The World Bank has agreed to lend $80 million to China to help the country increase the development and utilization of coal bed methane (CBM) and coal mine methane (CMM) as substitutes to coal.
The loan will help the nation meet growing demand for energy and reduce greenhouse gases and local air pollutants.
The Coal Bed Methane Development and Utilization Project will focus on Shanxi province, which produces one quarter of China's coal production of 2.6 billion tons and hosts one-third of the estimated 32 trillion cu m CBM resource in the country.
The project will finance the exploration and development of about 350 vertical CBM production wells with an estimated annual production capacity of 250 million cu m, and the construction of a Liquefied Natural Gas (LNG) plant with production capacity of 200,000 tons per year.
As part of the overall government efforts to promote cleaner energy resources, and improve the safety of mining operations, the Chinese government plans to increase significantly the development and utilization of CBM/CMM resources.
China's rising energy demand has been met largely by domestic coal, which accounted for about 69 percent of China's total energy consumption in 2007.
The fast increase in coal production and consumption has contributed to China's severe air pollution and rapid rise in the emission of greenhouse gases.
Methane is a high quality and clean energy which can be recovered either during mining operations or ahead of mining activities and utilized as a clean fuel by households, commercial and industrial establishment or for power generation.
CBM/CMM utilization projects are operated and planned in at least 13 countries including China, Australia, Germany, Japan, Poland, and the US.
The total methane emission reductions that could be achieved by these projects are approximately 135 billion cubic feet per year, equal to 14.8 million tons of carbon equivalent per year, according to a recent release from Energy Business Reports, an energy industry think tank for energy industry information and research products.
The World Bank has also supported the world's largest CMM capture and utilization project in Shanxi province to help reduce greenhouse gas emissions through carbon finance.