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Energy Policy 38 (2010) 3701–3709

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Energy Policy

0301-42

doi:10.1

n Corr

Univers

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journal homepage: www.elsevier.com/locate/enpol

CO2 emissions and mitigation potential in China’s ammonia industry

Wenji Zhou a, Bing Zhu a,b,n, Qiang Li a, Tieju Ma b,c, Shanying Hu a, Charla Griffy-Brown d

a Department of Chemical Engineering, Tsinghua University, Beijing 100084, Chinab International Institute for Applied Systems Analysis, Schlossplatz 1, A-2361 Laxenburg, Austriac School of Business, China East University of Science and Technology, Shanghai 200237, Chinad Graziadio School of Business, Pepperdine University, Los Angeles, CA 90045, USA

a r t i c l e i n f o

Article history:

Received 29 October 2009

Accepted 22 February 2010Available online 12 March 2010

Keywords:

China’s ammonia industry

CO2 emission

CO2 mitigation potential

15/$ - see front matter & 2010 Elsevier Ltd. A

016/j.enpol.2010.02.048

esponding author at: Department of Chem

ity, Beijing 100084, China. Tel/fax: +86 10 62

ail address: bingzhu@tsinghua.edu.cn (B. Zhu

a b s t r a c t

Significant pressure from increasing CO2 emissions and energy consumption in China’s industrialization

process has highlighted a need to understand and mitigate the sources of these emissions. Ammonia

production, as one of the most important fundamental industries in China, represents those heavy

industries that contribute largely to this sharp increasing trend. In the country with the largest

population in the world, ammonia output has undergone fast growth spurred by increasing demand for

fertilizer of food production since 1950s. However, various types of technologies implemented in the

industry make ammonia plants in China operate with huge differences in both energy consumption and

CO2 emissions. With consideration of these unique features, this paper attempts to estimate the amount

of CO2 emission from China’s ammonia production, and analyze the potential for carbon mitigation in

the industry. Based on the estimation, related policy implications and measures required to realize the

potential for mitigation are also discussed.

& 2010 Elsevier Ltd. All rights reserved.

1. Introduction

China’s total CO2 emissions by fossil fuel consumptionincreased sharply at an annual growth rate above 10% from2002 to 2007, to 6.07 billion tons, which made China rank the firstplace in the world (IEA, 2004, 2009). This trend was primarilycaused by fast expansion of heavy industries such as steel,cement, and chemicals production. In China’s chemical industry,ammonia is one of the most fundamental chemicals, and is widelyused to produce fertilizer such as urea and ammonium bicarbo-nate. Driven by agricultural demand, the production capability ofammonia has undergone fast development since the 1950s. Atpresent, China is the largest producer of ammonia in the world,with an annual production output of 51.67 million tons in 2007,accounting for about 33.7% in worldwide total (IFA, 2009). Dueto its unique importance to China’s agricultural production andfood security, ammonia-based fertilizer production still benefitsfrom preferential policies, which are rarely offered for otherindustries. As a result, less constraint has been imposed onammonia plants with respect to energy consumption andpollutant emission. Furthermore, fertilizer industries, includingurea production, have not been included in the inventory of

ll rights reserved.

ical Engineering, Tsinghua

782520.

).

key ‘‘energy saving and pollutant reduction’’ industries(Wang, 2007). Thus, implementing advanced energy efficiencytechnologies as such is hindered, to some extent, by this favorablesituation.

Generally, there are three approaches used for ammoniaproduction: steam reformation of natural gas (or other lighthydrocarbons), partial oxidation of heavy fuel oil (or vacuumresidue), and coal gasification. Among these three alternatives,natural gas is the best in terms of energy efficiency andenvironmental impact. Coal gasification has the highest energyconsumption and has been abandoned gradually worldwideexcept China (Appl, 1998). However, in China, coal gasificationis the most widely used approach due to China’s abundant coalresource and relatively scarce natural gas reserves. This iscompletely the opposite from Europe and North America, wherenatural gas dominates in ammonia feedstock structure. What’smore, technology levels of China’s ammonia plants are uneven.Small-scale ammonia plants implemented with low energyefficiency processes account for the largest share, while advancedprocesses only lie in a few large-scale plants. Consequently,ammonia production in China results in higher energy consump-tion and CO2 emissions, as well as other environmental problems.

In this study, we attempt to investigate the CO2 emissionmechanism and estimate its amount in China’s ammoniaproduction. Besides the status quo analysis, the potential forCO2 emission reduction in the industry and measures to realizethis potential are presented as well. The rest of the paper is

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W. Zhou et al. / Energy Policy 38 (2010) 3701–37093702

organized as follows: in the second section, a background ofChina’s chemical industry development and current CO2 emis-sions status are briefly explained. The third section summarizesthe current ammonia production technology structure and therespective energy consumption in China. In the fourth part, CO2

emission in the process of ammonia production is analyzed, andthe emission factors for different routes and the amount of CO2

emission are calculated. The fifth section discusses the potentialof CO2 emissions reduction in the industry from scenario analysisin the aspects of fuel switching and technology progress, andfinally specific measures required to realize these potential arediscussed in the last section.

2. Chemical industry development and CO2 emissions in China

Since the beginning of the tenth five-year plan (the year of2001), China’s chemical industry has experienced fast develop-ment. From 2000 to 2005, the production value of the entireindustry (with petroleum industry excluded) increased from 927billion yuan to 2221 billion yuan, with an annual growth rate of19.1% on average. Production of some main chemicals, such asphosphate, sulfuric acid, nitric acid, sodium hydrate, etc increasedby 50% during this period, while for some other products likepotash manure, weedicide, calcium carbide, methanol, PVC(polyvinylchloride) etc., the annual output doubled at the sametime (CPCIA, 2007). An integrated chemical industry has beenformed over a long period of development. At present, China’schemical industry contains more than 40 thousand chemicalscovering fundamental raw material, fertilizer, coating, pesticide,synthetic material etc. (CPCIA, 2006), among which ammonia,sulfur acid, caustic soda, calcium carbide, pesticides, etc. areproduced with largest production capacity worldwide. In thewake of China’s industrialization process, a large number ofchemical entrepreneurs have emerged driven by huge demand indomestic and international chemical markets. In the meantime,benefiting from China’s policy to attract foreign investment, moreand more large international companies transfer their productionbasis to China. The drivers from both the domestic andinternational sides have made China one of the largest chemicalproduction bases in the world.

The large production scale has also lead to enormous energyconsumption in China’s chemical industry. As shown in Fig. 1, in2005, the amount of energy used in China’s chemical industry wasmore than 220 million tce (ton coal equivalent), with a proportionof 11% in countrywide energy use. Ammonia productionconsumed 35% of the total energy in the chemical industry,

non -industry

29%

other industry

60%

chemical

industry,

Fig. 1. Ratio of energy use in ammonia, chemical industry, the whole industry and th

CPCIA, 2006).

becoming one of the sectors with the largest energy consumptionand heavy pollutant emissions.

Not surprisingly, the predominance of coal in the feedstockstructure of China’s chemical industry also contributes to CO2

emissions in addition to its high energy consumption. Further-more, production technologies in the industry vary enormously.Both advanced and backward techniques exist simultaneously,which presents a huge difference with regard to energyconsumption and environmental performance. Analyzing theproduction processes for these 40 thousand CO2 producingchemicals would be too broad and time intensive. However, afocused study would yield valuable insight. As a result, weattempt to take ammonia, to analyze CO2 emission in a typicalchemical production process, representing a large quantity of CO2

output and being an appropriate industry proxy since it has themain characteristics of the entire industry as mentioned above.

3. Ammonia production and energy consumption in China

3.1. Overview of the ammonia production status

As an upstream product for widely used fertilizers in China,ammonia production expanded from 31.86 million tons in 2000 to51.67 million ton in 2005, which directly contribute to the growthof overall food production for the country. Current ammoniaproduction technologies in China are developed from bothdomestic R&D and directly imported from foreign companiessuch as Lurgi and Texco. Since the 1950s, the development ofChina’s ammonia industry followed a strategy, which combinedlarge-scale units depending on imported technologies withmedium or small-scale units under domestic R&D efforts (Fei,2007). As a result, current ammonia production in China can beclassified in three levels in terms of production capacity, theseare: large scale (the unit with a production capacity of over 300thousand tons/year); medium scale (the unit with a productioncapacity of between 300 and 60 thousand tons/year); and smallscale (the unit with a production capacity of less than 60thousand tons/year). Among these, the medium and small-scaleplants are dominant for ammonia production. The sum of bothlevels accounted for 82% of the entire output of the industry in2005, as shown in Fig. 2. The widespread prevalence of small-scale plants is partly caused by the original plan for fertilizerdevelopment following the 1950s. This plan included favorableagricultural policies, which aimed to ensure the country’s foodsupply. Therefore, the policies provided an umbrella for theexistence of those small and low efficient plants.

other chemical

industry,65%

ammonia35%

11%

e whole country in 2005 (Data source: China National Bureau of Statistics 2009;

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W. Zhou et al. / Energy Policy 38 (2010) 3701–3709 3703

On the other hand, there is also another classification methodin terms of feedstock type. The raw materials for ammoniasynthesis are hydrogen and nitrogen. Theoretically, the morehydrogen element the feedstock contains, the less energy isrequired to produce material gas. Thus, the process is derivedfrom natural gas, which is the most hydrogen-containing,consumes the least energy for per unit production among thethree alternatives. Because of this merit, natural gas-basedprocesses dominate in worldwide ammonia production and arealmost exclusively employed in new ammonia plants (Appl,1998). But in China, the most widely implemented technologiesare based on coal gasification because of their lower cost, asshown in Fig. 3. This structure is determined by the characteristicsof China’s resources, that is, coal serves as the primary resource inthe energy supply due to its relatively abundant reserves butnatural gas and oil are insufficient and require greaterdependence on imports to meet the growth of domestic energydemand. This situation is also expected to continue in theforeseeable future.

The three scales of techniques represent three levels oftechnologies. For large-scale facilities, natural gas is mainly usedas feedstock, a few units are fueled by coal or coke with relativelyadvanced technologies, for medium scale, the major fuel is coaland heavy oil (due to the fluctuation of oil price, most of the heavyoil facilities were transformed into coal processes), and for small

large 8.40 Mt

18 %

medium 7.32Mt 16 %

small 30.24 Mt

66%

Fig. 2. Share of large, medium and small-scale ammonia production capacities in

2005 (Data source: Zhang, 2006).

from coal and coke, 32.26Mt,

71%

from natural gas,

9.84Mt, 21%

from oil,

3.86Mt, 8%

Fig. 3. Share of ammonia produced from different feedstock in 2005 (Data source:

CPCIA, 2006).

Feed stockpretreatmentand gasgeneration

Carbonmonoxideconversion

Gaspurificat

Fig. 4. Simplified flow chart

scale, the coal gasification process with lower energy efficiency ispredominantly implemented.

3.2. Energy consumption in China’s ammonia production

Irrespective of the feedstock, the complete process of indus-trial ammonia production could be subdivided into the followingsections: synthesis gas production, compression and synthesis, asshown in Fig. 4.

Within the whole process, gas generation requires the mostenergy and is responsible for 60�70% of total energy consump-tion. For this reason, the energy performance of a specifictechnology largely depends on the feedstock employed. Amongthese three routines, the coal gasification process consumes themost energy. Table 1 shows energy consumption conditions forthree typical large-scale ammonia plants in China.

The technologies in these three plants, shown in Table 1,represent the best available level in China in their respective fields.Among the three plants, the Zhongyuan plant that employs thenatural gas process consumes the lowest energy for per unitproduction, and the process could even produce extra electricity andsteam by heat recovery. Compared to worldwide advancedtechnologies (Rafiqul et al., 2005), natural gas fueled processes areat the same level in terms of energy performance. The conditions inthe three plants also show that fuel consumption accounts for thelargest part in total SEC, because regardless of which type of fuel isused, it always performs two functions, heat supply (by combustion)for chemical reaction and hydrogen preparation as a feed gas.

In coal-based technologies that dominate China’s ammoniaproduction, the most widely used process is based on a so-calledupper gastrointestinal (UGI ) gasifier, which is cost-effective butrequires more energy. Other advanced coal-based processesdeveloped by Lurgi, Texco and Shell accounted only for a smallpart, and are mainly implemented in large-scale plants.

The UGI-based process was originally imported from theUnited States, and has been developed domestically for severaldecades in China (Jiang, 2005). However, the assimilation of thistechnology did not happen for other advanced processes. Table 2shows a historical improvement for different alternatives.

As shown in Table 2, energy performance for natural gasprocesses did not change significantly from 1990 to 1995, and theonly remarkable improvement occurred in the use of coal. Due tothe lack of technology adaptation and assimilation, China’s large-scale ammonia production heavily depends on imported ad-vanced technologies, which come at a higher cost and thereforehinder these advanced technologies from widespread diffusion.For the same reason, these originally imported technologiesperform worse than those in developed countries, as shown inFig. 5. Data in Fig. 5 indicate that in 1980, on average the level ofammonia energy consumption in China’s large-scale plants wasonly 3.3 GJ/ton NH3 higher than that in the U.S. However, this gapwas enlarged in the following decade, with a maximum value of11.2 GJ/ton NH3. In 2000, the gap was narrowed to 6.7 GJ/ton NH3

because that technical performance in the U.S. became ratherstable while China’s ammonia plants still had much potential tocut their energy use.

ionCompression Synthesis

of ammonia production.

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Table 1Energy consumption of typical China’s large-scale ammonia plants with three different types of feedstocka.

Plant Weihe Ningxia Zhongyuan

Feedstock Coal Oil residue Natural gas

LHV of feedstock/ 27088 kJ/kg 45133 kJ/kg 39355 kJ/m3

Fuel consumption 1.38 ton/ton NH3 0.73 ton/ton NH3 893 m3/ton NH3

Electricity/(kWh/ton NH3) 139.31 75 �51.8

Steam/(ton/ton NH3) 2 1.39 �1.9

Cooling water/(m3/ton NH3) 379.26 570 193

Desalination water/(m3/ton NH3) 1.2 0.57 2.15

SECb/(GJ/ton NH3) 46.05 38.52 28.82

a Data is from Wang, et al., 2006.b SEC, or specific energy consumption, denotes energy used for per unit production.

Table 2Energy performance improvement for ammonia production in China in an average

level a (GJ/ton NH3).

Large scale Medium scale Small scale

Natural gas Heavy fuel oil Coal Coal

1990 37.51 41.9 63.78 66.32

1992 37.96 41.33 63.23 61.41

1994 37.63 41.18 64.30 61.33

1995 37.85 40.41 60.39 59.78

2000 55.38 52.72

2001 54.77 52.92

2002 55.06 52.66

2003 56.96 52.16

2004 55.67 53.01

2005 55.61 52.69

a Data from 1990 to 1995 are reported from Li, et al., 2000, data from 2000 to

2005 are obtained from CPCIA, 2006, where the data for large scale during this

period are unavailable.

20

25

30

35

40

45

1980 1985 1990 1995 2000

China United States

Fig. 5. Comparison of average energy consumption in large-scale ammonia units

between China and U.S. (GJ/ton NH3) (Data source: China Energy Statistical

Yearbook 2008).

W. Zhou et al. / Energy Policy 38 (2010) 3701–37093704

For those small-scale plants deployed with even inferiortechnologies, which are much more widespread in China, theenergy saving potential could be enormous.

4. CO2 emissions in the process of ammonia production

4.1. The mechanism of CO2 emission in ammonia production process

CO2 emissions in ammonia production could be divided intotwo sources. One is in feedstock gasification to produce hydrogen,defined as ‘‘process-related emission’’ in this paper. The otheris in fuel combustion for heat supply, defined as ‘‘combustion-related emission’’. In process-related emission, CO2 is produced asa bi-product during ammonia manufacturing. The chemical

reactions among fuel (hydrocarbons, carbon, or coke) andwater, oxygen, air or any combination of these yield a gas mixture(called syngas) made up of CO and H2 in various proportions alongwith CO2.

In order to produce additional hydrogen, a carbon monoxideshift conversion is required. In this reaction, the carbon monoxideserves as a reducing agent for water to yield hydrogen and carbondioxide, by which carbon dioxide will be readily removable.Before final ammonia synthesis, carbon dioxide has to be removedas well as residual carbon monoxide and sulfur compoundsbecause they are not only useless for the following synthesisprocess but also poisonous for the catalyst inside. Variousmethods could be used to scrub the CO2-containing synthesisgas. For example, absorption by physical sorbent like propylenecarbonate (PC) could be used. This is the most widely used inChina’s ammonia industry for CO2 recovery. The high-concentra-tion CO2 after desorption could be used for fertilizer production.

The emission mechanism of CO2 generation from fuelcombustion is relatively simple and easily understood. However,this part of CO2 is not well captured by absorption due to its lowconcentration and therefore it is normally released to theatmosphere.

4.2. Estimation of CO2 emissions in China’s ammonia industry

Three types of methods and default emission factors forCO2 emissions calculation in ammonia production have beenrecommended by the Intergovernmental Panel on Climate Change(IPCC, 2006), for inventory establishment at a national level. Here acombination of Tiers 1 and 2 methods is employed to estimate thetotal CO2 emission from China’s ammonia production, consideringthe data availability and the unique feature in the industry.

(1)

Method and system boundarySpecific energy requirements and related CO2 emissionslargely depend on the raw material employed. For theestimation, firstly the emission factor for each technologicalalternative is calculated, and then all the emission amountsfor these three alternative technology processes are summedup to obtain the total emission amount. The method can beformulated in the Eq. (1).

ECO2¼X

i

ðEFiUARiÞ ð1Þ

where: ECO2=amount of CO2 emission, ton, EFi=the emission

factor for the technology type i, ton CO2/ton ammonia, andARi=ammonia production of technology type i, ton. Morespecifically, emission factors for the technologies are calcu-lated from different approaches according to their dataconditions. In particular, for coal-based ammonia production,an average value of the emission factor has been estimated

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Table 4CO2 emissions of China’s ammonia production in 2005.

Feedstock type Natural gas Heavy oil Coal

Output (million ton) 9.84 3.86 32.26

Emission factors (ton CO2/ton NH3) 2.104 3.273 4.582

Emission amount (million ton) 20.7 12.63 147.82

Share of CO2 emissions in total 11.4% 7.0% 81.6%

Total amount of CO2 emissions (million ton) 181.15

Table 5CO2 recovered for downstream use and adjusted CO2 emissions (million tons).

Downstream product Urea (CO(NH2)2) Ammonium bicarbonate

(NH4HCO3)

Production in 2005 19.43 6.81

CO2 consumption 14.25 3.79

Total emissions 163.11

Table 3Fuel requirement and emission factor for coal-based routes of ammonia production in China.

Total fuel requirement

(GJ/ton NH3)

Carbon content factor

(kg/GJ)

Carbon oxidation factor

(fraction)

CO2 emission factor

(ton CO2/ton NH3)

Value 52.4 26.5 0.9 4.582

W. Zhou et al. / Energy Policy 38 (2010) 3701–3709 3705

among more than ten different types of techniques withdifferent scales and various energy consumptions, due to thelack of detailed relevant data for each technique.

(2)

1 Notice that only CO2 contained in synthesis gas is absorbed in China’s

ammonia industry, as explained in 4.1. The other part of CO2, which is from fuel

combustion, however, is too low concentrated and thus normally released into the

Emission factors(a) Natural gas (or light hydrocarbons)

The natural gas fueled technologies applied in China havebeen mainly import from Europe and North Americasince the 1970s. Although the technology performanceswere similar to those in western countries in the earlystage, the technique gap between China’s ammonia plantand worldwide best available technology (BAT) wouldgradually became larger because the development andemployment conditions changed over time. According toone survey (Fei, 2007), energy use for unit ammoniaproduction is around 20�30% higher than those in theinternational advanced level. Therefore, this disparityshould be also considered in the emission estimation.There are several emission factors reported by differentliterature (IPCC, 2006; Rafiqul et al., 2005). For example, inthe IPCC guidelines, based on European circumstance, anemission factor value of 1.56 ton CO2/ton NH3 is reportedunder a BAT energy consumption of 28 GJ/ton NH3, andthe average value of 2.104 ton CO2/ton NH3 is alsorecommended in accord with a 37.5 GJ/ton NH3 fuelrequirement, which is almost the same as on averagereported by Chinese ammonia plants with natural gasprocesses (CPCIA, 2006; Wang et al., 2006). Consideringthis similarity, a emission factor of 2.104 ton CO2/ton NH3

reported from IPCC is taken here.(b) Heavy oil (or vacuum residue)

The CO2 emission factor for the partial oxidation route isalso recommended by IPCC, the value on an average levelis 3.273 ton CO2/ton NH3. This value could be directlyapplied to the Chinese case as well.

(c) CoalFor CO2 emissions factor of coal gasification, there is littlerelevant data reported. In order to estimate the averageCO2 emission factor of China’s coal-based ammoniaproduction technology, we firstly made a survey of fuelconsumption in dozens of ammonia plants in threedifferent scales, and calibrated the data with energy usereported form other sources (CPCIA, 2006; Wang et al.,2006). As anthracite (the net calorific value of which isabout 34 GJ/ton) is the major type of coal feedstock forammonia production in China, a carbon content factor of26.5 kg/GJ is taken here (Chen, 2007). The carbon oxida-tion rate of 90% is selected to represent the average

atmo

technology level according to several citations in theliterature (Li, et al., 2000; Wang et al., 2006). Based onthese data, the average CO2 emission factor for coal(4.582 ton CO2/ton NH3) is obtained, as shown in Table 3.

sphe

(3)

Estimation of the total emissions amount

Emission factors for three technology alternatives and respec-tive emissions are summarized in Table 4. The total amount of

CO2 emissions in 2005 was about 181.15 million tons, of whichcoal was responsible for 81.6%, implying that the improvement ofcoal-based technologies remains the key issue for CO2 mitigationin China’s ammonia production.

4.3. CO2 recovered for fertilizer production

As mentioned above, ammonia produced in China is mainlyconsumed for fertilizer manufacturing such as urea and ammo-nium bicarbonate. If the CO2 recovered for downstream use isconsidered, though it will be released to the atmosphere againwhen the fertilizer is applied to the field, according to calculationmethods recommended by the IPCC guideline (IPCC, 2006), itcould be still viewed as a type of industrial reuse. Thus, it shouldbe deducted from the total amount, as shown in Eq. (2).

E0

co2¼ Eco2

�Rco2ð2Þ

where Eco2refers to the value of the total CO2 emission amount

and E0

co2refers to adjusted value of CO2 emission amount, which

equals to Eco2subtracts CO2 recovered by fertilizer production,

indicated by Rco2. Total output of urea and ammonium bicarbo-

nate, and associated CO2 consumption estimated by multiplyingproduction amount by their respective stoichiometric ratio of CO2

are presented in Table 5.Table 5 shows that CO2 consumed for urea and ammonium

bicarbonate production was 18.04 million tons in 2005, and thusthe adjusted amount of CO2 emissions from China’s ammoniaproduction was about 163.11 million tons, accounting for 3.2% oftotal nationwide emissions (China’s CO2 emissions in 2005 wastaken as 5101 million tons from IEA key world energy statistics2007). Obviously, ammonia is a very important industrial sectorin China in terms of CO2 mitigation and energy saving.

Table 5 also implies that CO2 recovered for urea and ammoniumbicarbonate production accounted for 10% of the total CO2

generated from ammonia production.1 More than half of all the

re.

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W. Zhou et al. / Energy Policy 38 (2010) 3701–37093706

ammonia plants in China are integrated with fertilizer productionunits, most of which produce urea rather than ammoniumbicarbonate. This is because urea has much higher percent ofnitrogen (46.7% of nitrogen in urea compared to 17.7% inammonium bicarbonate in terms of mass fraction) and serves asthe most important fertilizer in China’s agriculture. Thus, regula-tions for urea production, which are intensively connected withnational agricultural policies have a direct impact on the ammoniaindustry. Urea production keep on increasing during the ‘‘eleventhfive year’’ period, reported by China National Development andReform Commission (or NDRC). The production capacity ispredicted to increase to over 60 million tons, with about 10 milliontons excess of expected demand (Wang, 2007). The high growthspeed of urea supply and demand is directly driven by China’sagricultural production. In fact, the urea industry contributed a lotto food supply in the past decades given that China has the largestpopulation in the world. Therefore, it is reasonable to expect thatthe amount of CO2 recovered for nitrogenous fertilizer productionwill increase by a large percentage in the short run.

5. The reduction potential of CO2 emission in the ammoniaindustry in China

The current status of ammonia production in China implies atremendous reduction potential of CO2 emissions in the future.The calculation and analysis in the previous section indicate thatcoal-fueled technologies have the highest emission factor andthen should be considered as a key point for CO2 mitigation.Generally there are two approaches to reduce energy use and CO2

emissions for the entire ammonia industry. One is partly changingthe coal alternative toward more use of the natural gasalternative. The other is improving the energy efficiency of coal-fueled technologies. To estimate CO2 mitigation potential forChina’s ammonia production in the near future (situations in 2010and 2015 are taken into account), three scenarios are defined asfollows:

5.1. First scenario: the reference scenario

The reference scenario is defined as ‘‘doing nothing’’, that is,assuming that there will be no fuel switching and technologyimprovement from 2005 to 2015, and ammonia production inChina will continue to develop at an annual growth rate of 2%.2

Thus in this scenario, fuel mix and technology level in the years of2010 and 2015 remain the same as those in 2005.

5.2. Second scenario: fuel switching

In this scenario, reduction potential could be achieved fromfeedstock alteration. That is, more natural gas plants would beestablished instead of oil and coal-based plants, and thencompared to the reference scenario, a certain reduction amountcould be fulfilled. According to (CPCIA, 2006), the proportionof ammonia produced from natural gas is expected to expand to30% in total during the period of the ‘‘eleventh five year’’ plan(from 2005 to 2010), and this proportion is expected to be

2 The value is estimated by CPCIA, 2006. Note that this value only represents a

rough estimation and implies a general situation of the industry’s development. It

may not be appropriate for predicting annual output in a specific year. For

example, in 2007, the output of China’s ammonia was 51.67 million ton, far more

than the amount estimated from the rate; however, ammonia production shrank a

lot in the following years due to the impact from the financial crisis. As we focus

on the analysis of CO2 reduction potential in the industry, this value of growth rate

is acceptable.

enlarged to 50% in the near future. Assume that in 2010, heavy oilprocesses will exit from the ammonia supply, and 70% of China’sammonia production comes from coal and the rest 30% comesfrom natural gas; and in 2015, the fuel mix will be half from coaland half from natural gas, with the total amounts of ammoniaproduction in 2010 and 2015 set as the same as in the referencescenario for comparison.

5.3. Third scenario: fuel switching plus technological improvement

This scenario represents a further reduction from both fuelswitching and technological improvement. This scenario suggeststhat based on the situation under the second scenario in which areduction amount could be achieved by altering fuel mix forammonia production step by step (as explained in point b), therewill be an additional reduction amount from technologicalimprovement achieved in a progressive way. Suppose that theaverage level of energy performance in 2010 will be promoted tothe domestic BAT level of 2005, and then further promoted to theworldwide BAT level of 2005 in the year of 2015. The technologygap between predominant process and the most energy efficientprocess in 2005 would thus fade out and correspondingly the CO2

emissions would be reduced to some extent in a decade. Relateddata are summarized in Table 6.

The reduction potentials for three scenarios are quantified inFig. 6.

Fig. 6 indicates that under the reference scenario, the CO2

emission amount in China’s ammonia industry will increase to ashigh as nearly 200 million tons in 2015. Fuel switching, however,can offer an amount of 33.54 million tons CO2 mitigation in thatyear, as represented by the second scenario. On this basis, ifaverage technology performance could be promoted to theworldwide BAT level seen in 2005, after a decade’s effort, thereduction potential would reach to 74.07 million tons. This isshown in the third scenario, accounting for 37.5% in total emissionof 2015 in the industry, which is estimated in the referencescenario. Fig. 6 also implies that a huge potential for CO2 emissionreduction lies in China’s ammonia industry, which could make CO2

emission in the industry decrease by 23.5% from 2005 to 2015.

6. Policy implications

Ammonia plants in China are implemented with divergenttechnologies, the overall level of which is not high with regard toenergy and environmental performance. High CO2 emission in theindustry is inherently determined by the fact that coal serves asthe predominant feedstock, which is predicted to continue in thenear future.

Currently, nitrogenous fertilizer associated with ammoniaproduction, is still preferentially supported by national policies.The fundamental role of the industry as an important supportiveindustry for food production will most likely continue in the shortor medium term. In particular, the manufacturers still benefitfrom favorable policies with regard to fuel supply, electricityprice, product transportation, and value-added tax, despite thefact that fertilizer production capability has been highly promotedin recent years and is sufficient to meet domestic demand (Wang,2007). On the other hand, the protective policies also havenegative impacts on the industry, mainly from the seasonalexport tariff and government referential price.3 Importantly, the

3 Seasonal export tariff aims at limiting the export of domestic ammonia and

government referential price aims at keeping fertilizer at a relative stable and low

price level, for peasants being able to buy it. Thus, under some unfavorable market

conditions, the policies have negative impacts on the industry.

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Table 6Comparison among different levels in term of energy use and emission factors in 2005a.

Natural gas Coal

Total fuel requirement (GJ/ton NH3) Average level in China 37.5 52.4

Domestic BAT level in China b 32.2 46.0

Worldwide BAT level c 27.9 42.0

Emission factors (ton CO2/ton NH3) Average level in China 2.104 4.582

Domestic BAT level in China 1.806 4.023

Worldwide BAT level 1.566 3.673

a For the data associated with BAT level, it is too hard to obtain the exact value in the very year of 2005, so part of the data reported in earlier years are taken here

instead.b Data are from Wang, et al., 2006, representing an average level of BAT under different operating circumstances.c Value for natural gas and for coal are respectively taken from IPCC guideline and Cao, et al., 2008.

0

50

100

150

200

250

2005 2010 2015

CO

2 em

issi

on

Reference scenario

Second scenario

Third scenario

Fig. 6. CO2 reduction potentials of three scenarios (million tons).

4 A bio-refinery is a facility that integrates biomass conversion processes and

equipment to produce fuels, power, heat, and value-added chemicals from

biomass.

W. Zhou et al. / Energy Policy 38 (2010) 3701–3709 3707

policies are being deeply reformed at present. For example, thegovernment referential price formation mechanism is supposedto be gradually replaced by market regulation (NDRC and ChinaMinistry of Finance, or MOF 2009). In principle, the governmentintervention is being weakened in the reform. A reserve system ofchemical fertilizers during off-seasons is also being established inthe process, in order to absorb the shock from the reform andkeep a balance between the supply and demand sides. That is, theregulation aims to solve the problem of constant production andseasonal use of chemical fertilizers and promote the balancedproduction of the enterprises of chemical fertilizers while alsosatisfying the agricultural production needs for chemical fertili-zers in peak seasons.

To address the challenge from the indirect impact of the globalfinancial crisis, the China State Council has issued a stimuluspackage for petrochemical sectors (China State Council, 2009). Inthe package, fertilizer output is planned to increase to 62.5million tons by 2011. This is not a difficult goal to realize, giventhe current fast growing production capacity. The package alsohighlights the requirements for the improvement of industrialdistribution, more rapid technology progress and the remarkable‘‘energy saving and pollutant reduction’’ effect. To meet therequirements and lower the production cost simultaneously, anadjustment of technology structure and the localization of keytechnologies in the ammonia industry are supposed to play anextremely important role.

Basically, the reduction in energy consumption and CO2

emissions in China’s ammonia industry lies in the two aspectsexplained in Section 5. One is increasing the shares of cleanenergy resources such as natural gas in feedstock supply, and the

other is the upgrade of coal-based technologies. Whereas thepressure of climate change imposed on China’s heavy industry istaken more and more seriously, strict measures for CO2 abate-ment, for instance, carbon capture and storage must also beconsidered in advance. Policy considerations, which we suggestare significant for CO2 mitigation in China’s ammonia productionare:

6.1. Structural change of feedstock

Compared to the coal alternative, natural gas-based processesare much less carbon intensive for ammonia production. Asestimated in Section 5.2, the potential of feedstock change couldreduce CO2 emissions by 16.9% in 2015. Even though natural gasis to some extent unlikely to become the main feedstock forammonia production in China, a small alteration could make adifference even in the short term. In addition, new types offeedstock could be used for ammonia production. For example,coal bed methane exiting as an associated gas with coal mines,with almost the same composition as natural gas, could bealso utilized as a new clean industrial resource. Determined byChina’s abundant coal resources, the amount of China’s coal bedmethane reserve is also considerable, about half of that ofconventional natural gas, according to a rough estimation (Chen,et al., 2009).

In the long run, renewable energy, such as the bio-refinery,4

also offers a new option for low-carbon fuel supply in China’sammonia industry. The concept of the bio-refinery is generallyviewed as an important contributor to the development of asustainable industry and effective management of greenhouse gasemissions. In North and South America, a new market has alreadybeen emerged with regard to bio-fuels and bio-chemicals (Sergioand Colin, 2008). In recent years, the bio-fuel industry repre-sented by bio-ethanol production is undergoing rapid develop-ment. In 2007, China’s bio-ethanol production reached 1.33million tons, ranking the third largest bio-ethanol producer inthe world after the USA and Brazil (Qiu et al., 2008). Since someconcern has arisen regarding China’s food security given thechallenge of the rapid growth of the bio-fuel industry, somerestrictive policies have been put forward by the government(NDRC and MOF, 2006). Therefore, there is no doubt that theapproach of chemicals produced from biomass would become avery promising industry in the long run. Development of theammonia industry would also benefit from relevant technologies,such as bio-gasification, or co-gasification of biomass and fossilfuel.

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Table 7Emerging energy efficient technologies in ammonia production.

Process Examples of energy efficient technologies

Feedstock convert Natural gas reforming Heat recovery of primary reformer;

High efficient catalyst to reduce steam use: R67-7H catalyst (Topsoe) Wang, et al., 2006

Coal gasification Opposed-multi burner gasifier (OMBG) Guo, et al., 2007

Ash agglomerating fluidized bed coal gasification Chen, et al., 2000

Shift Within Natural gas route High active catalyst : SK-201 catalyst (Topsoe) Wang, et al., 2006

Within coal route Low temperature shift conversion Wang, et al., 2006

Gas purification Desulfurization K2CO3/sterically hindered amine system Fei, 2007

Super mini ring (SMR) packing Fei, 2007

Synthesis Ammonia synthesis reaction Ruthenium-based ammonia synthesis catalyst Lin, et al., 2007

Fe1�xO-based ammonia synthesis catalyst Hu, et al., 2005

Hydrogen recovery Membrane separation technique Zhang et al., 2007

W. Zhou et al. / Energy Policy 38 (2010) 3701–37093708

6.2. Technology improvement

Results of the third scenario, as calculated in Section 5, showthat the promotion of a higher technology level has a 20%reduction potential for CO2 emissions in China’s ammoniaindustry in 2015. The most important aspect of improving thetechnology level for the entire industry is the shut-down orupdate of small-scale plants. Most of small-scale ammonia plantsin China are implemented with cost-effective technologies, whichare normally low in energy efficiency and heavy environmentalpollutants. Realizing this problem, the Chinese National Develop-ment and Reform Commission has promoted a series of mandatesto restrain the overexpansion of production capacities with small-scale plants. These restrictive policies, however, were not fullyenforced by local governments because of the considerable profitand GDP contribution from the plants.5 The only way to solve thisconflict is to make advanced technologies more cost-attractive,which would encourage the key component processes such ascoal gasification, oxygen-enriched combustion, steam self-sup-porting technique etc. to become more fully adapted andassimilated after import. The achievement of key technologylocalization would greatly help to lower investments in largeprojects and enable a penetration of these advanced technologiesinto the market.

Table 7 summarizes some examples of emerging energyefficient technologies in main processes within ammoniaproduction. Table 7 also shows that many of these technologieshave already been developed by domestic institutes, offering agreat opportunity for localization in the whole process on a largescale.

Another option is to optimize the plant energy system. It isnecessary to reuse wasted heat in the whole process to fulfill acascade use of energy; and make an optimal configuration oftechnical parameters according to production or market change toreduce the feedstock requirement as well. In this approach,modeling and optimization techniques are required for relatedproject demonstration and adoption in manufacturing.

6.3. Incorporating carbon capture and storage (CCS) or carbon reuse

Carbon capture and storage, viewed as one of the mainapproaches to reduce CO2 emissions in industrial processes, arewidely demonstrated and assessed nowadays. The ammoniaproducing process is one of the most suitable processes forcarbon capture besides power generation. In fact, in China about

5 GDP is a key criterion for evaluating local administration’s achievement in

China.

half of all the ammonia plants have used the CO2 captured toproduce urea and other fertilizer (the mechanism is similar withpre-combustion), which provided good industrial experience forfurther implementing carbon capture unit in other processes. In amore stringent climate context, the CO2 that would not beconsumed for downstream usage is supposed to be captured andstored underground permanently because this amount of CO2

emission is still large in China.Though CO2 capture technology in China has been applied in

some industrial sectors such as ammonia, hydrogen and petro-leum for several decades, R&D of large-scale carbon capturetechnologies directly aiming at CO2 mitigation just started a fewyears ago. In 2005, CCS technology was listed in the NationalOutlines for Medium and Long-term Planning for Scientific andTechnological Development (2006–2020), which significantlyspurred relevant research. In July 2008, the first carbon capturedemonstration project in China has been completed in the BeijingThermal Power Plant owned by Huaneng Group, with a capacityof 3000 tons of CO2 captured per year. In the meantime, someother demonstration projects with larger capture capacity are alsoat different stages of completion. However, the cost for CCS is stilltoo high for Chinese companies, and more effort is still needed tolower the capture cost by technology innovation and generateenough financial incentive simultaneously for commercializationof CCS.

6.4. Strengthening the governmental function for the diffusion

of key technologies

Energy efficiency, renewable energy and CCS are widelyviewed as three fundamental approaches for CO2 mitigation,and all of the three approaches could apply to ammoniaproduction, as this discussion suggests. However, diffusion ofnew technologies always takes a considerable amount of time,especially for those technologies with high capital cost in theirearly development stage. Hence governmental support during thisprocess will be extremely important. Many of the technologiesinvolved in these three scenarios have been listed in the Chinesenational scientific research programs, such as State High-TechDevelopment Program (‘‘863 program’’) and National Fundamen-tal Research Program (‘‘973 Program’’). Part of these programs islisted in Table 7. Despite these endeavors, more effort should bemade in the areas of demonstration and market penetration.Furthermore, assimilation of imported advanced technologies alsoneeds governmental support. The current technology situation inChina’s heavy industries, such as the ammonia productionindustry, highlights this shortage. Therefore, some financialmeasures such as subsidies and tax preference should be

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W. Zhou et al. / Energy Policy 38 (2010) 3701–3709 3709

employed not only to develop new technologies but also to adaptexisting imported technologies, and gradually improve thetechnology structure to realize CO2 mitigation and energy saving.

7. Conclusion

The considerable CO2 emissions from China’s ammoniaproduction (3.2% in total of nationwide CO2 emissions) makethe industry one of the most important sectors in terms of energysaving and CO2 mitigation. This scenario analysis showed that atremendous potential for CO2 mitigation lies in the ammoniaindustry by feedstock structure change and energy efficiencypromotion. To address the climate change challenge, policyconsideration for CO2 mitigation in the future of China’s ammoniaproduction lies in localization and assimilation of energy efficienttechnologies and a change of feedstock structure. In the long term,bio-refinery and carbon capture and storage also offer feasiblemeans to lower CO2 emissions. Governmental support plays apivotal role.

Acknowledgement

The authors are grateful to Prof. Yong Jin and Prof. Weiyang Feifor their important advice and comments on this research work,and gratefully acknowledge National Natural Science Foundationof China (NSFC) and Ph.D. Programs Foundation of Ministryof Education of China for their financial support to the projects(No. 20876087 and No. 200800030049 respectively).

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