To achieve low-carbon societies and economic growth at the same time, a well-balanced energy mix is essential. This means making good use of renewable energies and nuclear power, but it requires the sensible, sustainable application of fossil fuels too. Coal in particular is here to stay, at least for the foreseeable future. The world's recoverable coal reserves are abundant and widely distributed, and we can expect to see more coal-fired thermal power stations being built in the years ahead, primarily in emerging economies. Accepting this inevitability, it is paramount that we promote the development of clean-coal technologies to reduce CO2 emissions and prevent global warming, and put these into practical application as soon as possible. This is where MC comes in. We have been involved in both IGCC and CCS projects to make coal a cleaner and "greener" option. Read on to learn more about these endeavors.
(Please note that the information in the following chapter comes from interviews that were conducted in 2010, and therefore reflects circumstances at that time).
Backed by both the Japanese and Australian governments, MC and Mitsubishi Heavy Industries (MHI) have been working to commercialize power generation businesses that employ IGCC and CCS technologies. The "ZeroGen Project" is one example underway in the northeast state of Queensland.
Integrated Combined Gasification Cycle (IGCC) is a term used to denote systems that turn coal into gas, and then power turbines with the steam produced by the primary combustion. These systems are 20% more efficient than conventional, pulverized coal power generation technologies, and are less of a burden to the natural environment in terms of disposing of the emitted gasses and ash. As its name implies, Carbon Capture and Storage (CCS) refers to systems that capture CO2 emitted from power stations and store it deep underground. This technology has promise in terms of lowering the amount of CO2 released into the atmosphere, one of the causes of global warming.
In truth, IGCC is not a new technology. Its merits have already been demonstrated at several power plants built in the US and Europe during the 1990s.
Due to the highly-sophisticated nature of IGCC technologies, the cost of introducing these systems is substantial. Because the economic benefits derived from the increased energy efficiency have failed to offset the cost of investment, these technologies have proven difficult to commercialize; for more than a decade little progress was made. Recently though, heightened awareness of environmental issues such as preventing global warming and reducing carbon footprints, have stimulated renewed interest in both IGCC and CCS technologies. MHI is applying the latest advances to its ZeroGen Project, and aiming to commercialize a new business model that integrates both methods.
With the addition of CCS functions, the power generation costs of IGCC and conventional coal-fired systems are said to be roughly the same. Furthermore, because coal-gasification technologies – the core of IGCC systems – can also be applied to the production of alternative fuels like natural gas and diesel oil, this technique is also being re-evaluated from the perspective of energy security.
Clean coal technologies leave a smaller carbon footprint than traditional coal-fired infrastructure and if viable should help ensure a more stable supply of energy. While future demand for these technologies is expected to exceed ten trillion JPY per year, there remain a number of barriers to commercialization.
To start, it costs a lot of money to develop new and sophisticated technologies. Realizing commercial-scale demonstration projects necessitates considerable funding at the development stages, and that means government support is essential. There is also a strong desire throughout the industry to design CCS systems as soon as possible. The required business frameworks have yet to be established, however, and until these are in place it will be very difficult to commercialize CCS technologies. Some of the mechanisms that are needed include legislation for CO2 sequestration credits and leak prevention, and a way to tie this business in with existing systems for emissions trading. The first challenge will be to ensure that governments and local citizens alike correctly understand the significance of introducing clean coal and CCS technologies. Considering tax revenues may have to be increased to make these systems and technologies viable in the near future, it may take some time before public opinion can be swayed.
MC is currently involved in two CCS projects in Australia. The first is the ZeroGen Project in Queensland that is being developed jointly with the state government and MHI. The world’s first commercial-scale demonstration project integrating both IGCC and CCS technologies, ZeroGen is slated to commence operations in 2017.
The other project is the CarbonNet Project. This is being spearheaded by the Victoria government and involves the additional installation of a CO2 capture plant newly developed by MHI to the existing lignite (brown coal) fired thermal power station owned by local partner Loy Yang Power. Other facility for transportation and storage of the CO2 is being developed alongside with the intent of integrating all systems. The aim is to launch commercial operations at CarbonNet sometime in 2018.
There are high hopes that clean coal technologies will lower CO2 emissions, but if we are to be successful in quickly commercializing these technologies, we must identify suitable areas for demonstration projects. The keys here will be gaining the cooperation of host governments and local citizens, and establishing environments that are advantageous to developing our businesses, factoring in competition with rival firms and synergy with our existing operations.
For example, due to its economy's high dependence on coal, Australia has been more active than other countries in pushing for the swift commercialization of clean coal technologies. Also, compared to Europe and the US, Australia has not really made its own advances in this field and is therefore more accommodating of technologies from Japan. The news is good for MC as well, as we have established strong ties with the Australian government through years of joint coal operations. Although the market for plant and equipment business is relatively small, the environment appeared conducive to success for MC, and that is why we selected Australia for our initial venture into the clean coal business.
The challenge of creating new businesses in the field of electric power is no different than in any other field. In addition to understanding the ins and outs of our immediate power plant operations, we must always keep up to speed on information coming from other domains, including the coal, natural gas, and emissions credits industries; it is essential to stay apprised of cross-business developments. This is a field where MC can demonstrate its comprehensive strengths as a global integrated business enterprise; in other words, pick up on not only the trends of our customers and manufacturers, but changes underway throughout the world, developments in different countries or regions, and the needs of the people who live there. By doing so, we can formulate the best solutions possible.
Contents Produced in Cooperation with Nikkei Business Online Special / Cross Architects, Inc.