Environ. Sci. Technol. 2011, 45, 380–385
Improvements in the Operation of SO2 Scrubbers in China’s Coal Power Plants YUAN XU* Woodrow Wilson School of Public and International Affairs, Princeton University, Princeton, New Jersey 08544, United States
Received July 28, 2010. Revised manuscript received November 18, 2010. Accepted November 19, 2010.
China has deployed the world’s largest fleet of sulfur dioxide (SO2) scrubbers (flue gas desulfurization systems), and most of them now appear to be operating properly. Although many plant managers avoided using their SO2 scrubbers in the past, recent evidence, based on a series of field interviews conducted by the author, suggests that managers of coal power plants now have incentives to operate their scrubbers properly. China’s new policy incentives since 2007 appear well designed to overcome the hurdle of high operation and maintenance costs of SO2 scrubbers. Furthermore, it is now far more likely that offenders will be caught and punished. Continuous emission monitoring systems have played a key role in this change of attitudes. Plant inspections have become much more common, facilitated by a significant increase in the number of inspectors and the fact that the 461,000-megawatt SO2 scrubbers at the end of 2009 were located in only 503 coal power plants, making frequent inspections little constrained by the shortage of inspectors. Because SO2 is the precursor of sulfate particles believed to cause significant cooling effects on climate, China’s SO2 mitigation may make it more urgent to control the world’s greenhouse gas emissions.
1. Introduction China’s outdoor air pollution - with sulfate particles as a significant component - causes serious damage to public health (1). Because SO2 is the precursor of sulfate, mitigation of SO2 emissions plays an important role in the control of air pollution. Sulfate particles also have significant cooling effects on climate though the magnitude is uncertain (2). SO2 mitigation will weaken the cooling effects and equivalently warm the planet. China is the largest emitter of SO2, and its share of the world’s emissions increased from 13% in 1990 to 18% in 2000 (3). Its mitigation efforts accordingly have very important impacts, both regionally and globally. Power generation is the largest source of SO2 emissions. China’s official data reported that in 2005 25.5 million tons of SO2 were emitted and the share of coal power plants was about half (4). A critical method to reduce SO2 emissions in coal power plants is to install SO2 scrubbers (or flue gas desulfurization systems) that can often remove over 90% of the SO2 in the flue gas. Between 2006 and 2009, China installed SO2 scrubbers in 422,000-megawatt (MW) coal power plants, and the share of the coal power capacity with SO2 scrubbers * Corresponding author phone: (852)26096647; e-mail: yuanxu@ cuhk.edu.hk. Current address: Department of Geography and Resource Management, the Chinese University of Hong Kong, Shatin, N.T., Hong Kong. 380
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increased from 10% to 71% (5, 6). In comparison, the United States accumulated 140,000 MW in more than three decades until 2008, and 42% of the coal power capacity had SO2 scrubbers (7). There is little doubt that China possesses an impressive array of SO2 scrubbers, as their existence has been confirmed by formal verification procedures, the publication of detailed data (8), independent checks (such as the author’s site visits and a survey by Steinfeld et al. (9)), and the records of foreign technology licensors. More importantly, official data from the Ministry of Environmental Protection reported that in 2008 SO2 scrubbers removed 78.7% of SO2 from associated coal power plants (10), indicating that they were largely operating as they were supposed to do. China’s official claims of progress in the fight against air pollution contrast sharply with the widespread perception that the country has a poor record on environmental policy implementation. A study has shown that many factories in China were primarily concerned about minimizing operation costs, and only operated their pollutant removal facilities when an inspection was imminent (11). It would not be surprising if the managers concerned adopted a similar approach with their SO2 scrubbers. Possible evidence of misreporting of SO2 emissions and removal is also present. For example, official data reported that SO2 emissions from the power sector in 2007 were 11.5 million tons (4), but an independent study estimated that 16.4 million tons were emitted in that year (12). In addition, official data announced that in 2007 73.2% of SO2 was removed from coal power plants that had SO2 scrubbers (10). In Jiangsu province, however, a province that has a relatively good track record on environmental protection, the rate was found to be only 64.1% (13). However, the author’s visits to China’s seven coal power plants in 2009 found that SO2 scrubbers were in most cases operating properly. In addition, several provinces publish monthly data from continuous emission monitoring systems (CEMSs) for individual SO2 scrubbers. The detailed data from this source enables a check to be made against other official figures. In Jiangsu province, a great majority of SO2 scrubbers after July 2007 were operating for more than 90% of the time and were also achieving SO2 removal efficiencies of over 90% (14). Most SO2 scrubbers in China today do operate properly, though this has by no means always been the case. The reason is that coal power plant managers have been given strong enough incentives to use their SO2 scrubbers as they were meant to be used. In China, the decisions to install SO2 scrubbers and to operate them are largely separate. The Chinese government has decreed that SO2 scrubbers should be installed in specified coal power plants (15), and it is then largely up to the managers to decide whether to operate them or not. The willingness to install SO2 scrubbers does not necessarily mean that the incentives are strong enough for their proper operation. From another perspective, policy incentives for the operation do not need to first overcome the hurdle set up by the capital costs of installing SO2 scrubbers. In addition, China’s SO2 scrubbers vary greatly in sizes, technology types, sulfur contents, costs of reagents, and local environmental governance effectiveness. A significant variance should exist in their operation especially across provinces. Studies have shown that three conditions are favorable to ensure compliance with environmental legislation: low costs for compliance, high penalties for noncompliance, and high probability of catching noncompliance (16-18). The latter two conditions are complementary to each other. In 2000, Blackman and Harrington judged that in China, “both 10.1021/es1025678
2011 American Chemical Society
Published on Web 12/02/2010
TABLE 1. Data on SO2 Scrubbers in China’s Seven Coal Power Plantsa
plant no.
region
new or retrofit
SO2 scrubber type
sulfur content, %
Plant 1 Plant 2 Plant 3 Plant 4 Plant 5 Plant 6 Plant 7
Southwest Southwest Southwest East East East East
new retrofit retrofit retrofit new retrofit retrofit
wet wet wet wet wet wet (1): dry; (2): wet
3.0% 4.0% 3.5% 1.0%b 0.5% 1.0% 0.7-1.1%
operation and maintenance (O&M) costs, $/MWh
profit margin of electricity price premium generation, for desulfurized electricity, effluent discharge fee,c $/MWh $/MWh $/MWh
3.7
∼ 14.6
2.2
∼ 4.1 1.8 2.2 3.7; (2): < 3.7
>0
2.2 2.2 2.2 2.2 3.7
.14.6 (O&M costs)/(discharge fee + price premium + penalty). When SO2 scrubbers do not function, the discontinuation of electricity generation becomes a rational decision when the net revenue in scenario (4) is greater than that in scenario (3), or C% >(profit margin + O&M costs)/(discharge fee + price premium + penalty). Because profit margins are generally positive, it is accordingly easier to push for the proper operation of SO2 scrubbers when they function than to ask coal power plants to discontinue electricity generation when they do not. In order to encourage coal power plants to fix malfunctioning SO2 scrubbers as soon as possible, the rational decision when SO2 scrubbers function should generate greater net revenue than that with malfunctioning SO2 scrubbers. The condition is fulfilled when C% >(O&M costs)/(discharge fee + price premium + penalty).
to significantly over $14.6/MWh (including the O&M costs of SO2 scrubbers and the price premium for desulfurized electricity). Decision Making When SO2 Scrubbers Function Normally. In July 2005, China’s SO2 effluent discharge fee was raised from $0.031/kg in 2003 to $0.092/kg (39). However, as converted to $/MWh in Table 1, it was still too low to overcome the hurdle of the much higher O&M costs. Another increase was scheduled in 2007 to reach $0.18/kg in three years (40), but the exact schedule varied from province to province. In Jiangsu province, the higher rate has been in effect since July 2007 (41), but in Henan province, the lower rate was still being applied as recently as the first quarter of 2010 (42). With the higher rate, coal power plants burning high-sulfur coals will find operating SO2 scrubbers cheaper than paying the effluent discharge fee (Plants 1 and 3 in Table 1). However, for others (Plants 4, 5, 6, and 7) when facing only this policy, the rational decision is to pay the fee. Another policy was introduced in 2004. If new coal power plants came online together with SO2 scrubbers, the desulfurized electricity could enjoy a price premium of $2.2/ MWh (15). In June 2006, the policy extended to cover all SO2 scrubbers, including retrofitted ones (15). Some coal power plants were awarded higher price premiums, such as Plant 7 in Table 1. The price premium and the effluent discharge fee together were a little higher than the O&M costs (Table 1), but the small difference indicates that the proper operation would be a rational decision only when most nonoperation cases were caught. In 2007, a harsh penalty measure was associated with the price premium for the first time. If the operation rate is lower than 80% and SO2 scrubbers are still not operating, a penalty of $11.0/MWh will be issued (34). The required minimum probability of catching nonoperation became much lower to induce the proper operation of SO2 scrubbers. For Plant 3 in Table 1 burning high-sulfur coal, corresponding to the effluent discharge fee of $0.092/kg SO2, a risk-neutral manager would decide to operate SO2 scrubbers properly if the probability of catching nonoperation exceeded 26% (see Table 2 for the calculation formula). For Plants 4 and 5 burning low-to-medium-sulfur coals, the minimum probability was about one-seventh. Furthermore, additional penalties were introduced on the managers of coal power plants. In China, almost all coal power plants are owned by the state. The nonoperation of SO2 scrubbers could increase profit and benefit the managers’ career and salary. However, according to formal regulations (34) and the author’s interviews, cheating and nonoperation
could lead to the removal of the managers. They have to calculate the risk for themselves. Decision Making When SO2 Scrubbers Do Not Function Normally. SO2 scrubbers occasionally have to stop operating due to accidents, malfunctions, or other reasons. While they are out of action, SO2 emissions can be controlled either by minimizing the sulfur content of coal or by shutting down electricity generation. China issues no penalty as long as the operation rate is above 90%, a mild penalty of $2.2/MWh if the rate is between 80% and 90%, and a harsh penalty of $11.0/MWh if the rate is under 80% (34). Because it is expensive to restart electricity generation, the O&M costs of SO2 scrubbers may not be critical in the decision making when SO2 scrubbers can get fixed soon. This subsection focuses on the decision making when problems have to take much time to fix - for example several weeks - and the penalty of $11.0/MWh is applied. The economic incentives should make it a rational decision to discontinue electricity generation for many coal power plant managers. Electricity generation without operating SO2 scrubbers earns a profit margin and avoids the O&M costs of SO2 scrubbers, but if the nonoperation of SO2 scrubbers is caught, coal power plants need to return the price premium and pay the effluent discharge fee as well as the penalty. Many coal power plants will continue generating electricity as long as the probability of catching the nonoperation of SO2 scrubbers is low enough (see Table 2 for the specific calculation). For coal power plants with large profit margins (such as Plant 5 in Table 1), electricity generation should continue even when nonoperation cannot be hidden at all. However, when the author visited Plant 5, electricity generation in one system had been discontinued for several weeks due to its malfunctioning SO2 scrubber. Personal penalties on the managers could have played a role. Furthermore, coal power plants are assigned a quota for their total SO2 emissions (43). If nonoperation is caught, the quota quickly will be used up. Even if the decision is to continue electricity generation, a high enough probability of detection is still necessary to encourage coal power plants to fix malfunctioning SO2 scrubbers as soon as possible (see Table 2 for the specific calculation). If the actual probability is not expected to reach this level, there will be little concern about the quality of SO2 scrubbers, as in the early years. VOL. 45, NO. 2, 2011 / ENVIRONMENTAL SCIENCE & TECHNOLOGY
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5. The Probability of Catching the Nonoperation of SO2 Scrubbers China has made several prominent improvements in monitoring and site inspection to enhance the probability of catching the nonoperation of SO2 scrubbers. The number of government employees at all levels engaged in environmental monitoring has increased from 46,984 in 2005 to 51,753 in 2008 (4). More importantly, CEMSs have become critical to monitor the operation of SO2 scrubbers especially since 2007 (34). Six plants (all in Table 1 except Plant 2) allowed the author to read the computer screens of their CEMSs. The values of SO2 concentrations changed continuously, and different data were generally consistent. In recent years many CEMSs and SO2 scrubbers have been inspected once or twice a month. Because CEMSs transmit data online and in real time, inspections often follow abnormal data reporting. Coal power plants are informed in advance of some inspections, but in many other cases inspections are unannounced. Inspectors have the right to enter coal power plants without being delayed. In the plants that the author visited, inspection vehicles generally needed just a few minutes to drive from the gates to the sites where the SO2 scrubbers were installed. China is actively building up its site inspection capacity. The number of government inspectors at all levels has increased steadily in recent years, from 50,040 in 2005 to 59,477 in 2008 (4). China has focused on monitoring and inspection in its efforts to build capacity. During the period 2006-2008, the two functions accounted for 85% of government personnel growth for environmental protection (4). Because of the concern about their data accuracy and reliability, as discovered in the author’s interviews, CEMSs are not the only data source to track the operation of SO2 scrubbers. Other relevant data are collected, including operation and maintenance records, load factors of electricity generation, sulfur contents of coal, the consumption of limestone and other reagents, electricity consumption, the handling of products from SO2 scrubbers, the opening and closure of bypass dampers, and records of accidents and responses (34, 44). SO2 concentration in the inlet flue gas corresponds to the sulfur contents within a fairly predictable range. The load factors of electricity generation decide the flow rate of the flue gas and can check direct measurement with CEMSs. The factors together determine the sulfur load to a SO2 scrubber system. For wet scrubbers using limestone as the reagent, the molar ratio between CaCO3 and SO2 is normally quite stable at 1.02-1.05 (45). Then the sulfur load will decide the consumption of limestone and the production of gypsum. The managers of coal power plants are asked to keep the receipts of limestone purchases, and cheating on receipts is considered financial fraud with harsh penalties on those responsible. Electricity is another important input to operate SO2 scrubbers. Because all data should be consistent with each other, it becomes more difficult to cheat with the methods described in Section 3. China’s limited resources for monitoring and inspection are enough to have an intensive focus on SO2 scrubbers. Particularly, the 461,000 MW SO2 scrubbers (1264 systems) at the end of 2009 were located in only 503 coal power plants and the largest 300 had a total capacity share of 82% (5). Government personnel are sufficient to follow these 503 plants closely and conduct inspections frequently. The problem of collusion appears under control. Data from CEMSs are sent to more than one agency, including environmental protection bureaus and electric grid corporations. Authorities at China’s four government levels - central, provincial, prefectural, and county - all inspect SO2 scrubbers. The multiplicity of inspection authorities effectively diminishes the opportunities of collusion. In addition, the pressure 384
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to achieve the 10% reduction goal of SO2 emissions in the 11th Five-Year Plan reduces incentives to collude. In order to better implement the incentives, responsible government agencies are specified: electric grid corporations are in charge of paying the price premium in time; provincial environmental protection bureaus collect effluent discharge fees; provincial price agencies are responsible to recover unjustified price premium according to actual operation rates (34). Seven coal power plants in 2008 and five in 2009 were penalized for cheating or nonoperation with the $11.0/MWh penalty applied (33, 35).
6. Discussion At least three points are worth noting for future pollutant mitigation. First, though economic-incentive policies played a critical role to induce the proper operation of SO2 scrubbers, command-and-control policies were also essential. The Chinese government decided when and in which coal power plants SO2 scrubbers should be installed. Coal power plants without SO2 scrubbers do not enjoy the price premium for desulfurized electricity but do not face the associated penalty either. If the installation of SO2 scrubbers can be decided by the managers of coal power plants, most will not find it economically attractive. Second, the penalty of $11.0/MWh for nonoperation was successfully enacted probably because the price premium for desulfurized electricity was essentially a subsidy. In other words, the consent from coal power corporations might have been “purchased” with the price premium. Third, although China has limited resources for environmental monitoring and inspection, it is not difficult to continue to target inspections on SO2 scrubbers, because only a few hundred coal power plants in the whole of China are involved. However, the further mitigation of SO2 and other pollutants will have to deal with numerous small polluting sources with much wider diversity than SO2 scrubbers. The challenges in enacting proper policies and catching noncompliance will be more daunting. This paper’s explanation of the proper operation should not be seen as exclusive or complete. The official data may still overestimate the actual performance of SO2 scrubbers, though probably not as much as they did a few years ago. The cooperation among involved government agencies is another important factor. The threat to remove the managers of coal power plants would barely have any impact if the plants were not state-owned. Rich coastal provinces should better operate SO2 scrubbers because of their better environmental policy enforcement and lower O&M costs due to lower sulfur contents. One concern is about the sustainability of the achievement partly because China’s insufficient rule of law means that there is no certainty that existing policies will continue to be enforced. China’s history and culture of environmental law is less developed to press coal power plants to operate SO2 scrubbers properly. China’s court system plays only a marginal role in environmental policy enforcement. The proper operation of SO2 scrubbers represents a great advance in China’s environmental protection efforts and could lead to further improvement. However, because SO2 is the precursor of sulfate particles that cause significant cooling effects on climate, the world may need to accelerate the negotiation of an international climate treaty to accommodate China’s faster-than-expected reduction of SO2 emissions together with the associated cooling effects.
Acknowledgments The author would like to thank Robert Socolow, Robert Williams, Yiguang Ju, Catherine Peters, Denise Mauzerall, Jonas Nahm, Chi-Jen Yang, Jing Song, David Wilmshurst,
the anonymous reviewers, and the editor for commenting on the contents of this paper. Funding was provided by Woodrow Wilson School, Princeton Environmental Institute and Department of East Asian Studies at Princeton University, and the Industrial Performance Center at Massachusetts Institute of Technology.
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