China is planning to capture millions of tonnes of carbon dioxide generated by its energy and steel plants for use in extracting crude oil from the country’s increasingly barren oilfields.

Construction has begun on the Yanchang Integrated Carbon Capture and Storage Project, Asia’s first commercial carbon capture and storage project. Set to begin operations in 2018, Yanchang will capture 410,000 tonnes of carbon a year from a coal-to-gas plant in Shaanxi province, the country’s coal heartland. The project could mitigate emissions from the notoriously polluting and water-intensive coal-conversion process used by coal-to-gas plants, which the Chinese government has been promoting in the face of slumping coal prices. Captured carbon would be transported by truck 140km to the Qiaojiawa oilfields 20 tonnes at a time, making the Yanchang project the world’s first “full-chain” carbon capture and storage (CCS) project. According to Global CCS Institute, an Australian non-profit group, China has a further seven CCS projects in the pipeline, which would store a total of 9m tonnes of CO2 a year. Four of this total of eight projects are for coal-to-gas plants. However, China finds CCS attractive because it carries a commercial silver lining, where the millions of tonnes of captured carbon can be pumped into the ground to extract oil. Proponents tout this enhanced oil recovery (EOR) method of carbon storage as a win-win, from both an emissions and commercial perspective.

As its maturing onshore oilfields dry up, China has become increasingly reliant on oil imports. Dropping exports over the past two years and the slow development of shale or “tight” oil extraction has prompted China to consider methods such as EOR, according to Peter Lee, an oil and gas analyst at BMI Research. “Chinese firms have to resort to expensive EOR programmes to squeeze out the last remaining bits of liquids from existing assets that are approaching the end of their product cycles,” Mr Lee said. Using captured carbon to extract oil is not new. Fourteen of the 17 existing commercial scale CCS plants around the world sell their carbon to enhanced oil recovery projects. China has been exploring EOR techniques since the 1980s but has been relatively slow to adopt CCS because of its significant upfront cost. “In theory, CCS is technically feasible,” says Yang Fuqiang, senior adviser on climate and energy at the Natural Resources Defense Council, an international environmental non-profit organisation. “But it hasn’t been put into practice in industry, in part because research is still needed to show that this can be an economically-viable technology.

In China, the Ministry of Science and Technology has supported a couple demonstration projects, but none have been completed yet due to a lack of sufficient investments.” Yet state-owned enterprises in China’s heavy industry sectors, including cement and steel, have begun considering adding equipment to existing plants that would allow them to capture about 90 to 95 per cent of their carbon emissions. Carbon from the country’s energy and industrial plants may be put to other uses as well. Huaneng, one of China’s largest power producers, can process food-grade carbon dioxide from its Beijing power plant for use in fizzy drinks. The country’s policymakers have also been exploring pumping the gas into aquifers in China’s increasingly arid northern plain to access the remaining water.