By Chen Jia (China Daily)
Updated: 2007-11-14 07:03

The government is to introduce a new policy to help tap the country's huge reserves of coal bed methane (CBM).

Liu Lianhe, director of the exploration department of the Ministry of Land and Resources, said Tuesday: "We will encourage the exploration and use of this green energy source."

Currently, the China United Coal Bed Methane Co Ltd has the exclusive selling rights for CBM.

However, speaking during a forum at the ongoing China Mining 2007 conference, Liu said he wanted the market to be opened up. "We welcome more competition," he said.

Liu said the State Council will make the final decision on which companies are granted selling rights.

Coal bed methane, similar to natural gas, can be used to generate power. It is found in coal seams and has long been regarded as a major contributor to global warming. It is also blamed for explosions in collieries.

While reserves of the gas are vast, with official estimates putting the figure at about 36.8 trillion cu m, very little of it is currently being used due to the existing monopoly situation, insufficient funding and a lack of technology.

However, experts say that if the gas is extracted prior to mining the coal, it could provide a valuable new energy source.

Sun Ping, a consultant at a PetroChina research center, said: "Next year, I believe dramatic changes will happen in the energy industry, which will affect the environmental situation in China."

About 15 billion cu m of CBM leaks into the air in China every year. This figure could be significantly reduced if the new policy is introduced, Sun said.

Both PetroChina Co Ltd and the China Petroleum & Chemical Corporation (Sinopec) are believed to be among the companies likely to be granted CBM selling rights.

Fan Mingzhu, a senior geologist with Sinopec said Chinese companies were beginning to see their social duty as well as the economic benefit of extracting the gas.

"Sinopec is confident it can extract 11.67 trillion cu m of CBM with the right financial investment, and we are interested in developing more international cooperation on technology," he said.