\"Guidelines for the Development of Modern Coal Chemical Industry during the 13th Five-Year Plan Period\"

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I. Current Status of Industrial Development During the 12th Five-Year Plan period, against the backdrop of rapidly rising oil demand and high oil prices, China’s modern coal chemical industry, which focuses on oil substitutes, entered the stage of industrialization at a rapid pace thanks to the completion and operation of a number of pilot projects, resulting in swift growth in the scale of this industry； Significant breakthroughs have been achieved in technological innovation; a large number of technical challenges related to advanced coal gasification, coal liquefaction, as well as the production of olefins and ethylene glycol from coal have been overcome, and a range of large-scale equipment has been developed ； A park-based and base-based layout has initially taken shape ； Both technological innovation and industrialization are at the forefront of the world, and modern coal chemical industry has become one of the biggest highlights in the development of China’s petroleum and chemical industry during the 12th Five-Year Plan period. 　　(1) Main characteristics of industrial development 1. The industry has reached a certain scale Modern coal chemical projects focused on coal-to-oil, coal-to-olefins, coal-to-ethylene glycol, and coal-to-gas have all completed the development of their production processes, resulting in rapid growth in the scale of this industry. In 2015, China’s coal-to-oil production capacity reached 2.78 million tons, with an output of 1.32 million tons ； The production capacity for olefins from coal (methanol) reached 7.92 million tons, with an output of 6.48 million tons ； The production capacity for ethylene glycol derived from coal reached 2.12 million tons, with an output of 1.02 million tons ； The production capacity of coal-to-natural gas reached 3.1 billion cubic meters, with an output of 1.6 billion cubic meters. By the end of the 12th Five-Year Plan period, China had built 20 demonstration and industrialization projects for producing olefins from coal (methanol), 4 projects for producing oil from coal, 3 projects for producing natural gas from coal, and 12 projects for producing ethylene glycol from coal. 　　2. Overall breakthroughs in key technology implementation In recent years, China has developed a range of advanced coal gasification technologies, including “multi-nozzle opposed coal slurry gasification,” “aerospace-type pressurized coal gasification,” “Tsinghua water-cooled wall coal slurry gasification,” “SE coal gasification,” and “two-stage pressurized dry coal powder gasification.” In light of the characteristics of different coal types, relevant enterprises and research institutions are developing new coal gasification technologies to provide technical support for the in-depth advancement of modern coal chemical industry upgrading initiatives. Our country has mastered technologies for direct coal liquefaction, indirect coal liquefaction, methanol-to-olefins, coal-to-ethylene glycol, methanol-to-aromatics, and kerosene co-processing, all of which involve independent intellectual property rights. Among these, technologies for direct coal liquefaction, indirect coal liquefaction, methanol-to-olefins, and coal-to-ethylene glycol have all undergone engineering demonstrations; furthermore, based on the success of these demonstrations, the methanol-to-olefins and coal-to-ethylene glycol technologies have been implemented on a larger scale ； Industrial trials for the methanol-to-aromatics and kerosene co-processing technology have been completed. China’s modern coal chemical technology is generally at the world’s leading level. The continuous improvement in the level of technological innovation in coal chemical industry provides important technical support for the diversification of petrochemical raw materials. 　　3. Significant achievements in project demonstrations Major progress has been made in project demonstrations related to the production of olefins from coal (methanol), coal-to-oil, coal-to-natural gas, and coal-to-ethylene glycol; these initiatives have helped solve a number of challenges related to industrialization, engineering implementation, and the development of large-scale equipment. The Shenhua Baotou coal-to-olefins project has been operating stably for 5 years in a row, with an average annual load factor of over 90%. The Yitai 160,000 tons/year coal indirect liquefaction project has been operating stably for 6 years, with the plant load remaining at a level of 90%–110%. The continuous operating time and production load of coal-to-gas projects such as Datang Keqi and Xinjiang Qinghua have also been steadily increasing. In the new context of a sharp decline in international oil prices, modern coal chemical demonstration projects are taking approaches from various aspects such as technology, management, and equipment to actively explore new advantages to compete with the petrochemical industry, and to strive to improve the profitability of modern coal chemistry. 　　4. A pattern of industrial parks and bases has taken initial shape. Modern coal chemical projects in China are mainly concentrated in provinces and regions such as Inner Mongolia, Shaanxi, Ningxia, Shanxi, and Xinjiang, and a pattern of development based on industrial parks and bases has begun to emerge. At present, the coal chemical industry bases that have already taken shape mainly include the Ordos Coal Chemical Industry Base, the Ningdong Energy and Chemical Industry Base, the Northern Shaanxi Coal Chemical Industry Base, as well as the coal chemical industry bases in Zhundong and Ili in Xinjiang. These modern coal chemical industrial bases are all located in areas rich in coal resources, with upstream and downstream industries developing further. In some cases, integrated production with industries such as petrochemicals and power generation is achieved, and these bases are moving toward a more organized, centralized, and large-scale format. The advantages resulting from industrial clustering have been fully utilized, laying a solid foundation for development during the 13th Five-Year Plan period. 　　(II) Main problems in industrial development While China’s modern coal chemical industry is developing rapidly and achieving significant results, it also faces some issues that cannot be ignored, which are mainly reflected in the following aspects: 1. Significant constraints due to water resources In China, water resources and coal resources are distributed in opposite patterns – the coal-rich regions in the west account for more than two-thirds of the country’s coal production, while they only hold one-third of the total water resources. In particular, regions such as Shanxi, Shaanxi, Inner Mongolia, Ningxia, Xinjiang, and Gansu account for only about 10% of the country’s total water resources; moreover, their vegetation coverage is low, resulting in fragile ecosystems. Modern coal chemical projects in regions such as Ningxia, Shaanxi, and Inner Mongolia rely primarily on the Yellow River for water supply. On one hand, the total volume of water in the Yellow River is limited, and on the other hand, it is decreasing year by year. 　　Currently, modern coal chemical projects in China consume relatively large amounts of water and are quite large in scale. On average, 5.8 tons of water is required per ton of coal for direct coal-to-liquid production; 6.0–7.0 tons of water is needed for indirect coal liquefaction; 7.0–9.0 tons of water is used in coal-to-natural gas production; 25.0 tons of water is required for coal-to-ethylene glycol production; and 22.0–28.0 tons of water is needed for coal-to-olefins production. These projects are mainly located in the central and western regions, where water resources are scarce. The bottleneck of water scarcity will hinder the healthy development of the modern coal chemical industry. 　　2. Great pressure regarding environmental emissions: Modern coal chemical industries are mainly located in the western regions, where the ecological environment is fragile. The contradiction between industrial development and ecological protection in these areas is becoming increasingly prominent. The disposal and emissions of solid waste and exhaust gases in the coal chemical industry can be controlled; pollution-related issues mainly focus on wastewater discharge. The treatment of wastewater is quite challenging, especially for high-concentration organic wastewater containing hard-to-degrade substances such as tar, phenols, and polyphenols. It is difficult to treat such wastewater using conventional biochemical processes, and many problems arise as a result. In addition, the disposal of high-concentration saline wastewater is also challenging, with high treatment costs. Due to the lack of environmental emission standards for coal chemical industries, areas without the necessary infrastructure to handle such waste face the difficulty of achieving \"near-zero\" emissions. The second is the issue of managing carbon dioxide emissions. At present, an effective way to deal with carbon dioxide emissions is by injecting it underground for storage. China National Petroleum Corporation and Shenhua Group have already carried out experimental projects related to carbon dioxide capture, oil displacement, and storage, but there is still a long way to go before this issue can be resolved fundamentally. How to effectively and fundamentally address the issue of carbon dioxide emissions remains a major practical challenge that the modern coal chemical industry urgently needs to solve. 　　3. Technological equipment remains a constraining bottleneck
Although China’s modern coal chemical industry has made significant breakthroughs in the research and development of key technologies as well as their engineering applications, the lack or low level of technological equipment continues to be a major bottleneck hindering industrial development. This is mainly reflected in the following: first, many key process technologies have not yet been overcome, resulting in a short industrial chain in modern coal chemical industry, a limited variety of products, low quality, and significant homogenization ； Secondly, the competitiveness of domestic core technical equipment needs to be improved; for some core technologies such as methanation, key equipment and materials still rely on imports, which has a negative impact on reducing project costs and shortening construction timelines ； Thirdly, the process flow and technical integration still need to be optimized and upgraded, and the scale of the facilities is not appropriate; as a result, the demonstration projects that have been put into operation still have significant room for improvement in terms of technical and economic indicators such as energy conversion efficiency, coal consumption, and water consumption ； Fourth, domestic equipment still lags behind international advanced levels in terms of larger scale and process control. 　　4. Lack of standards; an urgent need to establish a standard system. Overall, there are few standards in modern coal chemical industry, and the structure of the standard system is limited in scope. There is a significant shortage of important guiding and regulatory basic standards such as those related to clean production, technical safety guidelines, classification, and naming conventions. Specifically: first, there is a lack of standards for coal-based products, which affects their market positioning and sales ； Secondly, due to the lack of appropriate standards and specifications in the project design, construction, and operation management phases, multiple industry standards are applied to the same project, which affects the level of construction and quality and hinders the overall optimization of the project ； Thirdly, the lack of modern safety and environmental protection standards for coal chemical industries results in inadequate design, operation, and management practices for such projects, thereby increasing the difficulties associated with ensuring safety and environmental protection ； Fourth, the standardization work in modern coal chemical industry is divided among different standards committees for management, resulting in a lack of a coordinating body and thus hindering the establishment of a standard management system. 　　II. Analysis of the Development Environment At present, the recovery of the world economy is slow and difficult; global market demand remains weak, while prices of international crude oil and other raw materials are low. Energy development is showing new characteristics. China's economic development has entered a new normal; profound adjustments in the industrial sector will continue, and the pressure to reduce energy consumption and emissions is becoming increasingly severe. Although the growth rate of our economy has slowed down compared to before, it still possesses huge potential and broad prospects for development. “During the 13th Five-Year Plan period, the development of modern coal chemical industry in China faced a severe and complex environmental landscape, with favorable conditions and restrictive factors intermingling, as well as growth potential coexisting with development pressures. 　　(1) From a **strategic perspective, developing modern coal chemical industry is an inevitable choice. “The resource endowment characterized by a lack of oil and gas, but relatively abundant coal resources, determines that coal remains the main component of China’s energy structure, resulting in limited capacity to ensure oil and gas supply. Firstly, the modern coal chemical industry can partially replace China’s consumption of oil and natural gas, promote diversification of raw materials in the petrochemical industry, provide strategic support for energy security, and offer emergency safeguards for oil security ； Secondly, it is a major measure to implement the **strategy for an energy consumption revolution**, protect the environment, promote the clean and efficient utilization of coal, and facilitate the transformation and upgrading of the coal industry ； Third, it can effectively drive regional economic development and promote the optimization and upgrading of industries in related fields such as coal, petrochemicals, and equipment. Furthermore, the implementation of the Belt and Road Initiative requires making full use of China’s advantages in modern coal chemical technology, equipment, engineering expertise, and talent, in order to accelerate the expansion of the modern coal chemical industry overseas. 　　(II) From the perspective of market demand, China has a huge and steady demand for clean fuels, natural gas, and basic petrochemical raw materials. To achieve supply-demand balance in the refined oil market, there is still significant room for growth in gasoline demand. To improve environmental quality, it is urgent to upgrade the quality of petroleum products; coal-to-oil technology is needed to provide clean and high-quality oils, thereby diversifying the raw material sources for finished oils and alleviating the imbalance between oil supply and demand. There is still a gap in the natural gas market, requiring imports of pipeline natural gas and liquefied natural gas; developing coal-to-natural gas can serve as an effective supplement to it. There is still a significant gap in the consumption equivalent of ethylene and propylene, and the absolute increase in demand for polyethylene and polypropylene in the domestic market remains substantial ； Aromatics, especially p-xylene, are in severe short supply in the market ； The market deficit for ethylene glycol may widen further. Coal-based chemicals can provide important support for the diversified development of petrochemical feedstocks. 　　(III) Regarding the impact of international oil price fluctuations on modern coal chemical industry, the global oil market is experiencing a situation of ample supply; meanwhile, the factors influencing international crude oil prices are complex and ever-changing. Multiple domestic and international institutions predict that international crude oil prices may remain low for some time. Due to differences in investment and cost structures, low oil prices have a greater impact on modern coal chemical industries than on petroleum-based chemical industries; this leads to operational difficulties for coal chemical projects and results in them losing their competitive advantage over those in the petroleum chemical sector. 　　(IV) In terms of the potential impact of international energy trend changes on modern coal chemical industry, shale oil and gas production has become a significant factor affecting the supply-demand balance in the international oil and natural gas markets. Low-priced shale oil and gas, as well as low-cost chemical products derived from them, will have a certain impact on China’s production of chemicals from coal ； The development of new energy transportation vehicles, such as CNG vehicles and electric vehicles, will have a certain substitutive effect on refined petroleum products. However, at present, the coal-to-oil production capacity accounts for only about 0.6% of the country’s apparent consumption of refined oil; therefore, the substitution of refined oil by new energy sources will have little impact on modern coal chemical industry for some time to come. 　　(5) From the perspective of environmental protection requirements, with the introduction of new environmental protection laws and various regulations, modern coal chemical projects will have to comply with the strictest or higher environmental standards currently in force in the energy and chemical industries. To implement the Paris Agreement reached at the Paris Climate Conference, it is an inevitable trend for our country to introduce carbon trading or impose environmental protection taxes. This will affect the overall competitiveness of the modern coal chemical industry, and excessive taxes could deal a fatal blow to it. 　　III. Industrial Development Strategies and Objectives (1) Development Strategies Thoroughly implement the spirit of the Party’s *th, 18th Central Committee’s third, fourth, and fifth plenary sessions, as well as the outcomes of the sixth meeting of the Central Financial and Economic Leadership Group and the first meeting of the **Energy Commission. Guided by the Scientific Outlook on Development and in line with the \"five major\" development concepts, it is necessary to plan scientifically and coordinate effectively between current and long-term needs, as well as between local and overall interests. Proper planning, optimized layout, reasonable control of industrial scale, strict adherence to ecological boundaries, enhanced efforts in independent innovation, and active promotion of demonstrations for the upgrading of the modern coal chemical industry are all essential to achieve intensive, clean, low-carbon, safe, and sustainable industrial development. 　　(II) Basic Principles 1. Act in accordance with water availability to promote sustainable development. Demonstration projects shall be carried out in areas where water resources are permitted; based on analyses and assessments of the available water resources, the scale of development for the modern coal chemical industry shall be planned reasonably to facilitate its sustainable development. 　　2. Prioritize environmental protection and promote green development. Adhere to strict environmental protection standards. Regarding wastewater discharge, regional environmental management standards should be established. In areas lacking receiving water bodies or where such bodies cannot accept wastewater discharge, it is necessary to strictly implement the requirements for managing pollution load limits in water function zones, ensuring that all process wastewater is recycled and reused ； For areas with receiving water bodies, it is necessary to strictly enforce the standards for compliant wastewater discharge. 　　3. Adhere to a scientific layout to promote intensive development. Consider factors such as resource conditions, environmental capacity, ecological security, transportation, and product markets in order to arrange demonstration projects in a scientific and rational manner. The pace of development is determined based on resource carrying capacity and environmental limits, while the scale of resource exploitation and industrial layout are planned in accordance with energy supply capabilities, transportation, and processing capacities, in order to promote a sustainable development model centered on industrial parks and bases. 　　4. Adhere to innovation-driven development to foster independent growth. Increase investment in science and technology, actively pursue original innovation, integrated innovation, and innovation through the adoption and adaptation of external technologies. Focus on key areas and critical links, strengthen research and development of common technologies as well as the transformation of research results. By relying on coal chemical demonstration projects and industrialization bases, accelerate the industrialization of core technologies, improve technical equipment and standard systems, and enhance the industry’s capacity for independent and innovative development. 　　5. Adhere to industrial integration to promote efficient development. Resolutely break down the barriers caused by fragmented industrial development, innovate development models, optimize the allocation of resources across industries and regions, actively develop and promote coal-based cogeneration technologies, facilitate the integrated development of the coal chemical industry with sectors such as power generation, petrochemicals, and metallurgy and building materials, establish circular economy industrial chains and clusters, and improve the efficiency of resource and energy utilization. 　　(III) Development Goals
1. Scale goals:
It is anticipated that by 2020, the production capacity for coal-to-oil will reach 12 million tons per year, coal-to-natural gas capacity will reach 20 billion cubic meters per year, coal-to-olefins capacity will reach 16 million tons per year, coal-to-aromatics capacity will reach 1 million tons per year, and coal-to-ethylene glycol capacity will reach 6–8 million tons per year. 　　2. Technical objectives: Break through 10 major key common technologies, industrialize 5–8 major technological achievements, and establish a number of demonstration projects ； A number of high-level collaborative innovation platforms will be established. Within three years of the commissioning of large-scale modern coal chemical industry demonstration projects, they are expected to basically meet their design specifications and achieve “safe, stable, long-term, full-capacity, and optimal” operations. The local content rate of equipment for demonstration projects and industrialization projects (based on the value of the equipment) shall be no less than 85%. Indicators such as energy efficiency, coal consumption, water consumption, and emissions are all taken into account. 3. Targets for energy conservation and emission reduction: By 2020, compared to 2015, the modern coal chemical industry should achieve a 10% reduction in water consumption per unit of industrial output, a 5% improvement in energy efficiency, and a 5% reduction in carbon dioxide emissions. 　　IV. Main Tasks (1) Optimizing the industrial layout During the 13th Five-Year Plan period, it is necessary to adhere to the basic principles of being close to raw materials, close to markets, and located within chemical industrial parks. In line with the requirements of acting in accordance with one’s capabilities, environmental conditions, and the carrying capacity of the environment, an approach that emphasizes industrial park development, larger-scale facilities, flexible production methods, and diversified products should be adopted. This will help to ensure that the development of modern coal chemistry is properly controlled in terms of overall volume, has a more rational layout, and features stronger technical advantages. Efforts should be made to establish a number of modern coal chemistry parks and bases that are of international standard, characterized by large scale, integration across the value chain, better environmental protection capabilities, and higher efficiency in management. 　　Improve the layout of the modern coal chemical industry by taking into account factors such as regional resource availability, environmental capacity, ecological safety, transportation, and industrial infrastructure. In conjunction with the development of large-scale coal bases, with an emphasis on the creation of petroleum substitutes and the enhancement of emergency response capabilities for petroleum security, large-scale coal chemical industry bases will be established in regions such as Yimin in eastern Mongolia, Dalu in western Mongolia, Zhundong in Xinjiang, Ili in Xinjiang, northern Shaanxi, Ningdong-Shanghaimiao, Yunnan-Guizhou, and the Anhui region of Lianghuai. This will help to create an industrial structure that complements the petrochemical industry in the eastern part of the country.