Low Carbon Economy and Technology Xinjiang Symposium

Emerson’s Douglas Morris from the Alternative Energy team provides an update from a Low Carbon Economy and Technology in China:

The 2nd annual Low Carbon Economy and Technology Xinjiang Symposium was held last week in Urumqi which is located in China’s Xinjiang province. I had the opportunity to speak at this meeting and to learn about China’s plans to develop coal gasification to meet their growing needs for energy and bulk chemicals. Coal gasification is a core pillar to their overall energy plan.

First off, let’s have a quick geography lesson because not everyone may have heard of Xinjiang province and Urumqi (pronounced U-lu-rm-chi). Located in the northwest section of China, Urumqi is a fascinating place that truly represents the intersection of the Far East and the Middle East. The dominant local language is Uyghur, which is similar to Arabic, but Mandarin and Russian are also prevalent.

So why was this symposium all the way out in the Xinjiang province instead of Beijing or Shanghai? It turns out that Xinjiang is the epicenter for coal chemical plant development. I had the pleasure to meet some local government officials and learn about their plans to develop a host of projects, primarily focused on producing Substitute Natural Gas (SNG) and olefins, all in support of China’s 12th Five-Year plan. Xinjiang has strong national support and local resources to move quickly and execute these projects.

Although this industry is being developed with great speed, there are a couple of key areas that need to be addressed to support this growth. The first is that with so many new plants planned, there may not be sufficient water supplies to support all of these gasification plants. Let’s use an example of a typical coal chemical plant that uses 4000 tons/day of coal. If this plant runs at maximum capacity, it would use about one billion gallons of water. Given the demand already for scarce water supplies, a comprehensive water usage and management plan is a must. In support of this, China recently announced that they will spend $280M on water resource projects in support of the 12th Five-Year plan. Not all of this will go to industrial projects, though.

The second issue is the need for qualified technical workers. Over the next 4-5 years, over 150 gasifiers are planned and each plant will include, on average, 2-4 gasifiers and will need a skilled staff in the hundreds, including operators, maintenace workers, and engineers. There simply aren’t enough of these workers right now, but this is a reconized concern which China is trying to remedy.

Only time will tell how this rapidly growing industry meets these challenges. Nonetheless, China’s comprehensive energy planning provides development and investment structure for their increased need of alternative energy sources. My hope is that someday the US will adopt a long-term comprehensive policy that provides certainty and structure that attracts the private capital required to develop its alternative energy industry.