The slowdown in the development of coal chemicals is not the fault of low oil prices”

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The slowdown in the development of coal chemical industry is not the fault of low oil prices. Author/Source: Sinochem New Network Date: May 26, 2020 Clicks: 1 In China’s energy supply system, coal plays the role of a \"stabilizer\" and a \"ballast.\" This year’s **work report once again emphasizes the need to \"promote the clean and efficient use of coal\". 　　“This year’s report is only a little over 10,000 words, shorter than in previous years. Within such limited content, focusing on ‘ensuring energy security’, the first sentence mentions the clean and efficient use of coal, which clearly demonstrates the importance of coal as well as the emphasis placed on its development in a cleaner and more efficient manner. ”Bao Xinhe, a member of the Ren Dai** Committee, an academician of the Chinese Academy of Sciences, and president of the University of Science and Technology of China, told reporters. 　　How can cleaner and more efficient utilization be achieved? Many delegates and committee members pointed to “modern coal chemical industry” as the main approach. The reporter learned that, with continuous technological advancements and rapid industry growth, China’s modern coal chemical industry is in a leading position worldwide. However, recently, the impact of the COVID-19 pandemic combined with a sharp drop in international oil prices has caused the industry to face its \"most severe\" challenges in years, prompting an urgent need for a way out. 　　Fluctuations in oil prices highlight the importance of the coal chemical industry. The profitability of coal chemical projects is closely tied to oil prices. Since March, international oil prices have dropped sharply, reaching their lowest levels in 20 years, which in turn has driven down the prices of various coal-based chemical products and increased losses for companies in this industry. Is there still room for modern coal chemical industry amid low oil prices? In Bao Xinhe’s view, the decline in international oil prices brings many uncertainties, but from the perspective of ensuring China’s energy security, it actually highlights the role of coal and related industries. “In 2019, China’s dependence on imported oil and natural gas exceeded 70% and 45% respectively. In the face of fluctuations, coal is still the true reliable option. Modern coal chemical processing, as one of the main approaches to the clean and efficient utilization of coal, has its necessity and importance. ” 　　Liu Zhongmin, a member of the National Committee of the Chinese People’s Political Consultative Conference, an academician of the Chinese Academy of Engineering, and director of the Dalian Institute of Chemical Physics under the Chinese Academy of Sciences, also said that amid low oil prices, it is even more important to maintain commitment to the development of the modern coal chemical industry. “Regardless of how oil prices fluctuate, our country’s status as an ‘oil-poor’ nation will not change. The more uncertain the international situation, the more it serves as a warning for our oil supply. Coal chemical industry is suitable for producing bulk chemicals and petroleum products, and can thus make up for the shortage of oil resources. Furthermore, coal-to-oil and coal-to-gas technologies also hold strategic significance as a technical reserve, warranting appropriate planning. ” 　　“The decline in oil prices has a limited impact on the coal chemical industry, especially on projects across the entire value chain. ”Li Chunlin, deputy to the National People’s Congress and mayor of Yulin City, added that modern coal chemical industry is a product of energy substitution, given China’s national conditions of abundant coal, limited oil, and scarce gas. As an important part of the **Energy Revolution strategy, its development will not be disrupted by short-term changes in international oil prices or economic conditions. 　　From the perspective of enterprises, Yang Yue, a deputy to the National People’s Congress and chairman of Shaanxi Yanchang Petroleum (Group) Co., Ltd., said that despite issues such as declining profits and structural losses caused by low oil prices, the confidence in developing modern coal chemical industry remains unshaken. “The coal chemical industry is determined by China’s unique resource endowments; projects such as coal-to-oil and coal-to-olefins have achieved comprehensive breakthroughs from basic research to industrial demonstration in a short period of time, which is also extremely rare in the history of global chemical industry development. ” 　　Stalled development is not the fault of low oil prices; to address these challenges, appropriate measures must be taken to find a solution. Many delegates believed that in the short term, it was the sharp drop in international oil prices that led to reduced profits and losses on projects, but this actually exposed the long-standing issue of insufficient competitiveness within the industry. 　　“Taking the coal-based ethylene glycol projects, which have experienced significant price drops, as an example, the root cause lies not in low oil prices but in the fact that the technology itself is not advanced enough. ”Liu Zhongmin said that due to the limitations of current technological approaches and the limited range of project options, once a new technology becomes available or profits can be generated at a certain stage, it is easy for investments to concentrate on those projects. “A large number of projects were launched in a rush, ignoring the room for technological advancement. It may generate profits in the short term, but it cannot support long-term development and may even lead to a risk of overcapacity. ” 　　Yang Yue also said that coal chemical industry projects require large investments, consume substantial amounts of coal, water resources, and present challenges in terms of the emission and treatment of \"three wastes,\" which are prominent issues faced by industries that are concentrated in this sector. In this regard, technology is a key influencing factor. “At present, the primary conversion efficiency of coal needs to be improved, and the energy utilization rate remains unsatisfactory. For example, during the conversion process, challenges arise in terms of the generation, capture, storage, and utilization of carbon dioxide; due to the limitations imposed by the basic processes of coal chemical industry, it is very difficult to achieve further emission reductions. Furthermore, technologies for coal pyrolysis and the comprehensive utilization of low-rank coal have not yet been scaled up for industrial application; aside from gasification technology, which is relatively mature, other methods for converting coal into useful products still need further development. ” 　　Behind the technology lie deeper factors such as talent and standards. Yang Yue admitted that, as a highly systematic innovation project, every stage of the coal chemical industry – from basic research and applied research to engineering design and industrial demonstration and dissemination – requires a large number of specialized talents. “After years of development, the industry has gathered a group of high-level talents. However, in terms of technological innovation, particularly in the areas of fundamental research and practical application, the shortage of talent remains the key bottleneck restricting the development of modern coal chemical industry. Furthermore, the lag in industry standard setting results in some high-quality products not commanding premium prices, which in turn restricts further technological advancement. ” 　　Relying on mature and reliable technologies is key. Reporters have learned that some regions and enterprises have already taken proactive measures to cope with the impact of low oil prices. 　　“From another perspective, low oil prices force the industry to accelerate its transformation and upgrading. ”Yang Yue said that Yanchang Petroleum has introduced 35 measures in six areas to fully address the challenges posed by low oil prices and promote high-quality development. Next, efforts will focus on market demands by shifting production to high-value products, increasing investment in technology and fostering cooperation among industry, academia, and research institutions. The pace of transforming scientific and technological achievements will be accelerated, with the aim of shortening the coal conversion chain, extending the industrial chain, innovating the value chain, and improving efficiency – so as to create new drivers for development as soon as possible. 　　Bao Xinhe pointed out that for enterprises to survive, it is necessary to address the current difficulties; for the industry to develop, relying on mature and reliable technologies is key. “No matter how international oil prices change, one thing is clear: technology must take the lead. We cannot wait until there is demand in the market to develop technology; improving efficiency and reducing emissions are at the core of high-quality industrial development. ” 　　In addition to focusing on coal chemical technology itself, Yang Yue said that developing it in conjunction with industries such as coal mining, petrochemicals, coal-fired power generation, and heating facilitates the hierarchical utilization of energy resources and improves conversion efficiency. “The Jingbian and Yan’an coal, oil, and gas comprehensive utilization projects of Yanchang Petroleum apply the concept of hydrocarbon complementarity to achieve organic integration and comprehensive conversion of coal, oil, and natural gas. The yield of olefins in these projects is among the highest in the country; they save 75% more water and reduce carbon dioxide emissions by 51% compared to processes that rely solely on coal chemistry. ‘During the 14th and 15th Five-Year Plans, further exploration will be conducted into the coupling of modern coal chemical technologies. ” 　　Leveraging technological upgrades, Li Chunlin also has new ideas for development. “Yulin is a **designated energy and heavy chemical industry base; although it has made significant progress to date, there is still a large gap between its current status and the goal of becoming a world-class high-end energy and chemical industry hub. The biggest weakness among them is the chemical industry: there is insufficient capacity for on-site conversion of coal, and the high added value that can be obtained from resource conversion has not been realized. To this end, Yulin will follow the new strategy of advancing the coal chemical industry toward higher levels of development, cultivate competitive advantages across the entire coal chemical value chain, achieve a transition from raw materials to finished products, move from bulk chemicals to end-use products, and advance from the mid- to low-end of the industrial chain to the mid- to high-end, thereby creating a national model zone for modern coal chemical industry that makes full use of coal from start to finish. ”