Curbing “high-energy, high-emission” projects; proportion of coal-to-olefins and methanol-to-olefins capacity is declining

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Curbing high-emission projects: The share of capacity for coal-based olefins and methanol-based olefins is declining. Author/Source: Coal Tar Deep Processing and Hydrogenation Technology Collaboration Group. Date: 2021-12-08. Clicks: 6. In China’s energy landscape characterized by abundant coal, limited oil, and scarce gas, the coal industry has been fully utilized and developed, leading to rapid growth in the sectors of coal-based olefins and methanol-based olefins. Under the backdrop of carbon peak, the inherent “high consumption and high emission” characteristics of the coal chemical industry limit the development prospects of coal-to-olefins and methanol-to-olefins. Carrying out technological upgrades to save energy and reduce carbon emissions, phasing out outdated production capacities and processes, promoting the use of green and low-carbon process technologies and equipment, developing coal-based biodegradable materials, and researching high-value downstream products as well as strategies for achieving carbon neutrality have become key topics of concern for the coal-to-olefins and methanol-to-olefins industries and enterprises. On November 15, **five departments including the National Development and Reform Commission jointly issued a notice titled \"Benchmark and Baseline Levels of Energy Efficiency for Key Sectors in High-Energy-Consuming Industries (2021 Edition)\”), aimed at guiding local authorities in carrying out scientific and orderly technical upgrades to reduce energy consumption and carbon emissions in these industries, as well as at curbing the uncontrolled development of projects with high energy and carbon footprints. The notice sets clear standards for the benchmark and baseline levels of energy efficiency in areas such as coal-based olefins and oil-based olefins. “According to the benchmark requirements for olefin energy efficiency, coal-based olefins require 2.8 tons of standard coal per ton, while the benchmark level is 3.3 tons ； Oil-based olefins will be equivalent to 0.59 tons of standard oil per ton, with the baseline level set at 0.64 tons; this rule will come into effect on January 1, 2022. ” The \"Benchmark and Baseline Levels of Energy Efficiency for Key Sectors in High-Energy-Consuming Industries (2021 Edition)\") emphasizes the need to promote energy-saving and carbon-reduction technological upgrades in a steady and orderly manner, to avoid \"one-size-fits-all\" approaches and ad-hoc carbon reduction measures, and to ensure the stability of industrial and supply chains as well as the smooth operation of the economy and society. In the olefin industry, raw materials account for only 25% of the cost structure of coal-based olefins; therefore, it possesses strong risk resistance, especially during periods of extreme fluctuations in oil prices. In 2020, the proportion of coal-to-olefins and methanol-to-olefins (propylene) production capacity in China reached 20%. However, in the future development plan for the olefins industry, the use of coal-to-olefins and methanol-based processes has been significantly reduced. Meanwhile, light hydrocarbon routes such as propane and mixed alkanes are thriving due to their advantages, including simple reaction processes, high product yields, small land requirements, and low investment costs. As of November 2021, the share of China’s propane dehydrogenation and mixed hydrocarbon dehydrogenation capacity increased from 17% in 2020 to 21%, while the share of capacity for the comprehensive utilization of various light hydrocarbons was around 2%. The share of capacity for coal-based olefins and methanol-based olefins decreased to 19%. Over the next 10 years, if the propane dehydrogenation and mixed hydrocarbon dehydrogenation projects that are currently under construction or planned in our country can be brought online successfully, their production capacity will approach 40 million tons. In contrast, there are very few projects planned for the production of olefins from coal or methanol in the future. In the Inner Mongolia Autonomous Region, apart from the **planned layout and the “industry chain extension and supplementation” modern coal chemical projects**, no new modern coal chemical projects will be approved during the 14th Five-Year Plan period, in principle. At present, only the Ningxia Baofeng Energy Inner Mongolia 4×1000,000 tons/year coal-to-olefins demonstration project is less affected; most of the approval procedures have been completed, and work is ongoing to finalize the remaining approval steps for this project. However, for coal chemical projects that are indeed necessary to be built in the future, capacity and energy consumption reductions must be achieved through substitution within the autonomous region. The light feedstock route is gradually eroding the market share of the coal-to-olefins route. For the propane dehydrogenation industry, there has been a large-scale release of production capacity; however, high raw material costs have led to a gradual decline in its competitiveness. As a result, efforts to reduce energy consumption and improve efficiency in propane dehydrogenation will also become a priority. The propane dehydrogenation process will see certain improvements in feedstock selectivity, conversion rate, and processing costs. Meanwhile, it will enhance the added value of by-produced hydrogen, thereby improving the overall competitiveness of propane dehydrogenation units.