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Chinese Petroleum and China Steel

Making Money by Cutting Carbon


The two industrial giants Chinese Petroleum and China Steel have born the blame for Kaohsiung City's world-topping carbon emissions. Now, their aggressive carbon-cutting efforts are helping the environment, and making them money too.



Making Money by Cutting Carbon

By Ching-Hsuan Huang
From CommonWealth Magazine (vol. 369 )

Rising from within the intricate bowels of Chinese Petroleum Corporation’s Kaohsiung Refinery, the state-run company’s most expansive complex, five massive smokestacks stab as high as one hundred meters into the sky. In the past, we would expect to see these towering torches spouting five raging flames, yet these days only one, because its compressor happens to be under maintenance, gives up just a small flare.

Originally, the waste petroleum gas released through these stacks was simply set aflame. This practice not only wasted a potentially valuable resource, but injected a considerable amount of carbon dioxide into the atmosphere as well. Now, CPC has installed compressors that recover this gas for use as a source of energy.

The refinery’s hydrogen plant, one of the twenty-eight facilities comprising the three hundred-plus hectare complex, is quietly performing a little magic of its own these days. It is converting carbon dioxide that would otherwise be released into the atmosphere into cold cash.

CPC: The Good Deed of Dry Ice

The plant’s new trick is to recover, through a network of pipes, the copious amounts of carbon dioxide generated as a byproduct of the hydrogen manufacturing process and then to put this gas through a process of purification before freezing it into its solid form, dry ice. The modern alchemy performed by the upgraded hydrogen facility can produce sixty to eighty tons of dry ice a day, which CPC can then sell for use by the entertainment and refrigerated transportation industries. Although the negligible income generated by sales of this frozen carbon dioxide is dwarfed by CPC’s enormous annual revenues of NT$600-700 billion, “Don’t forgo a good deed because it is small,” affirms Kaohsiung Refinery deputy general manager Paul S. P. Chen (quoting Confucius). “We’re still aggressively reducing our carbon dioxide volume. We’ll add more equipment and extract even more,” laughs a contented Chen.

Back in 2004, CPC became the first major corporation in Taiwan to complete carbon dioxide inventory and certification work. The massive oil company discovered its annual emissions to total 11 million metric tons.

We can look at CPC’s colossal Kaohsiung Refinery to put the company’s accomplishments in perspective. Having implemented a bold carbon dioxide reduction program, the complex succeeded in cutting the volume of carbon dioxide it releases for every NT$1 million of annual revenues from 33.4 tons in 2003 to 20.4 tons in 2005.

After signing a voluntary agreement on industrial energy conservation and carbon dioxide reduction, CPC further committed itself to investing an additional NT$720 million from 2004 to 2009 in order to achieve a ten-percent reduction in its carbon dioxide emissions. This would cut its emissions by one million tons, or approximately 350,000 tons of oil equivalent (TOEs). CPC also requires that every plant and every division report its reduction achievements each quarter, and considers this an important item on performance evaluations.

China Steel: Turning Waste into Gold

Like CPC, China Steel Corporation, whose carbon dioxide emissions are the second largest of any industrial unit in Taiwan, has also discovered there are ways to cut carbon that also generate significant revenues.

For instance, the cement that went into the construction of Delta Electronics’ factory and office complex in the Southern Taiwan Science Park – the facility awarded Taiwan’s first gold-rated green building certificate – was mixed with a waste byproduct of the steel-making process – slag.

Slag is a viable substitute for cement, possessing a similar chemical activity, but higher strength. In Taiwan, “it can replace forty to fifty percent of cement,” says National Cheng Kung University Department of Architecture professor Lin Hsien-Te.

China Steel currently ends up with 0.3 tons of slag for every ton of molten iron it produces, meaning that, with an annual production capacity of 11 million tons of steel, the company creates 3 million tons of slag per year. Nonetheless, even this volume is insufficient to meet demand.

With China Steel’s use of this industrial waste product contributing nearly NT$900 million a year to its revenues, it is hard for the steel maker not to be happy. Others are happy as well. Construction companies, for instance, enjoy cost savings, because slag cement is just half the price of traditional cement. Furthermore, the reduction in carbon dioxide emissions resulting from the substitution of slag for traditional cement benefits the environment.

The cement industry is among the six big energy consuming industries in Taiwan and it winds up releasing an average of over 0.8 metric tons of carbon dioxide for every metric ton of cement it produces. Making use of slag cement, though, allows for a direct reduction in both the cement industry’s fuel consumption and its carbon emissions. On another front, China Steel has advanced a “regional energy integration” plan since 1993. This is yet another strategy that lowers energy consumption while generating external income.

Constantly emitting a tremendous rumble, the steam-electric cogeneration system at China Steel’s Hsiao Kang plant in Kaohsiung supplies all of the steam and sixty-six percent of the electricity needed to run the entire plant.

The surplus steam produced by the cogeneration system is delivered by long pipes to facilities in the area operated by China Petrochemical Development Corporation, Lee Chang Yung Chemical Industry Corporation, and CPC. This arrangement has saved China Steel’s neighbors from needing to install boilers of their own and burn the carbon-laced heavy fuel oil they consume. Moreover, China Steel’s sales of steam alone earned it income of NT$600 million in 2006. These sales, combined with those of oxygen, nitrogen and hydrogen, augmented the steel maker’s revenues by over NT$1 billion.

CPC has its own example of how teaming up with other businesses can achieve reductions in carbon dioxide while creating golden business opportunities.

Qatar Fuel Additives Company, a joint venture that CPC runs together with Lee Chang Yung Chemical Industry Corp. in Qatar, collects five hundred tons of carbon dioxide a day from fuel refineries in its vicinity. By combining this gas with the excess hydrogen it produces, CPC is able to produce 250 tons of methanol. As it turns out, Russia recently cut back its production of methanol due to the larger profits it earns from natural gas, leading to skyrocketing methanol prices and allowing CPC to reap considerable profits. This is hardly enough, though. CPC’s example demonstrates that there are business opportunities to be gained by moving quickly to seek out and develop cleaner alternative sources of energy. “There’s more to Chinese Petroleum than just oil refining and sales. We intend to become a competitive energy company,” declares CPC Kaohsiung Refinery general manager Jung-Shong Hwang.

Such alternative energy sources as ethanol, biomass energy, and solar photovoltaic power are the future of CPC’s development as a competitive energy provider. “Chinese Petroleum will absolutely not be absent when it comes to developing new sources of energy,” declares CPC vice president S. H. Chu, firmly confident that CPC will go on to create even larger, more far-sighted business opportunities.

Translated from the Chinese by Stan Blewett

Chinese Version: 減碳減出大商機