Beijing, China - At five minutes past 10am on a sunny Wednesday morning in June, the demolition crew outside the largest coal-fired heating plant in downtown Beijing went to work.
Two excavators trundled forward to knock down the coal boiler built a generation ago in 1987. Wedged between two schools, the local tax office and the 1990 Asian Games village, the North Heating Plant housed the largest coal furnace within Beijing's fourth-ring road.
The plan is to retrofit the plant to burn cleaner-burning natural gas. In a multibillion-dollar effort to ease chronic smog, China's capital is shutting down its coal-fired plants and replacing them with gas-fuelled power stations by the end of this year.
But far from wanting coal to disappear from the scene, the Chinese government is looking to engineer a future role for the much-maligned fossil fuel - albeit in a different form.
From coal to gas
By the end of this year, an industrial complex more than 330 kilometres away in north China's Inner Mongolia will start turning coal from nearby mines into cleaner synthetic natural gas (SNG) and send it by pipeline to Beijing.
The pilot project, built by one of China's biggest power utilities at a cost of $4.2bn, will initially supply the capital with 1.33bn cubic metres of SNG every year. A third and final expansion to be finished in 2017 will triple annual capacity to 4bn cubic metres - meeting nearly half of Beijing’s current gas demand.
This is a process that uses a lot of water and results in much more greenhouse gas emissions than conventional gas, shale gas or even coal.
China is not stopping there. The government has set ambitious targets for the industry to produce 15-18bn cubic metres of gas per year by 2015, up from hardly anything at present.
Some of the country's largest oil companies have also secured state approval to build both plants and cross-country pipelines that will eventually pump SNG to markets on the eastern and southern coast.
Faced with a rising bill for oil and gas imports, bought to satisfy surging demand at home, it makes sense for China to explore the possibility of converting its abundant coal reserves into relatively cheap synthetic gas.
But experts say China risks stumbling into an ecological disaster in its SNG push, as the environmental footprint of producing the gas makes even coal look green.
"This is a process that uses a lot of water and results in much more greenhouse gas emissions than conventional gas, shale gas or even coal," said Alvin Lin, China climate and energy policy director at the Natural Resources Defense Council in Beijing.
"The scale of planned coal-to-gas plans is worrying people - not just your traditional environmentalists but also energy experts who are looking at China's overall development pattern. Cleaner and more sustainable energy alternatives such as efficiency and renewables would seem to be a wiser choice," Lin added.
The carbon question
One of the biggest concerns is the carbon intensity of producing SNG. Chinese policymakers are promoting natural gas, as they want to see it displace oil products such as petrol in transportation and coal in electricity generation.
But a study by researchers in the US suggests SNG is unfit for both purposes. Burning synthetic gas to generate power produces 36 percent to 82 percent more greenhouse gas emissions than coal-fired plants, when the entire lifecycle of mining coal and then turning it into gas is taken into account, argue the study's authors, Chi-Jen Yang and Robert Jackson from the Nicholas School of the Environment at Duke University.
The case for using SNG as motor fuel fares little better. A separate study published in the journal Energy Policy found that lifecycle carbon emissions of cars running on synthetic gas were 150 percent to 190 percent higher than a normal petrol car, and up to 210 percent more than electric vehicles charged from coal-based power.
"At a minimum, Chinese policymakers should delay implementing their synthetic natural gas plan to avoid a potentially costly and environmentally damaging outcome," Yang said in a statement.
“"An even better decision would be to cancel the programme entirely."
That looks unlikely, given the dozens of facilities like the plant in Chifeng are planned across the country. In Inner Mongolia alone, which has 600bn tons of coal reserves, construction on three similar projects has under way since June and another five have received the green light to begin preliminary work.
As of September, the government has approved 18 large-scale coal-based SNG plants that will be capable of producing a total of 75.1bn cubic metres of gas every year, according to the World Resources Institute. None of these planned plants are located near large Chinese cities, so emissions generated from producing the gas will not hang directly over metropolises.
"Burning SNG in cities like Beijing will definitely reduce air pollution and greenhouse gas emissions. However, from a lifecycle perspective, it is a carbon intensive process and relocates the greenhouse gas emissions and pollution from the east to coal-rich provinces, said Wen Hua, a research analyst in Beijing with the World Resources Institute.
The net effect could mean accelerated climate change - a major concern following crucial talks over global warming at the United Nations climate conference in Warsaw, Poland.
Last week, China's top negotiator on climate change reiterated a pledge by the world's biggest greenhouse gas emitter to cut carbon emissions per unit of economic output by 40 to 45 percent by 2020 from levels in 2005.
China's policy of reducing carbon intensity would appear to be at odds with the huge Chinese investment in SNG - a contradiction that Wen blames on a lack of dialogue between energy policymakers and officials overseeing water resources.
The other problem with SNG is that converting coal to gas is water-intensive. Synthetic gas plants use extreme heat and pressure to gasify coal, which yields carbon monoxide and hydrogen. Steam and catalysts are then added to convert those gases to methane to produce a pipeline-ready substitute for gas.
Between six and ten litres of freshwater are needed to produce one cubic metre of SNG, compared with 0.1 to 0.2 litres for a cubic metre of shale gas. Given the size of the SNG bases China is planning, the water requirements will be enormous.
The World Resources Institute, for instance, calculated that the Inner Mongolia facility feeding Beijing will need to consume more than 32bn litres of freshwater when fully completed - enough to meet one million Inner Mongolians' domestic needs for a year.
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China's fledgling SNG industry is mostly concentrated in the coal-rich arid regions of Inner Mongolia and Xinjiang in far west China. Of the 18 projects approved by the government so far, 16 are located in these two areas. Sizable SNG production there would strain already limited water resources.
These 16 plants will consume up to 700m cubic metres of freshwater every year when running at full pelt, according to the World Resources Institute. That would be enough to fill 280,000 Olympic-size swimming pools.
"China faces challenges from both water supply and energy security. It is very important for policymakers to factor water considerations into their decision-making around energy issues. This means that energy authorities should be connecting local water authorities and experts to incorporate water considerations into their planning and policies," said Wen.
Potential solutions to the challenges presented by water scarcity have begun to emerge, however, including a coal-to-gas conversion process from a small US alternative energy start-up.
Massachusetts-based GreatPoint Energy is building a $1.25bn complex near the city of Turpan in Xinjiang that requires half the water used in typical gasification processes - a useful factor when setting up a gas plant in the desert.
"We are being recognised as having a very high efficiency, lower water consumption, low cost of production and the ability to use a wide range of coal types," said Daniel Goldman, president of GreatPoint Energy.
"This is very appealing to the Chinese regulators and both state-owned enterprises and private companies in China. It is an exciting time to be in the coal-to-SNG business."
Another advantage of GreatPoint's technology is that it captures carbon emissions, which can then be put to use.
"Sequestering the carbon dioxide in enhanced oil recovery reservoirs is our primary focus, since the opportunity is very large, the need is great… In Xinjiang, water can be saved by substituting carbon dioxide injection instead of water," said Goldman. "[There] is significant interest in this area."
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