Turning coal mine methane gas into clean energy in Shangxi province

Shangxi province in northern China is a major coalmining area. One result of its intensive coal production is high levels of methane gas, which can lead to dangerous explosions and fires and also to significant greenhouse gas emissions. The central government, the Asian Development Bank, the China Coal Information Institute - a government think tank - and the US Environmental Protection Agency worked together on the Coal Mine Methane Development Project. The objective was to build a methane power plant in Shangxi, which reduced noxious emissions and produced clean energy for domestic use by local citizens.

The challenge

One byproduct of coalmining, a major industry in the People's Republic of China (PRC) and especially so in Shangxi province, is the emission of methane gas. Quite apart from its damaging effect on the environment, it is also dangerous and potentially deadly. "Coalmines in the PRC release about 15 billion to 20 billion cubic metres of methane into the atmosphere each year. These emissions are expected to grow as coalmines go deeper underground. Many coalmines contain a great deal of methane, which needs to be drained during the mining process because it is extremely flammable and may explode when mixed with air. Methane is a primary cause of underground explosions that kill coalminers in the PRC each year."[1]

The initiative

Huang Shengchu, the president of the China Coal Information Institute - a government think tank - worked on the solution to the methane gas problem with the US Environmental Protection Agency and the Asian Development Bank (ADB). "After a number of field studies, he recommended building a methane power plant similar to Australia's at Sihe Mine in Shanxi Province." [2]

The ADB provided $117.4 million loan in funding in 2004. "To help address these problems, the PRC and the  ADB worked together on the Coal Mine Methane Development Project. The project used the latest technology to capture methane from a coalmine in Shanxi, one of the largest coal-producing provinces in the country."[3]

The project had the following objectives:

  • To reduce greenhouse gas emissions.
  • "To find alternative sources of energy other than coal."[4]
  • "To improve coalmine safety by demonstrating methane capture technologies on a large scale.
  • "To convert the captured methane to a clean form of energy for use in nearby communities." [5]

The public impact

The Coal Mine Methane Development Project has had the following benefits:

  • Each year, 3 million tons of CO2 equivalent was no longer being released into the atmosphere.
  • "In Shanxi Province alone, more than 3.2 billion cubic metres of methane was captured from coalmines for clean energy use in 2012.
  • "As part of the project, the Shanxi Jincheng Anthracite Coal Mining Group built a methane gas power plant with 97 generators that produced 207 megawatts of clean energy."[6]

The new gas power plant had a positive impact on households. "Before the project, families were spending about CNY2,000 (USD294) per month on coal. After the gas connection, their energy bills were cut to about CNY350 (USD52)... Poor households were connected to the gas pipes for free. They also paid a lower monthly rate for the gas."[7]

It also had a beneficial effect on public transport. "'We converted 365 buses from diesel to methane gas,' Wang Xinjia (the deputy general manager of Jincheng Public Transport Corporation) says. 'Forty more are to be converted within this year. The total cost for gas is about CNY2.1 million (USD350,000) annually. This is only one-third of the price for diesel fuel'."[8]

What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Stakeholder Engagement Strong

The key stakeholders for the Coal Mine Methane Development Project were:

  • The PRC and the ADB.
  • Regulatory agencies and government groups like the the US Environmental Protection Agency and, internally, the National Development and Reform Commission and the National Institute for Occupational Safety.
  • The Chongqing Energy Investment Group, Fushun Mining Group, Hebi Coal Industry Group  and others, who were the project hosts.
  • The equipment manufacturers for methane treatment and utilisation equipment - Atlas Copco, Capstone Turbine Corporation, Caterpillar and others.
  • Developers, such as the China National Petroleum Corporation, who were involved in planning the project.
  • The China Coalbed Methane Clearinghouse (affiliated with the China Coal Information Institute) were among those supplying for technical assistance.[9]
  • "Australian firm Valley Longwall International[, which] has been selling its computer-assisted drilling guidance system for three years in northern Shanxi province, the centre of China's coal-producing heartlands."[10]

Political Commitment Good

The PRC government was committed to the project. It was an initiative of the China Coal Information Institute working together with central government, the ADB and the US Environmental Protection Agency. "'The central government is very clear about its intentions to reduce emissions and improve energy efficiency,' Huang Shengchu [director of the China Coal Information Institute] says. 'The political pressure the central government is putting on local officials will make a difference.'"[11]

The government also provided incentives for the project. "The government grants about USD300 million a year in subsidies to mines that set up methane capture units." [12] This commitment had beneficial results. "Due to government incentives, 5 billion cubic metres of methane were captured in PRC coalmines in 2008, 14 times that of 2005, according to the China Coal Information Institute, a government think tank."[13]

Policy

Clear Objectives Strong

The main objectives were:

  • The reduction of methane gas emissions and, hence, greenhouse gas emissions.
  • Converting methane to clean forms of energy.
  • Providing citizens with a reliable and substantial supply of clean energy.

These objectives were defined at the outset and were maintained consistently during the implementation.

Evidence Good

There was evidence from projects in Australia about transforming methane gas into clean energy which Huang Shengchu saw as applicable to the Coal Mine Methane Development Project. "'In the '90s, we'd learned that Australia was successfully turning methane into power using Caterpillar gas engines,' Huang says. 'They'd then transfer that power to the grid.'"[14]

Huang worked with the US Environmental Protection Agency and the ADB on relevant research. "After a number of field studies, he recommended building a methane power plant similar to Australia's at Sihe Mine in Shanxi Province."[15]

Feasibility Fair

Huang Shengchu worked with the ADB and the US Environmental Protection Agency in conducting a number of feasibility studies to address the building of similar facilities to those in Australia (see Strength of Evidence above).

The ADB provided funding for the project. "ADB approved a USD117.4 million loan in 2004 for a project to demonstrate the latest technologies... The gas is called coal mine methane (CMM) when released into mineshafts by underground coal seams during mining operations, and coal bed methane (CBM) when released through bore holes drilled from the surface into underground coal seams."[16]

It also evaluated the financial constraints before the start of the project and made use of additional sources of finance. "The project is also registered under the Clean Development Mechanism - which supports the Kyoto Protocol that gives financial incentives to projects in developing countries that reduce greenhouse gas emissions."[17]

Action

Management Good

There were a number of experienced engineers and engineering organisations involved in managing the project:

  • Huang Shengchu, director of the China Coal Information Institute in Beijing, a qualified engineer, played an influential role in the project.
  • The organisations involved, such as Fushun Mining Group and Hebi Coal Industry Group, were given clearly defined roles (see Stakeholder Engagement above).

Measurement Good

There were a number of indicators used to measure the success of the project, e.g., the amount of methane converted, the revenue generated and annual fuel-saving. They were used to evaluated to analyse the impact of the project, which was monitored at regular intervals. "Critical assessment, during project planning, of methane gas supply and quality will avoid delays associated with the resulting design changes and repeat of the approval process. A thorough evaluation of the least-cost option for the pipeline routes and location of gas receiving facilities will improve the project’s financial viability and reduce implementation time."[18]

Alignment Good

All the main actors cooperated effectively: "to help address these problems, the PRC and ADB worked together on the Coal Mine Methane Development Project".[19] They were supported in particular by the China Coal Information Institute and the US Environmental Protection Agency. There was also strong alignment between the organisations responsible for delivering the project, who each had a well-defined role in the process.