By Bian Siying and Zhang Fuqin

New challenges from carbon neutrality

1. Efforts to achieve carbon neutrality

On January 15, China Petroleum and Chemical Industry Federation (CPCIF), and 17 petroleum and chemical industry parks and firms, such as CNPC and Sinopec, jointly issued Declaration of Reaching Carbon Emission Peak and Carbon Neutrality. To reach goals set in the declaration, the Ministry of Ecology and Environment calls for making specific plans, seeking ways to halt the rise of carbon emissions, establishing low-carbon industrial and supply chains, etc. Further, the national carbon trading market will expand scope of involved industries during the 14th Five-Year Plan period (2021-2025). Petroleum and chemical firms – one key source of carbon emissions – are required to actively participate in the carbon trading.

2. More stringent criteria on environmental protection

While issuing plans to reduce air, water and soil pollution, China has rolled out many new standards to protect environment in recent years, like pollutant discharge standards for refining, petroleum and chemical industries. Take the refining industry as an example. Refineries will continue to perfect clearer production, and decrease discharge of major pollutants including COD, ammonia nitrogen, sulfur dioxide, nitrogen oxide, etc.

Current situation of low-carbon development of petroleum and chemical companies

1. Try to establisha clean, low-carbon energy structure by propelling development of natural gas, solar energy, wind energy, geothermal energy, hydrogen energy, etc.

* Natural gas

On the basis of stabilizing petroleum business, CNPC improved natural gas production, supply, storage and marketing systems and tried to maintain rapid growth of natural gas business.

CNOOC intensified exploration of natural gas, and strengthened capabilities to develop unconventional gas and supply LNG. In addition, it constructed many natural gas power plants such as Putian Gas Power Plant –which was named “Green Factory” in Fujian province – which, since 2016, has contributed clean electricity of 10.43 billion kWh, and decreased emissions of carbon dioxide by 5.4 million tons, sulfur dioxide by 9 930 tons, and nitrogen oxide by 8 665 tons.

* Solar and wind energy

At the end of 2019, China accounted for 30% – equivalent to 790 million kW – of the world’s renewable energy generating capacity, and 41% of global wind power equipment production. The nation’s wind and PV power equipment manufacturers have established complete industrial chains.

Technical progress helped China’s offshore wind power market grow rapidly, with new generating capacity up 42.7% YoY to 1.66 million kW, and accumulated generating capacity reaching 4.45 million kW, both in 2018. Companies having ability to conduct offshore oil and gas operations actively constructed offshore wind power projects. CNOOC started out in the offshore wind power business in 2018, and annual electricity production of its first wind power project, Zhugensha offshore wind power project, reached 865 million kWh.

* Geothermal resources

China is rich in geothermal resources, mainly medium-low temperature geothermal resources distributed in sedimentary basins such as Bohai Bay Basin, Songliao Basin, Ordos Basin, etc. High-temperature geothermal resources are mainly in southwestern China like southern Tibet, western Yunnan and western Sichuan. CNPC and Sinopec have both set foot in geothermal business.

Geothermal resources made up 0.6% of China’s primary energy consumption in 2018, but annual exploitable amount – 2.6 billion tons of standard coal – accounts for 56% of primary energy consumption. Hence huge development potential. Geothermal resources of hydrothermal type will remain a medium to long-term objective.

* Hydrogen energy

Hydrogen energy plays an important role in replacing hydrocarbon fuel, and can be used as a supplement to conventional gas supply. Major hydrogen production methods currently include natural gas reforming, gasification of coal or coking coal and water electrolysis.

CNPC developed reforming hydrogen production catalyst with low water to carbon ratio, which helped PetroChina Daqing Petrochemical Company decrease energy consumption during hydrogen production process. Natural gas reforming hydrogen production technology of CNPC supported PetroChina Ningxia Petrochemical Company to construct 450 000 t/a synthetic ammonia and 800 000 t/a urea fertilizer units. In addition, CNPC made progresses in hydrogen storage materials, pipeline transportation of hydrogen, hydrogen refueling stations and fuel cells.

While accelerating the establishment of hydrogen production, purification, storage, transportation and marketing industrial chain, Sinopec will expand hydrogen production and utilization scale, and optimize hydrogen source structure via greatly promoting hydrogen production with renewable electricity. Further, the company plans to construct a large number of hydrogen refueling stations mainly in Beijing-Tianjin-Hebei region, Yangtze River Delta and Pearl River Delta, meeting demand from hydrogen fuel buses, logistics vehicles and taxis.

* Other energy

CNPC is actively developing biomass energy, and constructed a 600 000 t/a corn fuel ethanol production base in Jilin.

2. Improve energy efficiency, shut down outdated production facilities and decrease energy consumption

Comprehensive energy consumption of refining should have declined to 63 kg standard oil/t in 2020, according to Plan on Energy Conservation and Emission Reduction made for the past five years. For new refineries, energy consumption per unit of energy factor shall be seven kg standard oil/(t*factor) at most. The Ministry of Industry and Information Technology recently issued List of Top Runners in Reducing Energy Consumption 2020. Sinopec Qingdao Refining & Chemical Co., Ltd. decreased energy consumption per unit of product to 6.44 kg standard oil/(t*factor), and ranked the first in the refining area.

Domestic petrochemical industry has gradually adjusted industrial structure, eliminated outdated capacities, and effectively relieve over capacity of refining, chlor-alkali, fertilizers and pesticides. Enterprises took different measures to reduce energy consumption. For example, Sinopec Beihai Refining & Chemical Co., Ltd. adopted water resource recycling system to increase wastewater reuse rate to 100%, and utilized abundant rainwater resources, the source of 13.3% of water for production.

3. Construct carbon dioxide capture, flooding and storage projects, and chemical projects with carbon dioxide as raw materials

* Carbon dioxide capture, flooding and storage projects

With development of CCUS technology (carbon capture, utilization and storage), more and more domestic companies or institutions started to study carbon dioxide capture, and two methods currenly adopted by domestic firms are chemical absorption and pressure swing adsorption (see Table 1 for details).

Dozens of carbon dioxide flooding tests were conducted in many domestic oil and gas fields, and supporting technologies have been basically mature. In Jilin Daqingzijing oil field, four carbon dioxide flooding and storage test areas have been constructed since 2008, boasting oil production capacity of more than 100 000 t/a and carbon dioxide storage capacity of 350 000 t/a. In Daqing, Changqingand Xinjiang oil fields, pilot tests were conducted, trying to make breakthroughs in carbon dioxide flooding and storage technologies. For Songliao, Bohai Bay, Ordos and Dzungaria basins, scale of carbon dioxide flooding will greatly increase by 2030 if there is a cheap source of carbon dioxide, said experts.

On July 8, 2020, PBOC, NDRC and CSRC jointly issued List of Projects Green Bonds Support (2020 Edition). CCS projects were included for the first time, enriching financing channels. With implementation of more measures to reduce carbon emissions and with development of carbon trading market, more carbon dioxide capture projects will kick off, pipeline facilities will be improved, carbon dioxide flooding technologies will be more widely used in old oil fields, and demand from oil fields and power grids for clean electricity will increase.

* Chemical projects with carbon dioxide as raw materials

Some refining and chemical enterprises constructed carbon dioxide polyester projects. Other projects with carbon dioxide as raw materials included a 3 000 t/a carbon dioxide/epoxy compound copolymer project of Inner Mongolia Mengxi High-Tech Group Co., Ltd., CNOOC’s 3 000 t/a carbon dioxide copolymer degradable plastics project, both helpful to reduction of carbon emission, etc.

4. Spend more on R&D to strive for low-carbon technology innovation

* CNPC

Geothermal energy – CNPC developed 10 medium-low temperature geothermal evaluation, development and utilization technologies, and innovated five high-temperature geothermal drilling and completion technologies.

Biomass energy – Production technologies of corn fuel ethanol were upgraded, and new progresses were made in biodiesel reaction separation coupling technology, bio-jet fuel production technology, and cellulose to fuel ethanol technology.

Energy storage – The company established an energy storage material production and performance evaluation platform, and conducted technical R&D on scale production of key electrode materials of lithium titanate batteries, sodium-ion batteries, solid-state batteries, etc. Further, it developed two types of lithium titanate electrode materials reaching international advanced level.

Natural gas hydrate – The company signed a general contract for China’s second round of hydrate test production in the South China Sea, and for the first time made breakthroughs in deep-sea argillaceous silt hydrate production technology.

* Sinopec

Sinopec Maoming Petrochemical Company has developed more than 80 green chemical products since 2011, with 21 ones filling the domestic gap and 10 meeting the world's advanced level. Super-large plastic containers for liquids – made by high-density polyethylene TR580M – could save storage space by 30% compared with traditional plastic barrels packaging, and could be used for many times, decreasing both energy consumption and carbon emissions.

Sinopec Zhenhai Refining & Chemical Company put green, low-carbon products into comprehensive scoring system to minimize impacts on resources and environment. Six new environment-friendly polyolefin products realized industrial production. On December 4, 2019, the company developed antibacterial, antistatic rolling plastic special material R646UQJ, the first of its kind in china.

Low-carbon strategies of domestic giants

CNPC will continue to make energy structure more low-carbon, improve comprehensive utilization of resources, greatly decrease emissions of greenhouse gases, and actively participate in carbon emissions permit trading. Other plans mainly include propelling green production system, developing new businesses (in areas such as CCUS), etc.

In addition to increasing energy efficiency and consumption of clean energy and non-fossil energy, Sinopec will promote energy substitution, greatly reduce carbon emissions, construct CCUS projects and try to become the world’s leading clean energy chemical company.

CNOOC will propel cleaner production, decrease carbon emissions, and speed up construction of green oil fields/factories, and establishment of natural gas production, supply, storage and marketing systems. Meanwhile, it plans to increase proportion of clean, low-carbon energy to more than 60% in the company’s oil and gas supply chain.Projects regarding offshore wind power and utilization of ocean energy resources will get more attention. Other strategies mainly involve conducting R&D on carbon elimination technologies, improving carbon asset management capability, etc.