Reason for the sudden suspension of the Shaanxi Coal Yulin Chemical Super-Coaling project: carbon risks emerging

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The sudden suspension of the Shaanxi Coal and Chemical Industry Yulin Chemical Super Coal Chemical Project is attributed to carbon-related risks. “If we fail to accelerate coal extraction and transform our resource advantages into economic benefits, new energy sources will soon replace coal resources as technology advances.” By then, our coal might have to remain buried underground forever, and we will lose our advantages. During the current period of relative stability in the coal market and related policies, as well as the existence of certain advantages, it is necessary to accelerate the extraction of coal resources, speed up the introduction of coal chemical projects, and expedite the conversion of coal energy, in order to turn these resource advantages into economic advantages as soon as possible. ” This is an excerpt from a speech given by the then leader of the Hengshan County Party Committee at the county-wide economic work conference in October 2012. When I watched this speech last year, my reaction wasn’t as strong as it is today. As a native of Hengshan, I have witnessed the “energy rollercoaster” in northern Shaanxi. The thrilling moments and legendary stories associated with it have long since become urban legends in the provincial capital, frequently cited to highlight the unique character of the people from northern Shaanxi. Currently, Hengshan, Yulin, and northern Shaanxi will face new upheavals due to “carbon neutrality”. Yidu Society published \"Yulin Issues a ‘Carbon Alert’\" last week. However, no one expected that the “carbon shock” would come so quickly and so intensely. Last night, a friend sent me a TikTok video that contained a picture of a document – the “Project Scheduling Instructions” from Shaanxi Coal Group Yulin Chemical Co., Ltd. “To ensure that the work related to the temporary suspension of the project is carried out in an orderly manner, the following arrangements are made: 1. All work at the site will be suspended completely at 8:00 a.m. on July 2, 2021, with all construction and installation activities within the factory area also coming to a halt. 2. To ensure the safety of equipment and materials, from July 2 to July 4, only the following activities are permitted within the factory premises...” Image: This morning, I saw a report by 21st Century Business Herald titled “With a total investment exceeding 100 billion yuan, Shaanxi Coal and Chemical Industry’s Yulin project temporarily halted; the world’s largest ongoing coal chemical project has been put on pause.” “The world’s largest coal chemical project under construction – the Shaanxi Coal Yulin Chemical Demonstration Project for the selective utilization of coal to produce new chemical materials – was temporarily shut down recently. Numerous social media videos posted by workers on the project show that construction at the site has been halted, with many workers leaving the area carrying their belongings… According to the official website of Shaanxi Coal Group, this project is the largest coal chemical project under construction in the world, covering an area of about 13 square kilometers. The total investment in it is estimated to exceed 120 billion yuan, with over 20 million tons of coal being processed each year. According to a report by 21 Finance, the main reason for the temporary suspension of the project was that the necessary environmental assessment procedures had not been completed. Energy assessment, energy conservation evaluation. Energy conservation assessment is short for the energy conservation assessment and review of fixed-asset investment projects. It refers to the process of analyzing and evaluating, in accordance with energy conservation laws and standards, whether the energy utilization in fixed-asset investment projects constructed within China and managed by development and reform departments at all levels is scientific and reasonable. This process also involves preparing energy conservation assessment documents or filling out energy conservation registration forms. Review the energy conservation assessment documents of a project and formulate review opinions; or register and file the energy conservation registration form. Such review opinions or the energy conservation registration form shall serve as a prerequisite for project approval, verification, or commencement of construction, as well as important references for project design, construction, and completion acceptance. The Shaanxi Coal Yulin Chemical project will be constructed in two phases and four stages. Phase 1 is divided into two stages; construction began in 2019, with completion and operation set for the end of 2023. Phase II of the project involves coal pyrolysis and the deep processing of coal tar; it is planned to be ready for commencement by the end of 2020, with completion and operation starting by the end of 2025. Among them, the first phase of the project involves the production of 1.8 million tons per year of ethylene glycol from coal, with an estimated investment of around 21.9 billion yuan. After nearly two years of construction, the project has taken initial shape. In late April this year, the company also launched a major campaign to ensure that the gasifiers for Phase I of the project were ready for feedstock loading. The fact that the energy assessment procedures for the Shaanxi Coal and Chemical Industry Yulin project remain unfinished may be related to the Ministry of Ecology and Environment’s strict controls on “high-energy, high-emission” projects. Photo: On June 1 this year, the Ministry of Ecology and Environment issued the “Guiding Opinions on Strengthening the Prevention and Control of Ecological and Environmental Impacts from Energy-Intensive and Pollution-Intensive Construction Projects”, calling for strict environmental impact assessment approval procedures for such projects, so as to curb their unchecked development. It is clearly stated that petrochemical and modern coal chemical projects should be included in the **industrial plan**. For project categories that have a significant environmental impact or high environmental risks, such as those in the oil refining, ethylene production, steel manufacturing, coking, and coal chemical industries, the authority to approve environmental impact assessments or the requirements for such approvals must not be arbitrarily delegated under the pretext of reform pilots. A responsible official from the Department of Environmental Impact Assessment and Emission Management under the Ministry of Ecology and Environment said in response to journalists’ questions that at the beginning of the 14th Five-Year Plan period, some regions saw a resurgence of energy-intensive and high-emission projects, which hindered the achievement of carbon peak targets and the improvement of regional environmental quality. The Outline of the 14th Five-Year Plan and Long-Range Objectives Through the Year 2035 states that it is necessary to resolutely curb the unchecked development of “two high” projects and promote positive progress in green transformation. ****While presiding over the 29th collective study session of the **Central Committee**, it was emphasized that achieving synergy between pollution reduction and carbon mitigation should be taken as the overarching measure for promoting a comprehensive green transformation of economic and social development; efforts must be accelerated to adjust the industrial structure, energy structure, transportation structure, and land use patterns. High-energy-consuming and high-emission projects that do not meet the requirements must be resolutely phased out. On June 18, the Development and Reform Commission of Guangdong Province issued a announcement deciding to revoke the opinion contained in the “Review Opinion on the Energy Conservation Report for the Refining Transformation and Upgrading Project as well as the Ethylene Quality Improvement Project of Maoming Branch, China Petroleum & Chemical Corporation”. For Yulin, carbon neutrality represents a great certainty, yet the path to achieving it is full of uncertainties. In May this year, at the 5th Silk Expo, Yulin signed 45 investment projects with a total investment of 70 billion yuan, many of which were coal chemical projects. Li Chunlin, Secretary of the Yulin Municipal Party Committee and Mayor, said that in the face of the challenge of achieving high-quality development while meeting the goals of carbon peak and carbon neutrality, Yulin has adopted a new development strategy aimed at reducing the carbon footprint of a city with a high carbon intensity. The city has systematically refined its 14th Five-Year Plan, deciding to cancel more than 40 projects related to industries that generate high emissions, consume large amounts of energy, and rely heavily on resources; the total investment in these projects amounted to over 700 billion yuan. Strive to forge a path of high-quality development centered on the green and low-carbon development of energy. To achieve carbon peak and carbon neutrality, time is the most scarce resource for Yulin. Time should be given top priority in considering all policies and actions. Carbon neutrality is an extremely stringent goal. When the goal is set, strategy is more important than action. How can Yulin secure more \"carbon neutrality time\" for itself? 1. Seize time amidst the numbers: The statistical standards for carbon emissions and carbon sinks are still being developed and refined; local entities waiting for these standards to be released will end up at a disadvantage. The statistics related to carbon emissions and carbon sinks are highly specialized; by adopting digital management methods to establish a comprehensive, dynamic, flexible, and accurate statistical system, as well as a professional and efficient team for statistical evaluation, it will be possible to provide clearer decision-making bases for \"carbon governance,\" improve response capabilities, and gain more time to take action through greater efficiency. This needs to be done while there is still financial funding available and before the challenges related to carbon reduction become fully apparent. 2. Seize time through technological progress. The energy industry used to take a very cautious approach toward technology: it would first calculate the costs before considering the benefits, and then make careful selections. Now, technological progress determines not the amount of profits, but the survival or demise of various companies in an industry. Once a breakthrough is achieved in a certain technology, it may drive policy changes and lead to the transformation and upgrading of a number of enterprises. Yulin needs many carbon-neutral research institutes and technology development centers. In simple terms, it’s using the pace of R&D investment to buy time for industrial transformation. 3. Seize time from space: In the past, the development of southern Shaanxi had little to do with northern Shaanxi. Now, Yulin proactively assists southern Shaanxi in carrying out transactions related to carbon sinks, pollution discharge rights, and energy use rights; this is both beneficial and logically justified. Promote coordinated efforts across the province to achieve carbon peak, helping Yulin to gain more time before reaching that goal. Yulin accounts for over 50% of the province’s total carbon emissions… Yulin is like a heavy energy consumer; it was still accelerating its consumption not long ago, but now it has encountered the strict constraints imposed by the goals of reaching carbon peak and carbon neutrality. Moving forward, knowing how to press the accelerator and steer the wheel on these roads may not be just a problem specific to Yulin, but rather a problem for the entire Shaanxi province.