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1. Project Summary and Relationship to China Agenda 21

This project seeks to import desulphurisation technology suitable for China and to get support and co-operation from international finance organisations and developed countries. Specifically, China needs SO2 controlling techniques that can be applied in power plants, industrial boilers and other furnaces. In addition, SO2 emitters need to improve their operating process by reducing installation and operation costs of desulphurisation technologies. The project also plans to implement a retrofitting pilot project for burning coal flue gas desulphurisation technology on existing Chinese equipment. In the policy-making area, this project will be a suitable economic instrument in desulphurisation. Finally, the project aims to commercialise the desulphurisation equipment and technology. All these efforts will improve the air quality in China.

This project is based on programme area 18A of China Agenda 21, and is related to programme areas 13C and 12B.

2. Background

China ranks first in the production and consumption of coal in the world. It is the primary energy source because China has an abundance of coal and is a developing nation. Coal will still play an important role in social and economic development in the foreseeable future.

At present, 500,000 sets of coal burning equipment are used in China with an annual SO2 emission of 1,800 tons, which accounts for 90% of the total emission of SO2. Coal burning power plants alone are responsible for one-third of the SO2 discharged. Adding to the fact that with Chinese industry developing at the speed of 10% in the last ten years, the emission of SO2 will seriously degrade air quality if the situation is not controlled effectively.

The continuous increase of SO2 emission has worsened the acid rain problem in some local regions, and has aroused close attention from the international community. The major problem of SO2 emission is that China lacks suitable technology for its power plants and boilers.

Environmental protection has always been a priority for the government. An emission concentration limit for SO2 has been set in the amendments of the Emission Standard of Air Pollutant From Boilers and Emission Standard of Air Pollutant From Power Plant in 1991. In 1993, the National Environmental Protection Agency (NEPA), approved by the State Council, began to levy fines on SO2 emissions from burning coal and carried out a pilot study on acid rain prevention and control in Guizhou, Guangdong provinces, and in Liuzhou, Nanning, Guilin, Hangzhou, Qingdao, Chongqing, Yibin, Yichang, and Changsha cities. The Amendment of Law on Air Pollution Prevention and Control, passed by the National People's Congress in August 1995, has a clear direction on controlling SO2 emission, which stated:

"All the new coal fire power plants and major enterprises that emit SO2 and cannot use low sulphur content coal in the acid rain control zone or the SO2 emission control zone must install scrubbers or other sulphur removal measures to control SO2 emission."

The Seventh and Eighth Five-Year Plan has listed several power plants requiring desulphurisation technology development, including: Spray Dryer Absorber Flue Gas Desulphurisation (FGD) for mid-stage equipment of the Sichuan Baima Power Plant with a capacity of 70,000 NM3/h; Phosphorous Fertiliser Method for the mid-stage equipment of the 5,000 NM3/h capacity Sichuan Douba Power Plant; the Injection in Furnace with Calcium and Dampness Activation technique was applied to the 20 t/h industrial boilers. Despite the fact that all these techniques are in the research stage with some technical problems, they lay a good foundation for continued investigation on desulphurisation technique and policy applicable for China.

After 1990, some desulphurisation techniques were imported from abroad, such as Limestone-Plaster and Spray Dryer Absorber Desulphurisation techniques from MITSUBISHI, High Speed Flow with Dampness from HITACHI, Electron Beam Radiation technique from RENYUAN Japan, and EDSS technique from ALANKOU (USA) company. All of them have been installed or are in a trial operation in China.

However, because imported desulphurisation equipment and techniques are complex and expensive, they are hard to promote. Therefore, in order to push the progress of SO2 emission control, the project seeks to enhance co-operation with the international society, seek financial and technical support from abroad, and research, develop and commercialise suitable desulphurisation techniques for China. Necessary economic measures will be formulated to reduce SO2 emission.

3. Objectives

3.1 Long-term Objective

The project aims to strengthen the enterprises ability in desulphurising the flue gas from coal combustion. It also plans to fully implement the Air Pollution Control Law and reduce loss caused by acid rain.

3.2 Immediate Objectives

• To survey the current status of SO2 emissions from coal combustion and desulphurisation, to evaluate the mainstream desulphurisation technology, and to formulate favourable economic instruments towards flue gas desulphurisation;
• To import advanced technologies, equipment and expertise, to research FGD technology which is suitable for China, and to establish several demonstration projects;
• To commercialise appropriate desulphurisation technology which will enable China to produce desulphurisation equipment domestically.

4. Outputs and Activities

4.1 General survey on the current desulphurisation technologies and their effectiveness in China

• To organise domestic experts to examine the various desulphurisation techniques used in the power plants and other industrial boilers, and evaluate their corresponding effectiveness;
• To evaluate various desulphurisation techniques based on the above techniques. The evaluation will concentrate on cost-effectiveness and technical problems;
• To suggest a suitable technical policy.

Monitoring Indicators: The survey report on the desulphurisation methods and their effects.

Implementing Agencies: NEPA, the Ministry of Electric Power, the State Economic and Trade Commission and other relevant units.

Time Schedule: January 1997 - December 1998

4.2 Pilot projects for large power plant desulphurisation

• To convene domestic and foreign experts to discuss desulphurisation techniques used in large power plants with 300 MW and 600 MW capacity. They will also discuss regulations, financing and operations;
• To conduct pilot projects for the several identified techniques. The pilot projects will provide experimental and technical data, which are necessary for replicating in other power plants and boilers;
• To conduct technical training and information exchange based on the pilot projects.

Monitoring Indicators: 3-5 desulphurisation demonstration projects will be set-up in large power plants, and 10 power plants will be chosen for replicating this technology.

Implementing Agencies: The State Economic and Trade Commission, the Ministry of Electric Power and the related demonstration units.

Time Schedule: January 1997 - December 2000

4.3 The research and development of simple burning coal FGD techniques and pilot projects

• To research and conduct pilot projects on the simple wet desulphurisation technique;
• To research and conduct pilot projects on the manufacture of another desulphurisation technique, and the injection calcimine furnace;
• To import and conduct pilot projects on the Spray Dryer Absorber FGD technique.

Monitoring Indicators: 3-6 demonstration projects

Implementing Agencies: The Ministry of Electric Power, NEPA, the State Economic and Trade Commission as well as demonstration units.

Time Schedule: January 1997 - December 2000

4.4 Formation of manufacturing ability to produce a complete set of desulphurisation equipment for the domestic market

• To choose appropriate enterprises to produce desulphurisation equipment through joint ventures with foreign partners;
• To mass produce the equipment and develop domestic and south-east Asian markets;
• To train managers and technicians who operate plants which will produce desulphurisation equipment.

Monitoring Indicators: 10 environmental protection enterprises with the ability to produce desulphurisation equipment.

Implementing Agencies: the Ministry of Mechanics, the Ministry of Electric Power and relevant units.

Time Schedule: January 1997 - December 2005

4.5 Formulation of economic policy for FGD technology suitable for China

• To employ international experts to provide advice on international energy policy, tax policy, customs duty, and desulphurisation techniques;
• To formulate policy that would control foreign currency for desulphurisation project and would reduce customs duty for key components of imported desulphurisation equipment;
• To draft policies that include desulphurisation cost in electricity pricing and establishment of a SO2 control fund.

Monitoring Indicator: Establishment of economic policy for FGD technique in China

Implementing Agencies: The State Economic and Trade Commission, the Ministry of Electric Power and relevant units.

Time Schedule: January 1997 - December 1998

5. Inputs

5.1 Chinese Inputs

Chinese inputs will be used for technology, office facilities, part of the equipment as well as the cost of research and training.

5.2 International Inputs

International inputs will be used for the cost of technology and equipment in demonstration projects, cost of part of the instrument and training for the project.

5.3 Budget

The total capital needed for this project is US$ 69.7 million. The Chinese participants will raise US$ 38.4 million, while foreign aid and investment will cover the other US$ 31.3 million.

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Table 1. Budget by Item (in million US dollars)

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Table 2. Budget by Output (in million US dollars)

6. Benefits

After the completion of this project, SO2 emission will basically be under control through international co-operation in desulphurisation development. In addition, because some of the desulphurisation technologies have low capital and operating cost, they can reduce the government and enterprises' appropriation. The development would reduce the loss caused by SO2 emission. The pilot projects for desulphurisation equipment production would increase the technical level and productivity in desulphurisation. This provides a good foundation for entering foreign markets and controlling SO2 emission.

7. Risks

This project is faced with two difficulties: capital and technology. The initial investment and operation costs are quite high for desulphurisation. Therefore, responsible agencies will try to obtain government loans and international aid for retro-fitting technology and new desulphurisation technology. In addition, because the desulphurisation technology in China is still immature, the implementing agencies would integrate foreign advanced technology with domestic requirements to solve this problem.

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