General Electric, Shenhua Plan Clean Coal Tech Joint Venture

General Electric Co. (GE) and Shenhua Group Corp. said Tuesday they plan to set up a joint venture to develop and promote clean coal technology.

A memorandum of understanding, signed as part of a wider U.S.-China clean energy cooperation pact, aims to combine GE's expertise in gasification and cleaner power generation technology with Shenhua's expertise in building and operating coal gasification and coal-fired power generation facilities, GE said in a statement.

The two companies hope to set up a company by mid-2010 to improve the cost and performance of commercial-scale gasification and integrated gasification combined cycle, or IGCC, power plants, it added.

"This includes industrial coal gasification applications in China as well as jointly pursuing the deployment of commercial scale IGCC plants with carbon capture," GE said.

IGCC plants heat coal to produce a synthetic gas, which then turns a turbine to generate electricity.

They typically produce about 20% less carbon dioxide than conventional pulverized coal plants, which burn coal to boil water and create steam. IGCC is also referred to as coal gasification.

In addition, IGCC plants can produce more power than conventional generators with the same amount of coal.

"Coal plays an important role in the economies of the U.S. and China, and gasification technology allows us to use this abundant and low-cost resource in a much cleaner way," said Steve Bolze, President & CEO of GE Power & Water.

"Additional commercial scale IGCC and carbon capture facilities are needed though to further develop the industry and provide an opportunity for cost reduction and certainty, and to develop a carbon sequestration service industry," said Bolze.

GE is also supplying IGCC technology for Duke Energy's (DUK) plant in Edwardsport, Indiana that is expected to be the world's largest IGCC facility when it comes online in 2012.

On Sept. 10, Royal Dutch Shell PLC (RDSA) and Shenhua Group, which is China's leading coal producer, signed an MoU to jointly develop more advanced coal gasification technologies.

Work on China's first IGCC pilot project began in July -- the first 250-megawatt unit of which is scheduled to be completed in 2011.

By Simon Hall, Dow Jones Newswires; +86-106566 5848; simon.hall@dowjones.com