IMAGE:Peter Fairley

MULTITASKING: Guo Baogui [center], with colleagues at Yankuang polygeneration plant.

Shandong Province, nestled along the Sea of China between Shanghai and Beijing, has one of China's fastest-growing economies. Thanks to the local high-sulfur coal fueling its growth, it also has some of the country's dirtiest air. But while high-sulfur coal is choking Shandong's residents and stunting crops, it has also inspired a creative application of coal gasification technology that could help clean up China's air and quench its thirst for electricity.

The site of this experiment is a chemical complex operated by China's No. 2 coal producer, the Yankuang Group, in Zaozhuang, an industrial region of 3.0;million residents in southern Shandong. A bountiful flower garden attests to the facility's role since 1960 as a supplier of ammonia fertilizers, but it is the methanol plant—which began large-scale operation last year—that makes the site an energy innovator. The plant's two 27-meter-tall gasifiers are China's largest and most efficient, blending 2000 metric tons of coal per day with steam, oxygen, and extreme heat to form a hydrogen-rich fuel called syngas.

It is Yankuang's use of syngas, however, that is truly unique: while chemical plants across China use it as the feed stock for fertilizers, plastics, and industrial chemicals, Yankuang is the first to simultaneously produce a chemical and a considerable amount of electricity—up to 72 megawatts.

This combination of products, known as polygeneration, is attractive to chemical producers because it improves the overall economics of the chemical process. Instead of installing energy - consuming equipment to recycle syngas left over from the methanol-making reactors that turn syngas into methanol, Yankuang installed power-producing gas turbines that burn the leftover gas.

There is also an environmental dividend, because such gasification-based power generation releases less pollution than conventional coal-fired power plants. Yankuang's plant, for example, captures sulfur as a solid by-product rather than spewing it skyward; the plant could also capture its carbon dioxide.

When IEEE Spectrum visited the Zaozhuang plant, Yankuang senior engineer Guo Baogui, who directs the company's gasification research, said that the plant converts its half-million metric tons per year of methanol into acetic acid, an important feedstock for plastic resins. Local sources, however, suggest that some of the methanol may be sold to Chinese fuel distributors, who increasingly blend in methanol to displace pricey gasoline. The practice is technically illegal (methanol is toxic and at high concentrations corrodes engines), but Beijing tolerates it because it produces a cleaner-burning fuel and reduces demand for imported oil.

Yankuang's power (aside from a fraction consumed on-site) is sold on the Shandong grid—at a profit, according to Guo. He says Yankuang could negotiate a good price for its power because Beijing cofunded the polygen project through an advanced technology development program. The plant has a powerful patron in He Guoqiang, a former engineer at the Zaozhuang plant who now sits on the Communist Party's Central Committee.

Other would-be polygen operators will find the going tougher. Polygen plants cost considerably more to operate than the conventional coal plants feeding Shandong's grid. What's more, China's power market rules put independent power producers in a weak bargaining position. “There's no obligation on the part of the utility to be particularly generous,” says Eric Larson, an energy systems expert with Princeton University's Environment Institute. To grow polygen beyond a handful of well-connected operations such as Yankuang's, Larson says, China needs market rules guaranteeing access to the grid for such plants, even if their electricity costs somewhat more.

If such rules are put into place, the result—argue Larson and fellow polygen advocates at Beijing's Tsinghua University—would be a progressive reduction in costs of polygen plants so that eventually they could fuel entire regions. In a 2003 study of energy use in Zaozhuang City, Larson and colleagues estimated that larger versions of Yankuang's plant could deliver four-fifths of the 1545-MW increase in power- generating capacity projected for Zaozhuang between 2005 and 2020. The polygen plants would release 112 701 metric tons per year less sulfur dioxide than conventional coal plants—even if those plants burned imported low-sulfur coal. Meanwhile, their methanol output would more than meet new demand for motor fuels, cutting air pollution from vehicles by 16 to 20 percent.

A next step would be for China to start thinking about capturing the plants' carbon dioxide. Although few experts expect that to happen anytime soon, many see expanding use of carbon-capture-friendly polygen technology as a step in the right direction.