Over 2 billion yuan has already been invested; why was this coal-to-olefins project halted?

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Over 2 billion yuan has already been invested; why was this coal-to-olefins project halted? Author/Source: China Energy News Date: 2022-03-01 Clicks: 2 With an initial investment of nearly 2.5 billion yuan, and after completing various procedures such as environmental impact assessments and energy evaluations, as well as having the process design and basic design approved, the integrated project for producing 600,000 tons per year of olefins and methanol from coke oven gas, which has been in preparation for over 10 years, was recently suspended on its own initiative. What is the reason behind this? It is understood that this project was constructed by Feihong Chemical, a subsidiary of Shanxi Coking Group, and was approved by the Shanxi Provincial Development and Reform Commission at the end of 2012; it is intended to produce main products such as olefins. “Against the backdrop of China’s establishment of goals for carbon peak and carbon neutrality, and taking into account China’s ecological civilization policies as well as local environmental protection measures, coupled with factors such as the trend of overcapacity in the olefin industry in the future, continuing to advance olefin projects will entail significant policy risks and market risks. ”Reporters recently learned from Shanxi Coking that the company will soon begin the process of evaluating and advancing projects for its transformation. It is worth noting that the above situation is not an isolated case. In line with the requirements of green development and low-carbon transformation, some projects have promptly slowed down, others have sought to undergo modifications, and still others have focused on entirely new directions – the modern coal chemical industry is actively seeking change. Adaptation means taking timely action to limit losses in light of changing circumstances. According to Shanxi Coking, as of the end of last year, a total of 2.495 billion yuan had been invested in Feihong Chemical’s olefin project. The total area of the project is 3,130 mu, of which 2,204 mu has been expropriated and the land cleared for construction, while 926 mu has obtained planning approval. In addition, foundation pre-treatment, the methanol storage area, and the comprehensive warehouse were also completed within the 1,650-mu plot of land. Preliminary estimates suggest that the suspension of the project will result in Feihong Chemical having to record an asset impairment loss of around 850 million yuan; as a consequence, its net profit attributable to shareholders of the parent company in its consolidated financial statements for 2021 will decrease by 637.755 million yuan. Rather than holding on desperately, it’s better to cut losses in time. An industry insider who wished to remain anonymous confirmed to the reporter that this is the true picture of some current projects. “As of the end of last year, the production capacity and output of the four main types of products in China’s modern coal chemical industry had both reached historically high levels. While reflecting achievements, potential risks such as homogenization and a tendency toward lower-end products continue to accumulate. Given the short industrial chains, the prevalence of low-value-added products across the industry and the scarcity of deeply processed products, this situation is not in line with the direction of high-quality development. Without improving the production process or changing the product layout, it will become increasingly difficult for the project to survive as it progresses. ” Transformation is also a rational choice in line with the trend of energy conservation and carbon reduction. According to the newly released \"Guidelines for Energy Conservation, Carbon Reduction, and Modernization in the Modern Coal Chemical Industry,\" outdated process technologies and production facilities that do not meet the requirements of green and low-carbon development must be phased out. By 2025, the proportion of production capacity in the coal-to-methanol, coal-to-olefins, and coal-to-ethylene glycol industries that meets or exceeds the energy efficiency benchmarks will be 30%, 50%, and 30% respectively, while the production capacity below these benchmarks will be virtually eliminated. “Modern coal chemical industry uses coal as the main raw material, and its production process is characterized by high energy consumption and substantial carbon emissions. ”Han Hongmei, an expert from the Petroleum and Chemical Industry Planning Institute, gave an example: there are various technical routes for producing ethylene glycol from coal, and the industrialization of some of these routes has not been successful. In particular, some project design plans fail to take into account optimal energy utilization, resulting in high overall energy consumption for the facilities; approximately 40% of such facilities have an energy efficiency below the standard level. “Next, developing the capacity for coal-based ethylene glycol production, whose manufacturing technology is not yet mature and whose equipment efficiency is low, will be a key focus for energy-saving upgrades and phase-outs in this industry. ” Fully leverage the structural advantages of coal by discarding old approaches while seeking new solutions. The reporter learned that companies in some areas have taken proactive action. According to the press conference on the high-quality development of Ningxia’s new materials industry held on February 11, in the established coal chemical industry hub of Ningdong, seven major projects worth 10 billion yuan each will be launched this year in the field of new materials. These projects include the upgrade of the Guoneng Ningmei MTP facility, as well as a 1 million-ton high-end polyolefin project, with the aim of developing a polymer materials industry. Recently, the **Energy Bureau held a special meeting to hear a report on the work carried out by Shaanxi Coal Group in terms of the differentiated utilization of coal. The group plans to accelerate the construction of a demonstration project for the clean and efficient conversion of 15 million tons of coal per year, and it intends to build large-scale demonstration projects for the differentiated utilization of low-grade coal in Yulin, Shaanxi, Ordos, Inner Mongolia, Tuha, Xinjiang, and the Central China region. The Shenghong Inner Mongolia coal chemical project, with a total investment of over 100 billion yuan, received approval from the Ordos Natural Resources Bureau at the beginning of this month regarding land pre-review and planning considerations. This will help to shift traditional coal chemical production toward high-end chemical products, polymer fiber materials, and various end-use applications… Shifting from the production of basic chemicals and bulk raw materials to high-end products such as fine chemicals and specialty chemicals is in line with the industry’s trend toward diversification and lower carbon emissions, and it helps to overcome issues such as overcapacity and unfair competition. ”Yang Dongyuan, an adjunct professor at Northwest University, said that coal is characterized by a high carbon content and low hydrogen content; in order to produce products with a similar hydrocarbon content or those with low carbon and high hydrogen content, it is necessary to carry out processes that remove carbon and add hydrogen during the reaction. “This is also the core reason why existing projects are plagued by high energy consumption and high emissions. Use the available ingredients to prepare dishes; optimizing the use of coal requires acting in line with prevailing trends. ” The aforementioned individuals also stated that modern coal chemical industries are not inherently major sources of emissions; rather, it is the existing product portfolio and technological approaches that hinder low-carbon production. “New materials such as coal-based specialty fuels and coal-based biodegradable materials represent ideal directions that can truly leverage the structural advantages of coal. By making full use of various elements, carbon emissions can be reduced to some extent, and the problems related to high blood pressure, high blood sugar, and high cholesterol can be alleviated. ” Accelerate energy conservation, carbon reduction, and consumption upgrading. The \"14th Five-Year Plan for Energy Conservation and Emission Reduction\" issued by the State Council lists \"clean and efficient utilization of coal\" as one of the ten key projects. To complete this project successfully, modern coal chemical technology serves as an effective approach. Han Hongmei said that the coal chemical production process is based on chemical reactions, involving numerous material transformations and energy exchanges; it requires a high level of technology and has complex process flows. The successful development and application of cutting-edge technologies have the potential to overcome the limitations imposed by existing technical conditions, facilitate the optimization of production processes and the rational use of material energy, thereby accelerating energy savings and carbon reduction in a fundamental way. To this end, it is necessary to accelerate the research and development of high-performance composite catalysts, promote the demonstration application of domestically developed large-scale air separation units, large-scale air compressors, and large-scale gasification furnaces, and advance the development and application of cutting-edge technologies such as the one-step production of olefins from syngas and the integration of green hydrogen with coal chemical processes. “The early modern coal chemical demonstration projects developed in our country focused on the engineering application of core technologies and the use of domestically produced key equipment; as a result, the overall system did not reach an optimal state, and there was room for improvement in energy utilization efficiency. Through years of effort, experience in project construction and production operations has grown increasingly extensive, and mature technologies have been widely adopted, which helps to improve the overall energy efficiency of the industry. ”Han Hongmei said. At the same time, it is necessary to advance the upgrading of coal consumption and accelerate the shift toward high-quality raw materials and superior materials. For example, research and development of coupled processes for coal-to-oil and coal-to-chemicals production, as well as integrated processing technologies, are carried out to achieve product diversification. Yang Dongyuan revealed that, taking the popular coal-based biodegradable materials as an example, large-scale production of PGA products, namely polyglycolic acid, has already been achieved. The carbon emission level per ton of product produced is about half that of coal-based olefins. “Fundamental solutions have not yet been found for more technical approaches and production processes, which are the focus of current research and development efforts. ”