CDM Feasibility Study of Cogeneration with Coal Mine Methane in Shanxi Province, China

Global Environment Centre Foundation(GEC)

Reports of CDM/JI Feasibility Studies

Title of the researchCDM Feasibility Study of Cogeneration with Coal Mine Methane in Shanxi Province, China
FYFY 2006
Main research orgnisationJAPAN NUS CO., Ltd.
Research partner(s)Tsinghua University CDM R&D Center
Huajin Coking Coal Co., Ltd.
Location of the projectChina (Shanxi)
Summary of the research report (PDF)Summary(PDF 389KB)
Description of the projectThe proposed project will takes place in Shaqu coalmine located in Ryulin hsien, Shanxi province. The proposed project will capture coalmine methane (CMM) currently emitted to the atmosphere to ensure safe working environment in coalmine, the CMM captured will be used for power generation (total capacity of generators: 14,000kW) and the generated electricity will be supplied to local power grid. In addition, waste heat boilers (maximum heat generation: 33.12GJ/hour) will be installed to utilize the heat generated in the process of power generation. Those waste heat boilers will replace coal-fired boiler, which has been used to supply heat and hot water in coalmine residential area. Open flare system will also be installed to flare excess gas.
Sector of the projectOthers
Duration of the project activity/ crediting period2007-2027/
Baseline methodology/additionalityBaseline methodology:
In accordance with the approved methodology ACM0008, the continuation of current practices in Shaqu coalmine is identified as baseline scenario. The baseline scenario includes extraction of VAM, pre-mining CMM and post-mining CMM from coalmine to meet the safety standard and emission of those gases to the atmosphere. In baseline scenario, electricity used in coalmine is purchased from local power grid, and coal-fired boiler is used to supply heat to households living in coalmine.

The proposed project includes the utilization of coalmine gases currently emitted to the air for power generation. The generated electricity will be supplied to local power grid. Coal-fired boilers will be replaced by waste heat boilers, which utilize waste heat produced from power generator.
Financial assessment was carried out for estimation of the investment barrier of the project. The assessment was based on the cash flow for 20years, which is the lifetime of power generator, and the result indicated that IRR (Internal Rate of Return) would be 7.19%. Survey of other CDM projects in China that use coalmine methane showed that the benchmark of IRR is 8~11% or a little more. However, the IRR of Shaqu coalmine methane project, 7.19% is lower than the values of benchmark. Such low profitability is a significant barrier to the investment. However, taking in to account the profit generated by the sale of CER from the CDM project, IRR would be significantly improved up to 80.7% and thus the profitability of the project is sufficiently high. Therefore, it is possible to say that the proposed project has clear additionality.
Estimation of GHG emissionsAnnual emission reduction(estimate) : 664,488t-CO2e 
Total emission reduction during credit period (7years) (estimate) : 3,543,936t-CO2e 
Monitoring methodologyThe proposed project adopted ACM0008 (“Consolidated methodology for coal bed methane and coal mine methane capture and use for power (electrical or motive) and heat and/or destruction by flaring”) version 3 as baseline and monitoring methodology.
Environmental impactThe environmental impact factors anticipated in the project and their assessment are presented below:
(1) Air quality: The replacement of coal-fired boiler by waste heat boiler and the avoidance of the purchase of electricity generated from coal-fired power generation could reduce the greenhouse gas emission. Emission of ozone, sulfide and nitrogen oxides resulted from the coal power generation can also be avoided.
(2) Water quality: Most of the cooling water from the generator unit is re-circulated and Waste water from boiler and domestic sewage are discharged after treatment in the existing sewage treatment plant. It is anticipated that the proposed project will not harm waters in the surrounding environment.
(3) Ecological system: As the proposed project is sited within the reserved field for the Shaqu Coalmine Gas Station, the power plant construction will not exert any significant impacts on the ecological system.
(4) Animals and plants: There are no national protected animals and few plants (mainly bushes) reside in the project area. The proposed project is expected to have no adverse impact on animals and plants.
(5) Noise: Although use of machinery during the construction period may cause some noise, there will be no severe impact on people living in the surrounding villages because of the short construction period and limited influential sphere of 350m and long distance from the construction site.
The main source of noise in the operation period would be the generator unit, though it is designed with such strict measures as noise elimination & isolation, vibration reduction and internal noise shielding.
(6) Transportation: the existing road system is thought to be sufficiently able to cope with traffic during construction and operation.
As stated above, there are not any serious environmental impacts from the proposed project. The project will provide positive effects such as reduction of greenhouse gas emission and improvement of air quality of local area.
Issues and tasks for project implementationThe necessary preparation will be proceeded to be able to start the proposed project in June 2007