I.Because the production process is similar and the emission reduction grips overlap, we will take synthetic ammonia as an example to further clarify each carbon reduction grips in this article.
Demand-side management: The main downstream use of synthetic ammonia is nitrogen fertilizer production, and about 90% of synthetic ammonia is processed into nitrogen fertilizer. Nitrogen fertilizer use in China is projected to have the potential to decline by 40 percent by 2050, driven by a combination of reduced arable land and more efficient fertilizer use.
a. Reduction of cultivated land: China's total cultivated land area is expected to continue the downward trend in the future, from 2 billion mu to nearly 1.8 billion mu, an estimated decline of 10%. Long-term over-cultivation has led to the decline of cultivated land quality, currently China's 2 billion mu of cultivated land has 4% of polluted land, 17.8% of low arable land and more than 80 million mu of unstable farmland, recuperation, return to forest and grass, rotation and fallow is imperative. At the same time, along with the process of urbanization, the rural population is expected to move out further in the future, resulting in some arable land wastage.
b. Improved fertilizer efficiency: Without affecting yields, we project that annual nitrogen fertilizer use per hectare in China has the potential to decline by 30% by 2050 (see Figure V). The per capita arable area of Chinese farms is much lower than that of Western countries, and small farmers lack the knowledge of scientific use of chemical fertilizers, leading to the problem of excessive and blind use of chemical fertilizers in China. The average amount of nitrogen fertilizer used in China's crop hectares is 306 kilograms, much higher than the world average and more than twice that of the United States. The problem has improved in recent years, and during the 13th Five-Year Plan period, the government actively controlled fertilizer use through farmer education and local supervision. In the future, with the integration of land ownership, large farms are expected to gradually replace individual farmers as the mainstream farming model. Large farmers use far less nitrogen fertilizer per hectare than small farmers; At the same time, large farmers are also more willing to adopt optimized farming techniques, such as the use of organic fertilizers, slow-release fertilizers and other new fertilizers, to further improve the efficiency of fertilizer use.
2. Existing carbon reduction technologies: Emerging gasifier and fuel electrification technologies are mature and, if widely applied in the industry, can effectively reduce carbon emissions by more than 50%, but will incur additional capital expenditures and operating costs. Due to the low overall profit level of the coal chemical industry, external thrust is needed to internalize the external cost of carbon emissions in order to improve the application space of these two technologies in the industry.
a. Emerging gasifiers: China's existing gasifiers are still dominated by old fixed beds, and their single-furnace production capacity is low and pollution treatment is difficult, which has been generally eliminated by modern coal chemical industry abroad. With the increase of carbon emission requirements, coal chemical enterprises need to actively replace production capacity, eliminate and upgrade the old fixed bed gasification technology with high coal consumption, and use new high-efficiency pulverized coal gasification and other technologies. It is estimated that by 2030, by upgrading gas equipment, the industry has the potential to reduce coal consumption per unit by 30%, thereby reducing carbon emissions by about 15%.
b. Fuel electrification: Coal-fired electrification, which can eliminate carbon emissions from coal (50% of the total), is a mature technology, but it significantly increases operating costs in high-temperature processes, and is estimated to cost more than $100 to reduce 1 ton of CO2.
3. Emerging carbon emission reduction technologies: CCUS and electrolytic hydrogen, two emerging technologies, are the starting points to solve the last mile of carbon emission reduction in the synthetic ammonia industry. Both of these technologies can reduce carbon emissions in the production process of synthetic ammonia by more than 80%, but they are still in the stage of technological exploration.
A. Carbon capture utilization and storage (CCUS) : CCUS has a good coupling with the development of coal chemical industry, because the carbon dioxide concentration is high, the capture cost is much lower than other industries. According to our estimates, the cost of CO2 capture per ton in the synthetic ammonia industry is about 80 yuan, while in other industries (e.g., cement, electricity) it is more than 200 yuan. This technology can be preferentially used in North China, Northeast China, Inner Mongolia and other places close to oil fields to reduce carbon emission costs through carbon dioxide flooding. In the next 30 years, if the development of CCUS is improved, the construction of transport pipelines and storage facilities, and the formation of industrial synergies with other high-carbon industries, it is expected to further expand the application of the industry.
b. electrolytic hydrogen: The use of electrolytic hydrogen to produce synthetic ammonia instead of coal to produce hydrogen, this technology has been mature, but due to the current high cost, has not been applied in the synthetic ammonia industry. According to our calculation, assuming that the industrial electricity price is 6 yuan per degree, the cost of electrolytic hydrogen to synthetic ammonia is more than 3 times that of coal to hydrogen. With the further improvement of the efficiency of electrolytic hydrogen conversion and the reduction of the price of new energy, in some areas with surplus renewable energy, the future cost of electrolytic hydrogen can be lower than that of coal to hydrogen. If the cost advantage is obvious, the ammonia industrial plant cluster may gradually transfer to this area, and the carbon dioxide required for downstream urea production can be obtained from the carbon dioxide captured by the surrounding high-carbon enterprises.
Ii. Inspiration for coal chemical enterprises
Turn crisis into opportunity, lock downstream demand in advance, and look for future business opportunities: Evaluate the demand changes of major downstream customers in a low-carbon environment, and find low-carbon growth points. In the face of new growth opportunities, analyze potential revenue to identify key development directions and develop entry plans. For example, the agricultural demand of the synthetic ammonia industry will decline significantly, and the impact of carbon emission reduction on future earnings can be reduced by entering the downstream fertilizer industry or alcohol and ammonia co-production.
Take the initiative in the production process and look for carbon reduction opportunities: To deeply understand the impact of the national carbon emission reduction target on the coal chemical industry chain during the 14th Five-Year Plan period, formulate carbon emission reduction target according to the current carbon emission situation of the enterprise, and formulate specific emission reduction measures at the asset level, calculate its emission reduction potential and investment return, that is, the economic benefit, investment cost, operating cost and corresponding risk estimation, and find out the most feasible and economical carbon emission reduction path. Coal chemical enterprises can proactively check and close low value-added product production lines, establish fine chemical production control capabilities through digitization, and upgrade to more mature emerging gasifier and fuel electrification technologies, thereby reducing coal consumption levels.
First, pay attention to the impact of zero-carbon transition on the whole industrial chain of coal chemical industry, advance layout: regularly track emerging technologies such as CCUS and renewable energy instead of coal to hydrogen, and accelerate small-scale pilot under the premise of conditions. At the same time, research and establish a number of future scenarios to predict the final form of the industry chain in a zero-carbon environment, and prepare for future product and service upgrades and business transformation.
Advice for policymakers
Policy makers should fully respond to the call of the central government, take the initiative to set local carbon neutral transition targets, and adopt the most suitable carbon neutral transition path according to local conditions. Local governments should resolutely implement relevant national industrial policies and relevant regulations on coal control and strengthen effective supervision. Should be based on the local environmental carrying capacity, gradually develop and promote the development of "coal and electricity integration", the formation of modern coal chemical industry as the core of the "oil and gas electricity" multi-generation model, explore the chemical industry and coal, metallurgy, power, textile and other industries integrated development, so as to improve industrial competitiveness and overall efficiency. We will phase out backward coal chemical products with low added value, vigorously develop the fine chemical industry, and reduce overall carbon emissions while improving the competitiveness of local industries.
At the same time, local responsibilities should be highlighted, performance evaluation should be strengthened, policies and measures should be improved, pilot experience should be explored, and enterprises and society should be guided to increase capital investment in carbon emission reduction technologies and zero-carbon industries. Targeted subsidy support is actively provided to carbon emission reduction investment with low economic efficiency, such as subsidies for enterprises to adopt new gasifier and coal-fired electrification initiatives, and preferential loans, green bonds or direct subsidies for enterprises that are qualified to carry out CCUS and electrolytic hydrogen production pilots. Guide capital to lay out core carbon emission reduction technologies at the macro industrial level, establish green industry alliances, expand scale effects, and reduce the marginal cost of enterprises using carbon emission reduction technologies. Enterprises are encouraged to actively invest in research and development of core carbon emission reduction technologies, so that they can go abroad and go to the world at the right time, and create a green "created in China" business card.
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