The project will replace heavy-polluting coal-fired boilers and produce clean energy from straw, currently a waste by-product of local agriculture. The project will reduce CO2 emissions by over 200,000 tons each year, and make the air cleaner locally by reducing sulphur and fly ash.
“Finally, this project will result in additional and important side income for the farmers in the region when they get paid more than an average monthly salary to supply waste straw to the straw collection stations.A win-win project for all parties involved,” says Inger-Anne Blindheim, finance manager of Greenstream Network.
Greenstream has been able to build on a demand within China for the most efficient process technology within a range of industry sectors from the metal industry to the gas industry - and for professional industrial investors in these fields.
“In addition, there is a demand for renewable energy and Norwegian companies can meet the demand for competence and/or technology supply related to hydropower, wind power project development, bio-energy and solar energy. In addition to the supply of clean equipment and technology, Norwegian companies can contribute with important consultancy services in terms of technical, environmental and financial project development and quality assurance,” says Blindheim.
Today straw is a waste product from Chinese agriculture. Through new technology like this plant, straw-fired combined heat and power can replace old, polluting coal fired boilers, and in addition it can give extra income to the farmers and Certified Emission Reduction (CER) to the investors.
Norwegian Technology Up To Date
Einar Berstad, project manager on the Lishu project, says Norwegian energy and environmental technology is in general perceived as being up to date, having a high level of quality and reliable.
“The Chinese are in general interested in the access and purchase of top modern technology. Clean and safe technology is of course a plus. Norway can continue to build on this branding,” says Berstad.
An innovative approach, achieved with significant cooperation between the public and private sectors, as well as the recognition that Norwegian companies both big and small have to work together to crack the Chinese market and must innovate to thrive there.
Central to these efforts is the Norwegian Energy and Environment Consortium (NEEC), which through Innovation Norway’s Beijing office at the Royal Norwegian Embassy in China represents close to 100 enterprises through networks and company memberships, including some of Norway’s top companies, such as ELKEM, Aker Kvaerner and Statoil and groups such as the SINTEF Group, which is Northern Europe’s largest private research institute.
The demand is clearly there. China is choking on pollution emitted by the coal-fired power plants that provide the lion’s share of its energy needs. Beijing is worried about air quality ahead of next year’s Olympic Games in the capital and in regional cities around the country; authorities are scratching their heads trying to come up with a solution for the poisoned skies. China is the world’s second largest energy producer and consumer, after the US, with coal and crude oil as the largest energy sources.
Coordination Needed for SMEs
In strategic terms, NEEC coordinator and Innovation Norway’s Environmental Projects manager in Beijing, Vibeke Skaiaa, says the market has been good so far for larger companies, with ever more small and medium enterprises (SME) coming into the Chinese market. However, a coordinated approach is necessary.
For example, Greenstream works closely with the Norwegian Air Research Institute (NILU) and the Norwegian consulting company Norsk Energi in the consortium.
Part of the challenge for Norwegian firms is competing with much bigger countries whose firms have much greater economies of scale.
“Germany and France are huge and have very big companies that do the total enterprise. Then we have this little Norwegian company with maybe 40 employees that has unique technology but there is no way it can compete on its own in the bid, but if we put more companies together in a network they are very competitive,” Skaiaa says.
“The large companies are still young when it comes to renewable energies, and the sections working in this area on renewable energies are often like small companies within big companies,” says Skaiaa. On the other hand, they have the industrial experience and commercial resources necessary, and can be very useful partners for smaller actors. “The Chinese want pilot projects and they want them financed and that’s always a challenge if you’re small,” she adds.
Consortiums such as Clean Water Norway (CWN) have been crucial in strategic terms. CWN is an association of about 20 water treatment companies, which comprises consulting engineers, plant contractors and product specialists in the fields of water and wastewater treatment. The group’s main objective is to further develop cooperation throughout the industry.
“The SMEs from Norway have excellent technology but they don’t always have the capital or the knowledge of the Chinese market, which is quite complicated and can be challenging,” says Skaiaa, emphasizing that NEEC is there to help.
“We see that a lot of the smaller companies are working very closely with the larger companies and thereby have a possibility to enter the Chinese market in a different way than they did previously. And also we see a tendency in the big companies like ELKEM, for example, towards a willingness to work with smaller companies and utilize their technology,” she says.
Pictures show a ferrosilicon plant in Xibei, China before and after the successful installation of filter systems from Elkem Materials.
Taking Advantage of Synergies
Synergy is something very much on the mind of Skaiaa’s colleague Idun Christie, Commercial Counsellor at the Norwegian Embassy in Beijing.
“We wanted the business sector, the public sector and the research sector to support each other’s efforts ,” explains Christie, saying that they started thinking about alternative solutions three years ago.
“Norwegian companies had been active with projects in the hydroelectric power and environmental technologies sector but we found we needed to do more comprehensive thinking about this,” she adds.
Research identifying pollution causes cried for a practical follow up to solve the problems. Bigger companies wanted a consortium with vital expertise from smaller firms as well as research institutions to help them compete, and a network platform for collaboration was established.
Visibility is crucial, as the Chinese lack a lot of technologies and solutions in this sector. “We wanted to make these companies much more visible in China,” states Christie, referring to INTSOK – the Norwegian Oil Industry consortium – as a good model.
Another vital component was establishing critical mass. Norway had a head start on these technologies because of the oil and hydro industries.
“We don’t say three Norwegian companies are competing for one project in China; instead we have complementary companies giving complete solutions,” says Christie.
Handling the challenges of financing, there is a lot to be saved if SMEs work together from the same platform when it comes to financing.
“Our role is to facilitate the companies’ cooperation on solutions for the Chinese market, so they can become competitive with other global actors by innovating together,” explains Christie.
Clean & Green Natural Gas
The Norwegian University of Science and Technology (NTNU) is establishing research cooperation with top Chinese universities that could have long-term implications for the use of Norwegian technology.
Professor Ruzhu Wang is director of the Institute of Refrigeration and Cryogenics at Jiaotong University in Shanghai. Natural gas is a green and efficient source of energy that is more price competitive than oil and liquefied petroleum gas and is therefore being actively promoted by the Chinese government. Prof Wang works extensively with gas technology and natural gas is set to play an important part in the energy system in the region around Shanghai.
Jiaotong University is strongly involved in finding ways to best utilize liquid natural gas in the future, and Statoil, Elkem and IM Skaugen (Shanghai) are involved on the industrial side.
“Norway is thought to be the best organized country for renewable development,” states Professor Wang.
“Norway is a country rich in energy, but it is also a country that uses energy efficiently. The environment in Norway is quite good. China can learn from Norway’s experiences in handling these subjects,” Wang says.
The Chinese are interested in learning how to get the natural gas from the deep sea, liquefy the gas on sea platforms and transport it long distances. After this comes the efficient use of liquid natural gas (LNG), reliquefaction and increasingly, how to handle CO2 emissions.
Professor Wang’s main areas of interest are in LNG technology, including combined cooling, heating and power systems, as well as refrigeration and heat pumps and sees rich rewards for Norwegian companies working in China.
“The market for Norwegian energy products and environmental technology in China is just at the starting point,” he says.
Implementing the Kyoto Protocol
China is a vast country with spectacular nature and ancient history, and now the Chinese want Norwegian technology to protect tomorrows’ environment.
China is keen for projects to help enact the Clean Development Mechanism (CDM) of the Kyoto Protocol, and there is a large demand for CDM project development competence and sale of Certified Emission Reductions from CDM projects.
Water quality is falling at a fast pace, leaving millions stuck without clean water. Increasingly, the government recognizes the need to do something before the situation becomes politically destabilizing, and it has introduced legislation such as the Renewable Energy Law two years ago to try and help.
“Now is the right time as China has just introduced the Renewable Energy law, and it is also trying to deal with CO2 emissions. Liquefied natural gas (LNG) and renewable energy are good solutions for China,” the professor states.
Underlining the importance of the Chinese market for Norway, Prime Minister Jens Stoltenberg led a business delegation on a visit to China in March of 2007, which led to Innovation Norway setting up two initiatives under the “Energy Management Programme for China”. In the wake of the visit, Hans Borchsenius was appointed as the coordinator for energy recovery and CDM project development in the ferroalloy industry in China.
“Our prime minister declared Norwegian interest in contributing to improved energy efficiency in China, and that Norway is interested in purchasing carbon credits in China to fulfil our Kyoto obligations,” says Borchsenius.
Recovering Waste Heat
“Norway has a strong ferroalloy industry because of our huge amounts of hydropower. This industry is very energy intensive, and most factories have huge amounts of waste heat. Several Norwegian ferroalloy factories have installed heat recovery technology for production of electricity and/or heat,” the energy recovery coordinator says.
His company, Norsk Energi, has been involved in most energy recovery projects in the Norwegian ferroalloy industry for the last 30 years. Norsk Energi, along with Greenstream and NILU, has cooperated with Innovation Norway in looking at areas where Norwegian expertise can help the metallurgical industry.
One of these companies is Jilin Ferroalloy Company, which was established in 1953 based on technology from the Soviet Union. Today, Jilin Ferroalloy Company is China’s largest producer of ferroalloys, producing 430,000 tons of ferromanganese (FeMn) and ferrochromium (FeCr) last year.
Sinosteel Jilin Ferroalloy’s energy intensive production takes place in 25 metallurgical furnaces and there is scope for increasing the amount of heat recovered, which could be used for the production of process steam, heat and electricity.
“The Norwegian company ELKEM has large commercial operations in China for the installation of filters and recovery of silica dust for sale on the global market. We are cooperating with ELKEM,” says Borchsenius, adding that this is a good example how environmental protection, energy management and business go hand in hand.
China is interested in learning more about the utilization and liquefaction of natural gas from the deep sea and the transport of it over long distances. IM Skaugen cooperates with Statoil and ELKEM to provide the Chinese with top-notch technology for liquefied petroleum gases (LPG).
“The ferroalloy industry has traditionally been heavy polluters. ELKEM has already installed dust removal filters at several ferroalloy factories in China, and intend to expand this business,” says Borchsenius
The dust is a valuable additive to the cement production, as it increases the strength of the concrete. The removed dust is therefore sold on the world market.
The off gases from ferroalloy furnaces are very hot (300–500 degrees Centigrade), and the gases have to be cooled down before entering into the dust removal filters. The removed heat may be used for production of electricity and district heating of apartment buildings, and thereby substitutes electricity and heat produced in heavy polluting coal fired power plants.
“The reduced CO2 emissions can contribute to the financing of the energy recovery equipment by sale of carbon credits to international buyers by utilising the ‘Clean Development Mechanism’ under the Kyoto Protocol,” says the Clean Development Mechanism coordinator.
Energy recovery may reduce the need for an external supply of electricity to the ferroalloy furnace by up to 25 percent. As the main part of electricity in China is produced in coal-fired power plants, this will lead to reduced emissions of CO2 as well as other pollutants from the power plants. Therefore, such projects qualify for CDM.
“We are awaiting translation of the feasibility study to draw final conclusions. From the information that we have today, we conclude that the future plans for heat recovery at the Jilin and Liaoyang ferroalloy companies will reduce regional CO2 emissions, and that they therefore may be interesting in a CDM context,” Borchensius writes in a report on the project released in July of 2007.
There are several Norwegian companies operating in the field of water and wastewater treatment. Some CWN companies have also done business in China for many years. This includes Malthe Winje, Anox Kaldnes and several others.
“China is developing at a furious pace – including in the field of water treatment. This large country has many challenges: dry areas in the north, where water shortage is the largest problem, to the more water favourable areas in the south (where pollution represents the greatest challenge),” says Georg Finsrud, who was made chairman of CWN this year.
“It is the aim of CWN that its member organizations may gain access to a larger share of the Chinese market through increased collaboration. This could be done by several companies bidding for projects under the CWN umbrella. Not only would this increase market access, but also provide customers with the best solutions at a very competitive price,” says Finsrud. He has been working as a consultant in Norway and China for 11 years, including two years with the Norwegian Peace Corps in China.
Currently his work involves controlling and automation systems Malthe Winje Automation. One focus for CNW’s efforts in China is on developing water treatment solutions in a small rural city. China’s National People’s Congress, the annual parliament, has agreed to support efforts to improve sanitation conditions in smaller rural communities of between 500 and 10,000 people. This is a huge number of projects in a country of 1.3 billion people, most of whom live in the countryside. Existing situations are poor and few communities already have treatment plants.
The challenge with these projects is in making them economically acceptable, and the aim is to provide treated water to the population, industry and agriculture, as well as the treatment of waste water and sludge handling, and recycling of resources.
“This means that we should think of ‘new solutions’. The project must identify an overall solution for a targeted village that can serve as a demonstration for other cities. The demonstration will then include existing Norwegian treatment technology and competence,” the CWN chairman states.
The furnaces at Sinosteel Liaoyang Ferroalloys recover combustible CO gas, and General Manager Assistant Yimin Xing is a key person in the Sino/Norwegian energy management cooperation.
China is urbanizing at a ferocious pace, with new skyscrapers going up all over the country and apartment buildings housing over 10,000 residents being developed every day. CNW has developed a de-centralized water handling system for these residential constructions, providing secure drinking water, waste water treatment and recycling facilities, just like it does in the countryside.
The system involves the use of a separate waste water system (gray/black water) with a vacuum system with water-saving toilets using black water. The black water could be treated, possibly producing bio-soil. The grey water would be treated to be re-used for flushing toilets, washing streets and cars, and for irrigation – for example, making artificial waterways, streams and dams as part of the landscaping process.
Finsrud says the concern for CWN was not whether there is a market for the products and services of Norwegian companies, but rather how the companies may best gain access to this market.
“Norway is a small country, and many of the companies operating in this field are also relatively small, compared with some of their other European competitors. This is a challenge in China where the scale of projects is much larger than those which Norwegian companies are used to,” said Finsrud.
Norwegians Know China
Synergies work in many ways and Norwegian companies have also developed expertise in dealing with companies within the region who are keen to grow there.
The investment and strategic advisory company Origo Sino-India focuses primarily on the private equity markets of China and India. In August, Origo Sino-India announced it would focus and assist in sourcing high growth, merger and acquisition opportunities in China for Everest Kanto, which is Asia’s largest high pressure gas cylinder maker, with a market capitalization of X370 million.
Everest Kanto has embarked on a global expansion plan by doubling its existing capacity in Dubai and setting up a green-field manufacturing facility in China.
“Favourable policies and substantial investment in natural gas infrastructure by the Chinese government generates a huge demand for specialized gas equipment for storage, transportation and distribution. This brings enormous business and growth opportunities for manufacturers of such equipment such as Everest Kanto,” Origo chief executive Chris Rynning said in a statement.
As the power plant run on straw shows, innovation is the key to meeting that challenge.
China is urbanizing at a ferocious pace, and the clouds over Hong Kong are often dark. New technology is needed.