Hongda Chemical promotes energy efficiency

Shandong Hongda Chemical Co. Ltd, a major chemicals
manufacturing company in the coastal province of
Shandong, is the perfect illustration of China’s industrial
transformation in the light of climate change. Thanks to
innovative solutions, Veolia has successfully transformed
this group into a national energy efficiency champion.
The essential
A limited amount of time to reduce CO2 emissions in China.
Make energy efficiency a major lever in Hongda Chemical’s energy transition.
Veolia's response
25,000 metric tons of CO2 avoided each year for the manufacturer.
Published in the dossier of February 2019

For a long time, Hongda Chemical concentrated its efforts on its core business – chemical production. At a time of strong economic growth and low coal prices, energy efficiency was far from being a priority for the company, as its General Manager Mr. Hongtao Wei admits. The performance of the plant’s energy equipment was mediocre. However, the situation has changed. In 2017, Shandong’s provincial authorities put in place draconian environmental standards that Hongda Chemical’s cogeneration (CHP) facility was unable to meet. The government also required manufacturers with their own power plant, such as Hongda Chemical, to pay a tax on their greenhouse gas emissions.

Olivier Chen, Vice-President, Business Development for Veolia’s Industrial Energy and Energy Services sectors in China

Rewarding energy efficiency champions

In December 2017, China announced the launch of what will become the largest greenhouse gas emissions trading system (ETS) in the world. Unlike the initial European system (EU ETS) that set an emissions threshold according to past production values, the Chinese ETS is based on carbon intensity (calculated on the basis of a company’s CO2 emissions-tooutput ratio) rather than the total volume of emissions. It will reward efficiency and performance in line with the sector’s reference standards.
Once the new program is established, it will initially apply solely to power plants (connected to the grid), before being expanded to sectors such as aluminum, cement, chemicals, paper, and ferrous metals. Manufacturers will gain no advantage in “cheating” the system by putting off until tomorrow energy efficiency solutions that are already viable. Within the framework of the ETS, companies that release the fewest emissions per production unit will be financially rewarded.
The energy efficiency gains made at the Hongda Chemical plant will be a major lever for the future national emissions trading scheme. “The energy system improvements implemented by Veolia will allow Hongda Chemical to obtain and then trade carbon credits on this market, bearing in mind that the price of transactions will undoubtedly continue to rise in the future,” explains Olivier Chen.

A benchmark plant

Responsible for managing the basic services (heating, air conditioning, water, electricity) for many Chinese manufacturing companies at the time, Veolia provided Hongda Chemical with a solution: modernizing the plant’s energy system and implementing two energy management contracts. The aim was not only to make the site compliant, but also to make it a real benchmark plant.

The transformation of the two circulating fluidized bed (CFB) boilers with a steam production of 220 t/h was completed in March 2018; after the renovations, dust emissions fell by over 90%, while nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions were reduced by 80%, enabling the company to fully comply with the strictest environmental regulations. The energy efficiency of the entire plant has increased, rising from less than 60% to over 80%: this represents a considerable source of savings for Hongda Chemical, accompanied by a significant reduction in its greenhouse gas emissions (see key figures).

China: a leader in ambitious programs

Energy efficiency is increasingly appearing as a promising solution to combat climate change. According to Fatih Birol, Executive Director of the International Energy Agency (IEA), “energy efficiency policies could alone enable the world to achieve more than 40% of the emissions cuts needed to reach its climate goals without requiring new technology.”

On a global scale, China is gradually establishing itself as a leader in the field. Since 2000, ambitious incentive programs have been developed concerning both power plants and electrical appliances. Ultimately, the country has significantly streamlined its energy consumption, saving 1.2 gigatons of CO2 – i.e. 12% unconsumed energy – in 2017. This represents almost all of Japan’s annual emissions!

A booming market

Veolia is increasingly helping Chinese companies comply with environmental regulations. With the entry into effect of new energy efficiency standards for data centers, the Group was chosen by a Chinese publishing company to set up a chilled water facility in its big data hub and introduce a new eco-friendly approach.

Another example is the north-east of China, where Veolia has been awarded a contract to construct, operate and maintain a biomass plant, set up an ecological alternative to coal, and run a project to power a plant using 80% renewable energy.

These clients have joined the ranks of a new generation of Chinese industrialists who are rethinking their production to participate in the global fight against climate change. “China will certainly be able to honor the commitments made in the Paris agreement,” states Mr. Wei. “Our activities are a source of CO2 emissions and we must continue our efforts to reduce the latter.”


232 metric tons of SO2 avoided each year
572metric tons of NOx avoided each year
25 000metric tons of CO2 avoided each year
104 metric tons of dust avoided each year
161 GWh of energy produced each year
• Energy efficiency has risen from 60 to 80 %