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China and the European Union (EU) have launched the second phase of a joint project on carbon capture and storage (CCS) in China, confirming their desire to continue the collaboration.

The 'Near Zero Emission Coal Project' (NZEC), launched in 2005, will be based in either the Daqing and Jilin oilfields and saline aquifers of the Songliao Basin, or the oilfields of the Jiangsu Depression in the Subei Basin.

The memorandum of understanding, signed by China and the EU last week (30 November) at the 12th EU–China summit in Nanjing, starts the design phase of a CCS demonstration plant.

The European Commission has pledged up to US$86 million towards the project and the plant is expected to be completed by 2015.

The agreement follows calls from US secretary for energy Steven Chu and two reports, published in October and November, suggesting that China should embrace CCS.

The reports highlight China's huge potential capacity for storing carbon dioxide — 3,000 gigatonnes in its deep saline aquifers, ten times more than previously calculated — and the fact that more than 80 per cent of China's carbon emissions come from within 50 miles of a potential storage basin.

CCS captures carbon dioxide from factory smokestacks and transports it for storage in deep geological formations, such as depleted reservoirs or saline aquifers.

The technology could help China reduce its carbon emissions. The nation is highly dependent on coal and this situation is set to continue — 75 per cent of its electricity comes from coal-fired thermal power plants, and it built 100 new plants in 2007.

Because CCS is so expensive — a demonstration plant is estimated to cost US$750 million — China will need to collaborate with Europe and the United States to implement CCS on an industrial scale, the reports conclude.

CCS could be integrated within the UN's Clean Development Mechanism scheme, in which rich polluting nations pay for carbon dioxide reductions in poorer nations. This is due to be discussed at this month's UN Framework Convention on Climate Change summit in Copenhagen.

China already has one demonstration-scale CCS project in operation near Beijing: the Gaobeidian project established in 2008. But instead of storing the carbon dioxide it collects, it uses it to carbonate soft drinks.

Construction is due to begin in 2013 on another project, GreenGen in Tianjin, which will be the first commercial-scale CCS power plant, aiming to capture and store 25,000 tonnes of carbon dioxide each year. Two other projects, in Shanghai and Inner Mongolia, are in the feasibility study phase.