CHINA CBM PLAY

China’s Methane Attracting Carbon Credit Traders
James Finch, June 12, 2007 (Seeking Alpha via Yahoo Finance)

WHO
China National Reform and Development Commission [NDRC], US Department of Energy [DOE], Jincheng Anthracite Mining Group, Fortis Bank (Asian carbon market director Shane Spurway)

WHAT
Coalbed methane [CBM] has huge growth potential in China
click to enlarge)
WHEN
- Pollution problem announced June 12.
- China will overtake the US as an energy consumer and polluter by 2009

WHERE
- China’s largest coal supply: northern Shanxi province
- Jincheng, in Jiangxi province, has CBM
- Also, Guizhou Province, 400 miles northwest of Hong Kong.

WHY
- 62% of China’s cities are polluted; 39 on “BlackList”
- China pollution affecting Korea
- This year’s extreme weather may be related to climate change
- Economic growth requires energy
- DOE says US will need 90 gigawatts over 25 yrs to keep going: 151 coal plants or 100 nuclear plants or 60,000 wind turbines
- China needs more
- 75% of China’s 1.45 trillion kWh of electricity in the first half of 2007 from coal
- China will add electric capacity equal to all of Canada between now and 2050
- China also looking to nuclear but uranium and molybdenum supplies are tight.
- Looking at “clean coal” (carbon capture and geologic sequestration, CCS) and carbon trading
- Coalbed methane (CBM) is cleaner-burning gas for electricity and offers the possibility of carbon credit sales. It “degasifies” the coal mines. And, because methane gas is a worse GHG than CO2, a ton of methane is the carbon market equal to 20 tons of CO2.
- Guizhou province: 100 million square meters of CBM in 2007
click to enlarge
QUOTES
- Spurway: “Methane will probably be one of the most popular projects in the next three to four years…”
- US EPA: "Guizhou province has the largest coal reserve in southern China as well as rich CBM resources. The CBM reserve in Guizhou is 3.1KB m3, accounting for 22 percent of the total in China…The CBM resources in Guizhou are not only rich but of high quality as well, with the CBM reserve 29KB m3 in the methane-rich areas of over 8 m3 methane per ton coal, accounting for 94 percent of the total amount of local CBM resources.”
- Finch: “…through 2012, China’s coal mines and the methane contained in those mines is more likely to a major energy driver in attracting foreign capital [than nuclear]…[carbon trading credits] are attracting foreign investment, bringing the country new technologies and gifting the Chinese government billions of dollars for trying to reduce their air pollution.