ASSESSING OPPORTUNITIES IN CHINA'S MARKET FOR CLEAN-COAL TECHNOLOGIES

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005304569
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 20
• Document Creation Date: June 23, 2015
• Document Release Date: September 10, 2009
• Case Number: F-2008-01057
• Publication Date: September 23, 1997

v~ /yam- !.~-+w
r__ ,_
Intelligence Report
Office of Transnational Issues
Technologies
(b)(1)
(b)(3)
23 September 1997
Assessing O~~portunities in China's Market for Clean-Coal
China's dependence on coal to fuel its fast-growing economy raises serious
environmental and health concerns.
? ].Zespiratory disease from poor control of coal pollutants, for instance,
i.s the leading cause of death in China, according to the World Health
Organization.
So far, Beijing has done little to address air pollution problems, but if the Chinese
decide to take more concrete steps, they do not have the domestic capability to
manufacture clE:an-coal technologies such as fluidized-bed combustion, flue-gas
desulfurization, and coal-gasification units.
laepartment of Energy projections.
? China's annual emissions of carbon--estimatedat about 800 million
metric tons--are second only to those of the United States, and with an
expected growth rate more than four times the US level, China will
Have the world's largest carbon emissions by 2015, according to US
? According to an industry study, the potential market for these
technologies could be substantial--some $90 billion over the next 10
years.
A number of factors will determine if this sizable market materializes. China's
current policy on foreign technology sales requires technology transfer, local
production, an-d subsidized_ prices, which do not favor a market for expensive
clean-coal technologies.
? Vioreover, enterprise reforms proposed at the recent 15th Party
Congress mean that Chinese enterprises will have less capital to
invest in technologies that are not associated with production.
APPROVED FOR
RELEASE^DATE:
04-Sep-2009
 ? The poor financial condition of state-owned enterprises also makes
it difficult for Chinese authorities to enforce environmental
regulations.
Prospects for a sizable market would~improve significantly, however, if energy
price subsidies were eliminated, prices were allowed to rise to market levels, and
environmental laws were strictly enforced.
_.
? Under these conditions, Chinese consumers would be more
conscious of the need for energy efficiency, and domestic suppliers
would be in a better financial-position to invest in clean-coal
technologies.
? Beijing might then look for ways to improve plant efficiencies and
apply clean-coal technologies in energy-intensive industries such
as oil, chemicals, and steel
Key to gaining; access to any Chinese market For clean-coal technology will be
financing, especially offers of concessionary financing and direct aid. The
Chinese also favor joint ventures to ensure long-term financial commitments.
win Chinese contracts
using aggressive marketin tactics such as concession financin to
Companies from Japan, Germany, and France are formidable
competitors of US firms, especially because they have a long history of
Nonetheless ~ the Chinese recognize that the United
States has a clear technological advantage in nearly every clean-coal technology on
the market today, and US firms have established a good track record for completing
Chinese energy projects on time and within budget
? US companies also excel in less-sophisticated and costly technologies
to improve plant efficiency, and sales of these technologies could
serve as a way. to gain a foothold into China's larger market for
clean-coal technologies.
 A Staggering Pollution Problem
_ _ .. _.
1/hina's heavy xeliance on its abundant and cheap coal reserves to supply its fast-
growing demand for energy has not only made China the world's largest coal
consumer but has-raised serious environmental and health. concerns. Inefficient coal
use and poor control of coal emissions are the root of serious air pollution and health
problems in China.
? For example, ambient ground-level particulates and sulfur dioxide in
- -
_ _China average more than five times World Health Organization
{WHO) standards, and respiratory disease is the leading cause of death,
according to the WHO.
? .Moreover, according to official United Nations' statistics, China's
annum emissions of carbon--estimated at about $00 million metric.
"~ tons--are second only to those of the United States.
The expected rate of growth in Chinese carbon emissions, however, is
Four times that of the United States and, by 2015, China will have the
world's largest carbon emissions, according to US Department of
Energy projections
In an effort to address environmental problems, China in recent years has initiated
what most industry observers characterize so far as a public relations campaign that
boasts of ambitious plans to reduce air pollution. While some concrete steps have
been taken to reduce harmful emissions and to improve coal-burning efficiency, these
efforts have produced mixed results. The Chinese, for example, have promoted new
technology to shape coal into briquettes for widespread residential and commercial
cooking as well as the use of hot water district heating and town gas in major cities to
limit coal use.x -
? e increase in coal briquette
production, which now accounts for about 30 percent of residential
coal use, has been the most important development in reducing urban
air pollution.
1,District heating is the distribution of hot water (orlow-pressure steam) to heat large urban
apartments. The hat water is cogenerated (coproduced) with electricity at coal-fired power
plants.. Town gas is fuel gas produced from coke manufacturing used for residential cooking
and heating. Tt was replaced by natural gas inmost developed countries in the 1950s
 ? Government projections for increased use of district heating and town
gas, however, have not been achieved because of low, subsidized
1?rices for these energy sources.
? )