prepared. Specifically, price level of wholesale or retail of electric power is required to suitably reflect the cost. However, it is necessary to make a judgment from many different aspects since the electrical power pricing system are associated with various policies in different countries. (3) Challenges in technical aspect In the areas related to hardware of the technology, the challenge is to develop technologies satisfying specific needs in each country. There are cases where existing high-efficiency coal-fired thermal power plant can not directly be applied due to differences of available coal types. Therefore technologies that comply with the condition of each country are required. Besides, enhancement of power grid might be necessary when a large scale high-efficiency coal-fired thermal power plant is to be located. Upgrading surrounding technologies and environment such as the power grid as well as the power generation technology itself are other issues to be addressed. From software aspect, the lack of human resources and know-how related to the high-efficiency coal-fired thermal power generation technology is in question. If there are insufficient human resources and know-how, it is difficult to expect proper construction, operation and maintenance of the high-efficiency coal-fired thermal power plant. Thus it is needless to say that developing human resources and propagation and accumulation of know-how are indispensable before construction of high-efficiency coal-fired thermal power plant. (4) Other challenges The lack of understanding among people about coal-fired thermal power is an issue to tackle with. In many countries, environmental consciousness is growing among people and building of coal-fired thermal power plants itself might be difficult if the people do not agree. Because it is difficult to quickly and drastically improve people s understanding, persistent but continuous efforts are required. If the investment in power source depends on foreign capitals, the investment environment for such investors should be prepared. Environmental factors on investment that could limit activities of private companies implementing actual works of the high-efficiency coal-fired thermal power plant construction must be considered such as various entry regulations and protection of intellectual properties. (5) Expectation and requests for the future effort for the introduction and spread of the high-efficiency coal-fired thermal power plant Suggestions from the members of high-efficiency coal-fired thermal power generation technology working group regarding expectations and requirements of future efforts for introduction and spread of the high-efficiency coal-fired thermal power plant are shown as follows

54 1) Australia A combination of the high-efficiency coal-fired thermal power generation technology and CCS (Carbon capture and storage) is expected. R&D is necessary for improving efficiency and reliability, and for cost reduction. 2) China Further improvement of efficiency of the coal-fired thermal power plant is required though it s been improving. It is necessary to develop a technology to utilize high moisture coal (coal drying technology). 3) India Ash processing technology is a challenge as to domestic coal utilization. It is expected to develop an IGCC technology to utilize high ash coal. Revamping and improvement of existing coal-fired thermal power plants are important. 4) Indonesia Regarding the introduction of high-efficiency coal-fired thermal power plant, challenges include complicated operation and technology, quality control of cooling water and fuel, higher EPC cost, etc. It is required to share best practice of introduction of the high-efficiency coal-fired thermal power generation technology. Development of engineers and joint research and development are necessary. Coal mixing technology to homogenize different rank coals and supercritical/ ultra-supercritical pressure technology using low rank coal are demanded. 5) Thailand It is required to support development of technology for high-efficiency coal-fired thermal power generation technology. Supports for fundraising such as soft loan are required. Know-how for improving people s understanding is demanded. 6) Korea It is important to cooperate in technology and experience of new coal-fired thermal power plant construction as well as findings and know-how regarding repair, modification, operation and maintenance of existing coal-fired thermal power plants. It is required to increase electricity rate to improve incentives for energy saving and to satisfy research and development budget. 7) Japan It is demanded to improve incentives for energy conservation and CO 2 emission reduction, enhance environmental regulation, and introduce efficiency standard

55 Lack of return for technology transfer and investment, and enhancement of infrastructure necessary for coal-fired thermal power plants (port, industrial water, fuel, power grid, etc.) are issues to be addressed. It is required to learn operation and maintenance methods suitable for high-efficiency coal-fired thermal power plant. Viewpoints of utilization of low rank coals and technology support adapting to the needs of partner countries are important. Gap of costs between conventional coal-fired thermal power plant and the high-efficiency coal-fired thermal power plant is in question. Related countries are required to mutually understand those barriers and study how to overcome them in future. Although it is assumed that each country should independently make efforts to overcome the barriers, it might also be important to arrange necessary international cooperation to more efficiently overcome those barriers. In addition to above, for a continuous and efficient international cooperation, it is apparently important to construct a framework providing benefit to all participating parties. To be more specific, given that the majority of players in the high-efficiency coal-fired thermal power generation technology are private companies, the cooperation should allow them to obtain reasonable profits. Furthermore, since policies and regulations strongly influence the spread of the high-efficiency coal-fired thermal power plant as clarified in the statements above, supports for communication and cooperation between governments of related countries might be required. In which point can we find specific possibilities of international cooperation? Followings are suggestions from experts in each country at discussion. Sharing and matching of information related to the high-efficiency coal-fired thermal power generation technology Sharing of information and technology related to efficiency improvement and maintenance of existing coal-fired thermal power plants Information sharing and cooperation related to technology development such as IGCC Sharing of information and technology related to low rank coal characteristics and treatment and utilization technology of coal ashes Human resource development of high-efficiency coal-fired thermal power generation technology Sharing know-how to improve people s understanding Financial support They are just examples showing possible international cooperation and do not necessarily cover all. It is required to materialize the international cooperation by further discussions with experts from relevant countries in order to allow for the spread of the high-efficiency coal-fired thermal power plant

56 4. Outlook for demand of energy and coal in ERIA member countries In this chapter, a review is provided on demand forecast of coal in the world, Asia and major ERIA member countries related coal based on Asia/World energy Outlook 2010 published by the Institute of Energy Economics, Japan in November, This outlook features two scenarios including Reference scenario and Technologically advanced scenario to be set for estimation. Therefore, regarding forecasts of primary energy and power generation volume of the world and Asia, Technologically advanced scenario is also presented along with Reference scenario. Reference scenario gives energy demand/supply forecast based on current economic and social situations taking into account highly possible policies in future and highly possible common use technologies. On the other hand, in Technologically advanced scenario it is expected that policies to secure stable supply of energy and enhancement of measures against global warming be conducted, and development of revolutionary technologies be accelerated based on proliferation of international cooperation and international transfer, and common use of those technologies will spread all over the world. In the scenario, it is assumed that the energy efficiency is improved faster than that in the reference scenario and introduction of non-fossil fuel energy such as nuclear and solar expands. Assumptions on Technologically Advanced Scenario Regulation, National target, SSL etc. Carbon Tax, Emissions Trading, RPS, Subsidy Provisions, FIT, Efficiency Standards, Automobile Fuel Efficiency Standard, Low Carbon Fuel Standard, Energy Efficiency Labeling, and National Target. Promotion of R&D, International Cooperation Encouragement of Investment for R&D, International Cooperation on Energy Efficient Technology, Support on Establishment of Efficiency Standard Demand Side Technology Industry Best available technology on industrial processes such as steel making, cement, paper, oil refinery etc. will be deployed internationally. Transport Clean energy vehicles (highly fuel efficient vehicle, hybrid vehicle, plug-in hybrid vehicle, electric vehicle, fuel cell vehicle) will be globally utilized. Building Efficient electric appliances (refrigerator, TV etc.), highly efficient water-heating system (heat-pump etc.), efficient air conditioning system, efficient lighting, and strengthening heating insulation Supply Side Technology Renewable More expansion of Wind, PV, CSP (Concentrated Solar Power), biomass power generation, and bio-fuel Nuclear Acceleration of more nuclear power plants, and enhancement of operating ratio High Efficient Fossil-fired Power Plant More expansion of coal-fired power plant (USC, IGCC, IGFC), natural gas MACC(More Advanced Combined Cycle) CCS introduction in the power (coalfired, gas-fired) and industrial sectors Coal plays a crucial role in primary energy supply, particularly in electric power supply as it accounts for 29% of primary energy consumption, 41% of power generation in the world, and 53% of primary energy consumption, 60% of power generation in Asia. It is estimated that the demand of coal as a fuel for power generation will expand in Asia where the economic growth is remarkable

57 4.1 Coal among primary energy consumption in the world and Asia (1) Primary energy consumption forecast by region 5 Primary energy consumption in the world from 2008 to 2035 grows 1.6% a year. In other word, the size of consumption grows about 1.5 times from 11.3 billion toe in 2008 to 17.3 billion toe in Asia accounts for 60% of the growth of the world energy consumption and about 30% of the growth relates to China. Source: Forecasted by the Institute of Energy Economics, Japan Figure 4.1 Primary Energy Consumption by Region (World) Non-OECD countries share of the world primary energy consumption grows from 51% in 2008 to 65% in 2035 reflecting increase of population and economic growth. Asia grows from 34% in 2008 to 43% in 2035, and China from 17% to 22%. Now China is the second largest energy consuming country in the world next to the U.S. In 2014, it will exceed the current consumption in U.S. Share of India will expand from 4% to 8%. As Asian primary energy consumption grows at annual rate of 2.5% from 2008 through 2035 the consumption will double from 3.7 billion toe in 2008 to 7.4 billion toe in Rapid increase is estimated particularly in countries where steady economic growths are expected such as China, India, Vietnam, Thailand, Malaysia and Indonesia. About 50% of energy consumption increase between 2008 and 2035 will be attributed to the increased energy consumption in China, while India contributes about 20% of the increment. Even in 2035, energy consumption per capita in Non-OECD countries such as China and India is less than that in OECD countries. Therefore, even after 2035, there s a large potential growth of energy consumption per capita and total primary energy consumption in those countries. 5 This forecast divided the world into Asia, Oceania, Middle East, Non-ORCD Europe (including ex-ussr), OECD Europe, Africa, North America and Latin America

58 100% 80% 60% 40% 20% 0% OECD Non-OECD OECD/Non-OECD Source: Forecasted by the Institute of Energy Economics, Japan 100% 80% 60% 40% 20% 1 0% By region Figure 4.2 Share of Primary Energy Consumption Other Non-OECD Europe OECD Europe N. America Other Asia ASEAN Japan India China Source: Forecasted by the Institute of Energy Economics, Japan Figure 4.3 Primary Energy Consumption by Country and Region (Asia) In case of the Technologically advanced scenario, the world primary energy consumption is 14.4 million toe in 2035 which represents 16% reduction compared to the Reference scenario. Among reduced 2.8 billion toe, developing countries and ASIA account for a huge percentage, 69% and 54% respectively. China accounts for 59% and India for 23% of 1.5 billion toe of Asian reduction

59 18,000 15,000 12,000 9,000 6,000 Mtoe 6,592 Energy Saving in 2035 OECD 866 Mtoe 8,025 8,028 Non- OECD 1,971 Mtoe Asia 1,520 Mtoe 10,528 Reference 11,316 11,329 13,812 12,828 16,084 OECD Non-OECD 17,280 14,443 13,943 Tech. Adv Source: Forecasted by the Institute of Energy Economics, Japan 2,837 Mtoe ( 16% of total saving) OECD 866 Mtoe (31% of total saving) Non-OECD 1,971 Mtoe (69% of total saving) Asia 1,520 Mtoe (54% of total saving) Figure 4.4 Primary Energy Consumption in the World (Comparison between Reference Scenario and Technologically Advanced Scenario) 8,000 6,000 4,000 2,000 1,051 Mtoe Energy Saving in 2035 China India Other Asia Mtoe Mtoe 893 Mtoe 1,653 3,184 Reference 3,722 3,740 5,242 7,375 6,638 China India Other Asia 5,855 5,557 4,798 Tech. Adv. 1,520 Mtoe ( 21%) China 893 Mtoe (59% of saving in Asia) India 354 Mtoe (23% of saving in Asia) Other Asia 273 Mtoe (18% of saving in Asia) Source: Forecasted by the Institute of Energy Economics, Japan Figure 4.5 Primary Energy Consumption in Asia (Comparison between Reference Scenario and Technologically Advanced Scenario) (2) Primary energy consumption forecast by sources Taking a look of the primary energy consumption by sources, in both Reference scenario and Technologically advanced scenario, oil still occupies the largest share within primary energy consumption until 2035 and keeps its role as a major energy source. According to Reference scenario, the consumption of coal and natural gas will increase and the shares of oil, coal and natural gas are expected to increase to the same level around Fossil fuels (coal, oil and natural gas) will continue to be major sources of energy accounting for 80% of the increase of primary energy consumption from 2008 to Among fossil fuels, natural gas represents the largest increase, accounting for 31% of increase of primary energy consumption, followed by coal 27% and oil 21%, nuclear 7%, hydro 3% and renewable energy 11%

60 Solid line: Reference case Source: Forecasted by the Institute of Energy Economics, Japan Dotted line: Technology advanced case Figure 4.6 Primary Energy Consumption by Energy Source (World) Though the share of fossil fuels will decrease from 88% in 2008 to 85% in 2035 according to Reference scenario and down to 77% by Technologically advanced scenario, they will still remain as major energy sources. Comparing Technologically advanced scenario to Reference scenario regarding shares in 2035 by sources, there are no big difference with oil and natural gas in global picture though, nuclear and renewable increase by 4% and 3% respectively and coal decreases by 7%. A similar trend is also seen in Asia and coal decreases by 10%. Solid line: Reference case Dotted line: Technology advanced case Source: Forecasted by the Institute of Energy Economics, Japan Figure 4.7 Primary Energy Consumption by Energy Source (Asia)

61 (3) Coal consumption forecast The world coal consumption increases from 3.3 billion toe in 2008 to 4.9 billion toe in 2035 at an annual rate of 1.5%. By region, Asia accounts for 80% of increment of coal consumption. By sector, it is estimated that 86% of coal consumption increment is used for electrical power generation and the coal consumption for power generation will increase from 63% of total coal consumption in 2008 to 70% in The share of coal in the world primary energy consumption remains at 29% from 2008 to 2035 and the coal continues to be a major fuel source next to oil. Coal consumption in Asia increases from 2.0 billion toe in 2008 to 3.3 billion toe in 2035 at an annual rate of 1.9%. Consumption in China accounts for about 50% of increment of the coal consumption in Asia and that of India accounts for about 40%. By sector, electrical power accounts for 82%, industrial usage accounts for 6% and other transformation (ex. manufacturing coke, heat supply) accounts for 10% of coal consumption increment. Consumption for power generation in total coal consumption increases from 53% in 2008 to 65% in Though the share of coal in primary energy consumption drops from 53% in 2008 to 45% in 2035, it continues to be the largest share among primary energy supply sources. The world coal consumption in 2035 of Technologically advanced scenario is 36% lower than that of Reference scenario. More specifically, as coal consumption in 2035 is estimated at 4.9 billion toe in Reference scenario, it reduces down to 3.1 billion toe in Technologically advanced scenario. In Asia, it is also drastically decreased (by 37%) mainly at power generation down to 2.1 billion toe. Coal consumption decreases mainly in power generation area. The backgrounds of the decrease in that area are thermal efficiency improvement in coal-fired thermal power plant and transformation to other fuels. Source: Forecasted by the Institute of Energy Economics, Japan Figure 4.8 Coal Consumption by Region (World)

62 Source: Forecasted by the Institute of Energy Economics, Japan Figure 4.9 Coal Consumption by Country and Region (Asia) World Asia Million toe Million toe 6,000 72% 3,500 66% 5,000 70% Other final consumption 3,000 64% 4,000 68% Industrial use 2,500 62% 3,000 66% Other transformation 2,000 1,500 60% 58% 2,000 64% Power generation 1,000 56% 1, % 60% Proportion of power generation % 52% Source: Forecasted by the Institute of Energy Economics, Japan Figure 4.10 Coal Consumption by Sector (Reference Scenario) 4.2 Coal used for electrical power generation in the world and Asia Reflecting a steady increase of demand for electricity, the world power generation will increase from 20,200 TWh in 2008 to about 39,000 TWh in 2035 at an annual rate of 2.5%. Power generation in Asia increases from 6,800 TWh in 2008 to 17,000 TWh in 2035 at an annual rate of 3.5%. Share of coal-fired thermal power generation is largest among the world power generation in 2008 accounting for 41%, and natural-gas-fired thermal power, nuclear power and hydropower account for the rest. Power generation structure through 2035 will show a shift to natural-gas-fired thermal power by introduction of combined-cycle gas turbine considering reducing environmental load. Share of the natural-gas-fired thermal power generation out of total power generation increases from 21% in 2008 to 24% in Share of coal-fired thermal power generation will go sideways at 41% from 2008 and continue to play a role as the largest source of power supply

63 Solid line: Reference case Source: Forecasted by the Institute of Energy Economics, Japan Dotted line: Technology advanced case Figure 4.11 Power Generation Mix(World) As living standard will improve in Asia, consumption of convenient electrical power is expected to remarkably increase in future. To accommodate this demand of electrical power and to save oil and natural gas resources or from energy security viewpoints, the volume of power generation from coal, which is abundant in Asian region, is expected to increase steadily. Though the share of coal-fired thermal power in Asia decreases from 60% in 2008 to 57% in 2035, it plays a role as largest power supply source having extended utilization mainly in China, India, Indonesia, etc. as background. Particularly in China and India, the coal-fired thermal power continues to be major power source to accommodate quickly increasing demand for electricity from now. Solid line: Reference case Dotted line: Technology advanced case Source: Forecasted by the Institute of Energy Economics, Japan Figure 4.12 Power Generation Mix(Asia) Studying power generation mix in the world and Asia, coal-fired thermal power keeps a certain