China Energy, Seamwell to Build $1.5 Billion ‘Clean Coal’ Plant

China Energy Conservation & Environmental Protection Group, a state-owned project developer, will build a $1.5 billion “clean coal” plant in Inner Mongolia with U.K.-based Seamwell International Ltd.

The companies agreed to collaborate on the electric power plant that’ll harvest its energy from gasified coal deep underground, the first commercial plant of its size in the world, according to a statement today from Seamwell.

The plant on the YiHe Coal Field will produce power by the end of 2014 or 2015, Matthew Idiens, president of Normanton, West Yorkshire-based Seamwell, said in an e-mail. It will generate 1,000 megawatts of electricity for about 25 years.

The contracts for the accord are being signed at a U.K.- China summit attended today by Chinese Premier Wen Jiabao and U.K. Prime Minister David Cameron. The leaders will also be present at the signing of an agreement between U.K.-based Building Research Establishment Ltd. and China Vanke Co., the country’s biggest developer, to collaborate on an innovation park in Beijing.

That park, representing a Vanke investment of about 100 million pounds ($160 million), will demonstrate construction products and technologies for low-carbon homes and a research and development center, according to a statement from BRE.

China is promoting cleaner energy to meet a 2020 goal of cutting the amount of carbon it emits per unit of economic output by 40 percent to 45 percent from 2005 levels as demand for power grows in the world’s biggest energy consumer market.

Seam of Coal

The project will drill to the seam of coal that is then ignited and injected with air, oxygen or steam to create synthesis gas. That will be pumped out and cleaned before being used by a combined cycle power plant at the surface. There are 280 billion tons of coal resources “stranded” in that region of Inner Mongolia, according to Seamwell.

“The intention is to build more power plants of a similar type, to roll the technology out onto additional coal fields,” Idiens said. “The technology is very scalable.”

The commercial plant will be fitted with carbon-capture technology that collects the emissions linked to climate change before combustion, then stores them permanently underground. This is a 50 percent savings on emissions when compared to a traditional coal-fired plant, the company said. Seamwell is owned by private investors, including Idiens, and financial institutions.

The companies will first undertake a demonstration project at YiHe Field that Seamwell will finance after seeking funds globally, Idiens said. The full commercial plant will be funded using a project finance model, he said.

Once approvals are secured from the Chinese government, the companies said they will set up a joint venture in which Seamwell will own 49 percent and China’s energy conservation and protection group CECEP the rest.

Coal, the dirtiest carbon-based fuel widely used for power generation, has met 47 percent of new worldwide electricity demand in the past decade, according to the Paris-based International Energy Agency.