Cheap coal a hurdle to China natgas growth - expert
Date: 30-Jan-03
Country: USA
To leap the hurdle, China must define a national natural gas policy that reforms gas prices, defines gas quality standards, and provides incentives for development and construction of infrastructure, said Xavier Chen, the China Program Director at the Paris-based International Energy Agency at a conference in New York.
Natural gas provides China with just 3 percent of its energy, compared with oil at 25 percent. Coal provides nearly 70 percent.
"There is strong competition from coal, it is cheap and abundant, and China has a lack of gas technology," said Chen.
There are also natural gas infrastructure problems, from transporting gas to burning it for power. "China cannot manufacture small gas turbines," Chen said.
China's leadership has set a goal for natural gas growth to 6 percent of total energy supply by 2010. Chinese oil major PetroChina has set a goal of 12 percent by 202O.
China has only 1 percent of global proven natural gas reserves, mostly located in the central and western parts of the country, away from the high demand eastern parts. Still, the reserves could provide China with its natural gas needs for the next 50 years, said Chen.
China broke ground last summer on the West-East gas pipeline which is expected to span 2,500 miles (4,000 km) from the Tarim basin to Shanghai. Exxon Mobil Corp., Royal Dutch Shell, and Russia's Gazprom have also invested in the line which is expected to run gas by 2005.
Some analysts believe China could eventually connect the West-East pipeline to tap into Russian gas reserves.
The price of heavy coal dependence in China could prod China to faster natural gas development, said Chen.
Coal burning in China, combined with the explosive growth of car demand of about three million vehicles per year, makes the nation a leading emitter of pollutants.
China is the second largest emitter of amount of global CO2, but is the world's largest emitter of both soot and sulphur dioxide (SO2), a cause of acid rain, which damages 40 percent of Chinese land, according to IEA.
A 1998 World Health Organization report said seven of the 10 most polluted cities in the world. Water and air pollution cost China $24 billion in 1995, or about 3.5 percent of Chinese gross domestic product in that year, according to the World Bank.
China last September ratified the Kyoto protocol meant to rein in emissions of greenhouse gases blamed for warming the planet. But as a developing nation it is not bound by any targets for restraining carbon dioxide emissions.
"Kyoto is just one step, there will be certainly new commitments coming," said Chen, "without Chinese participation it will be hard to arrest the global warming process."
China has already banned the use of coal in certain areas where SO2 emissions and acid rain is a problem.