Industry group urges Chinese government to limit use of Shell's clean coal technology

A petroleum industry body in China has asked the federal government to limit purchases of Royal Dutch Shell's coal gasification technology, arguing that the oil giant's system is "still immature".

The China Petroleum and Chemical Industry Association (CPCIA) claims that out of 23 projects in China using Shell's coal gasification technology, all have experienced problems and only half are in operation.

Shell has rejected much of the criticism, arguing that the company's technology is not at the root of the bulk of the difficulties experienced by the projects.

In a report earlier this week on the CPCIA-run National Petroleum and Chemical Net web site, the group stated that "importing Shell's technology on a large scale causes problems... as the technology is still not reliable in application".

The CPCIA also contends that Shell lacks experience in project engineering, forcing local firms to troubleshoot during trials.

In response to the report, Shell China spokeswoman Li Lusha told Reuters news agency that about two thirds of project reliability problems in China are triggered by factors unrelated to the company's technology.

Possible causes included the frequent change of coal mix and poor equipment management, she said, adding that Shell only licenses its coal gasification technology and thus does not directly control equipment design and construction.

An underlying factor for CPCIA's move may lie in the group's stated concern that the technology is reliant on the import of a large number of components which can prove costly to repair.

The quasi-governmental CPCIA has been pushing for the local production of key components for coal gasification projects so that the technology can be used on a wider scale across China at lower cost.

The government is also pushing for domestically manufactured equipment to be used in many of the clean technology projects it has authorised in recent months. Last month, it issued a "buy Chinese" policy that calls for projects backed by the country's $586bn (£359bn) stimulus package to seek government permission before buying foreign goods and services.

Officials view coal gasification as a way to use the nation's sizable coal resources while minimising carbon emissions. Aside from Shell, coal conversion technologies by General Electric and Siemens have also been used in China projects.