NDRC: Approved coal chemical projects will not be halted

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Regarding the claim that China will halt coal-based chemical projects under construction, an official from the Energy Bureau of the National Development and Reform Commission said in an interview with the First Financial Daily yesterday that this is not entirely accurate, as projects that have already been approved will not be stopped. Yesterday, media reports stated that the State Council held a meeting on renewable energy on June 7, and that China will suspend coal chemical projects and grain ethanol fuel projects that are under construction. The report cited an *** official as saying that, taking Shenhua’s coal-to-oil project as an example, it cost over 10 billion yuan, yet its completion is still a long way off. With the necessary technology, development on a large scale is not necessary. Regarding the coal direct liquefaction project (that is, converting coal into oil) carried out by Shenhua Group and costing 10 billion yuan, as mentioned in the aforementioned reports, an official from the National Development and Reform Commission said, “We certainly acknowledge this project.” As for coal-to-oil projects that are being constructed in violation of regulations without **approval**, they will be halted immediately. It was revealed that the message conveyed at the meeting on the development of renewable energy held by the State Council on the 7th was that China possesses the technology for coal-to-oil conversion, but such conversion should not be pursued on a large scale. “Regarding the development of ‘coal-to-oil’, **’s attitude has basically always been to develop and master the technology, rather than pursuing large-scale development; at least not for now. ”The *employee said. This claim is confirmed in the relevant documents. The 11th Five-Year Plan for the coal industry, released in January 2007, **called for the orderly advancement of demonstration projects for coal conversion as well as for coal liquefaction**, stipulating that during the 11th Five-Year period, industrial demonstration projects for coal liquefaction and coal-to-olefins production should be completed in order to lay the foundation for further industrial development in the following decade. The China’s 11th Five-Year Plan for Energy Development, released in April 2007, stated that key priorities during this period included \"oil substitution projects.\" Efforts would be made to accelerate the development of coal-based and biomass-based liquid fuels as well as coal chemical technologies, with comprehensive planning to carry out key demonstration projects in an orderly manner. Lay the foundation for the development of the oil substitute industry during the 12th Five-Year Plan period and beyond. It is reported that among these demonstration projects, the coal direct liquefaction project carried out by Shenhua Group in Ordos will come online within this year, with the first phase capable of producing 1.08 million tons of oil equivalent. In addition, there are two projects from the Yankuang Group and the Lu’an Group, as well as a project to build an indirect liquefaction plant with an annual capacity of 3 million tons by utilizing the mature technology of South African Sasol Synthetic Fuels International Ltd., along with a demonstration project for commercial operation. **The attitude is becoming increasingly cautious. In the recently issued \"Notice of the State Council on Issuing a Comprehensive Work Plan for Energy Conservation and Emission Reduction,\" it was **stated once again that alternative energy sources will be developed steadily, medium- and long-term plans for their development will be formulated, and large-scale demonstration projects as well as technical preparations for the direct and indirect liquefaction of coal, as well as the use of coal-based alcohols, ethers, and olefins as substitutes for oil, will be pursued. “It can be seen from these planning documents that China’s attitude toward ‘coal-to-oil’ is one of developing and mastering the technology, with no call for vigorous expansion of this sector. ”Yesterday, an analyst from a coal-to-oil company told our reporter that China’s approach to coal-to-oil is to \"promote technical development,\" while its approach to renewable energy is to \"foster its growth vigorously,\" showing a clear contrast between the two. As an analyst at a large coal-to-oil company, the individual admitted that coal-to-oil projects do have disadvantages such as high costs, high energy consumption, and significant environmental impacts. The analyst believes that whether coal-to-oil production in China can develop on a large scale will depend on the progress of renewable energy development in China, as well as oil prices. Although the general direction has been established, **there have also been some subtle shifts in the attitude toward the development of the coal-to-oil industry. An expert from the China National Coal Research Institute said yesterday that **initially, there was quite a lot of enthusiasm for coal-to-oil projects, but later on, as many places rushed to undertake such projects – some of which were actually just attempts to exploit coal under the guise of coal-to-oil production – and considering the current issues related to funding, technology shortages, and high energy consumption in developing coal-to-oil technologies,** their attitude became more cautious. (First Financial Daily, Hou Lihong)