China's coal region will expand coal to oil output as part of energy security drive
China's coal-producing region plans to build China's largest base to convert?coal to oil, gas, and chemicals, to reduce the country's reliance on imported energy. The war with Iran has heightened China's attention to energy security.
Inner Mongolia is also China's leading producer of renewable energies, which makes it a microcosm for the country's complex energy transition. Its reliance on oil from abroad and relative abundance of coal are a microcosm for China's energy transition. The process of turning coal into petroleum is also a major source of carbon dioxide emissions that threatens China's climate goals. Huang Zhiqiang said at a Thursday press conference that "we are increasing and strengthening the production capacity of domestic coal-to oil, coal-to gas and coal-to chemical projects to increase domestic self-sufficiency in oil and natural gas". He did not provide any further details. The industry is a growing one, but production still pales in comparison to the vast amounts of oil and natural gas that China imports. China's 2024 production of liquids, chemicals and gas from coal was only enough to replace 6% of China's gas and crude oil imports. China's production of coal-to olefin is increasing. In May, the environment ministry approved a $22.1 billion ($3.3 billion) project to convert 800,000 tons per year. Olefin, a building block of plastics and chemicals, is the most common type. Profits for the coal-to-petrochemicals industry have surged since ?the Iran war as the use of cheap domestic coal puts it at an advantage over petrochemical competitors who rely on more expensive oil as a ?feedstock.
CARBON COUNTS CHALLENGE GOALS FOR CLIMATE Huang didn't directly answer questions about how policymakers would deal with the?carbon costs of the process. However, he said Inner Mongolia was balancing the use of its vast coal reserves against the growing development of renewable energy, which now accounts for 53% of installed capacity in the region.
Documents from the government?show plans for promoting green hydrogen in projects that convert coal to chemicals. Clean energy advocates caution this should not be used as a justification to expand the sector.
Huang stated that Inner Mongolia produces between 1.25 and 1.28 billion tonnes of coal every year. This is more than one quarter of China’s total. Two-thirds of that is produced in Ordos, where the government is building the coal-to-petrochemicals base.
(source: Reuters)
