Financing Advanced, Low-Emission Coal-Fired Power Generation

Technologies and Carbon Capture and Storage Projects

Annika SeilerNovember 18, 2013

Disclaimer

The views expressed in this presentation are the viewsof the ADB mission members and DO NOT necessarilyreflect the views or policies of the Asian DevelopmentBank, its Board of Director or the Governments theyrepresent.

Content

• Introduction to ADB• Rising Reliance on Coal for Power Generation in the

Asia Pacific Region• ADB’s Approach to Financing Coal Fired Power Plants• Examples of ADB’s Support to Low-Emission Coal

Technologies• ADB’s support to Carbon Capture and Storage

Demonstration in Asia

ADB’s Vision:Asia Pacific Region Free of Poverty

ADB’s Strategic Direction:

Asian Development Bank – An Introduction

• Founded in 1966 with Headquarters in Manila

• 67 Member countries with 26 country offices

• With a triple “A” credit rating, ADB is mobilizing low-cost funds for development

• In 2012, ADB assistance totaled $21.57 billion including $13.30 billion financed by ADB and $8.27 billion in co-financing

4

Status of Electricity Access in Developing countries of Asia and the Pacific Region, 2010

About 675 million people still suffer from a lack of access to electricity. An incremental generation capacity

of additional 125 GW is needed to achieve MDG

Coal Demand For Power Generation and CO2Emission for Developing Asia, 1990-2035

Electricity demand is projected to double between 2010 and 2035.

Investments in coal-fired power plants are a strategic choice for policy makers to strengthen energy security, also in traditionally non-coal-based economies.

Source: Asian Development Bank estimates, 2013.Expansion of coal-fired generation pose major concerns

for environmentally sustainable growth and climate change mitigation in ADB’s DMC.

ADB’s Energy Policy 2009

• Objective: Assist ADB Developing Member Countries in providing to their population reliable, adequate, and affordable energy for inclusivegrowth in a socially and environmentally sustainable manner.

• ADB’s Clean Energy Program target impact : First of all contribute to improved access to energy and energy security in DMCs and second decrease the rate of climate change.

• Tangible Outputs wrt cleaner coal & CCS technologies:– Investments in clean energy projects: $1 billion p.a. up to 2013 & $2

billion p.a. from 2013 onwards & leverage public & private sector CE investments

– Deployment of new technologies with strong demonstration effect – Approaches to promote clean energy / CCS introduced; – Barriers to clean energy/CCS technology investments lowered.

ADB’ s Approach to Financing Coal fired Power Plants (CFPP)

• ADB’s Energy Policy 2009 allows for financing of

– retrofitting of CFPP for improving efficiency, reliability, and operating life and to comply with current higher environmental standards;

– new plants under the condition• As a minimum super-critical, wherever feasible • Improvement of Energy Security • Ongoing policy-dialogue with relevant

government

Examples of CFPP Projects Co-Financed by ADB over the past 10 years

• Coal Mine Methane (CMM) Development, PRC, $187.4m, 2004– Demonstration of CMM for power generation (120 MW CMM power plant)

and urban residential gas supply• NTPC Capacity Expansion Facility, India, 2006

– Construction of India’s first super-critical power plant• Mong Duong 1 Thermal Power, Vie, $930.71m, 2007 and 2010

– Construction of low emission CFPP using CFB boiler technology• Tianjin IGCC Power Plant Project, PRC, $140m, 2010

– Construction of first IGCC in developing Asia

ADB supports first of its kind technologies in its membercountries to support development of advanced, lowemission technologies, instil sound environmentalmanagement and other safeguard practices

ADB’s Approach to foster low emissions coal fired power generation technologies

Capacity development

Policy dialogue &

consul-tation

Loan projects

ADB seeks to pave the way for low emission technologies andpromote environmentally sustainable investment decisions byfinancing demonstration projects, engaging in policy dialogueand strengthen capacity of relevant stakeholders

ADB CCS Fund

In June 2009, ADB established a CCS Fund with aninitial contribution of AUD 21.5 million from theGlobal CCS Institute, Australia. In 2012, Governmentof the United Kingdom also pledged £35 million in thefund.

Specific Eligibility Criteria Accelerate demonstration of CCS technologies

Identify, lower and / or eliminate general or country specific barriers for CCS demonstration

Identify, eliminate or mitigate risks in capture, transport and storage technology demonstration

Barriers to CCS in Developing Countries

Low Policy Priority for DMC governments Storage exploration is a long expensive

process; not much information is in public domain Existing institutional setup in developing countries do not match the

requirements of the whole CCS chain Unfair comparison with “without CCS” power plants; CCS is not

included in the developing countries’ low-carbon technology portfolio No economic drivers / Commercial gap due to

High LCOE Gaps in regulatory framework Lack of fiscal and financial support mechanisms Fuel subsidies & no carbon penalty

Insufficient commercial & public financing facilities Public Awareness

CCS in Developing Asia – ADB’s Approach and Activities

Par

tner

ship

s:

• ADB is a• stakeholder

in the CSLF • member of

the Global CCS Institute

Ass

essi

ng t

he P

oten

tial

for

CC

S

• Assessing potential and providing initial strategic assessment in

• PRC• South East

Asian Economies

Targ

et in

itia

l act

ivit

ies

in la

rge

coal

-bas

ed e

cono

mie

s:

• Capacity strengthening, technology roadmaps and policy advisory services for key policy makers and major energy groups in the PRC

Fina

ncin

g of

CC

US

pilo

t pl

ant:

• Supporting CCS pilot testing and demonstration in the PRC and Indonesia;

• Grant support to

Pre-combustion

CCS

Pre-combustion

CCS• Financial and technical assistance to China Huaneng Group to study the technology, build and operate an IGCC power plant with a CCUS

Post-combus-tion CCS

Post-combus-tion CCS

• Strengthen Capacity of Datang International to assess, pilot-test, and apply post-combustion method in gas-fired power plant and to establish CCS-ready criteria power plants

Oxyfuel-combustion

CCS

Oxyfuel-combustion

CCS

• Assess feasibility and establish technical standards for a 200MW demonstration coal-fired power plant

14

Upstream analysis and pilot testing of available technologies for energy companies and dissemination of lessons learnt:

ADB Approach to Support CCS Development in the PRC

Polic

y &

regu

lato

ry

fram

ewor

k:Po

licy

& re

gula

tory

fr

amew

ork: ADB is working

with the National Development and Reform Commission to formulate a comprehensive roadmap, policy, and regulations to enable CCS demonstration and deployment

ADB is working with the National Development and Reform Commission to formulate a comprehensive roadmap, policy, and regulations to enable CCS demonstration and deployment

Bus

ines

s M

odel

s:B

usin

ess

Mod

els: ADB in consultation with major oil, gas, coal mining, and power industries seeks to identify and facilitate joint ventures for early stage demonstration projects

ADB in consultation with major oil, gas, coal mining, and power industries seeks to identify and facilitate joint ventures for early stage demonstration projects

Kno

wle

dge

tran

sfer

:K

now

ledg

e tr

ansf

er: ADB organizes

international conferences or site visits for PRC stakeholders to facilitate knowledge sharing and exchange on good practices in CCS development

ADB organizes international conferences or site visits for PRC stakeholders to facilitate knowledge sharing and exchange on good practices in CCS development

15

ADB Approach to Support CCS Development in the PRC

Establishing an Enabling Environment for CCS Demonstration:

Conclusions

• Coal is and will be a key energy security solution tothe region but environmental foot print of coal usageespecially from power plants must be reduced

• Advanced, low-emission coal-fired generationtechnologies will have to be demonstrated anddeployed, and innovations in clean coal technologieshave to be advanced.

• Development banks can support change to business asusual (sub-critical) CFPP development by– financing highly efficient coal-based power plants– fostering CCS demonstration & deployment

For more information please contact:

Annika Seiler, Finance Specialist (Energy)Address: 6, ADB Avenue

Mandaluyong City1550 Metro Manila, Philippines

Email: aseiler@adb.orgTel: +632.683.1512Web site: www.adb.org