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Coal chemical industry: Regulating development as the core principle

2009-03-06View Original

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 In the plan for the adjustment and revitalization of the petrochemical industry, in addition to fertilizers, pesticides, oil refining, and ethylene, coal chemical industry also represents a topic of considerable interest. The plan explicitly calls for halting the approval of coal chemical projects such as coke and calcium carbide that aim solely at expanding production capacity, in order to firmly curb the uncontrolled growth of these industries. Why include restrictive elements in the revitalization plan? How will the traditional coal chemical industry improve its standards? How should the new coal chemical industry develop? With these questions, the reporter interviewed Sun Weishan, Deputy Secretary-General of the China Petroleum and Chemical Industry Association and Secretary-General of the China Calcium Carbide Industry Association; Yang Wenbiao, Secretary-General of the China Coking Industry Association; and Liu Zhiguang, Deputy Chief Engineer of the Petroleum and Chemical Industry Planning Institute.   Structural contradictions pose a serious problem. It is reported that the draft of the revitalization plan initially submitted did not include any provisions to restrict the uncontrolled development of coal-based chemical industries; such provisions were added in the final stages before the plan was made public. Although it is a bit surprising, it is reasonable and also very necessary.   In the second half of last year, the petrochemical industry entered a downturn. Apart from the impact of the global financial crisis, this was also due to the overly extensive development of the petrochemical sector; some high-consumption primary chemical products saw rapid growth year after year, leading to prominent structural contradictions. At present, there is a significant surplus in the production capacity of traditional coal chemical products such as coke and calcium carbide. China accounts for 60% of the world’s coke production capacity; in 2008, its total production capacity exceeded 381 million tons, with output around 300 million tons ; In 2008, the production capacity for calcium carbide was around 22 million tons, while the actual output was around 13.6 million tons. In the second half of last year, both coke and calcium carbide faced difficulties, with prices plummeting; the difference between the highest and lowest prices was 2,000 yuan ; Operating capacity also dropped to its lowest levels; the production cut in the coke industry was as high as 60%–70%, while the operating rate in the calcium carbide industry was around 30% at its lowest point.   In previous years, due to high international crude oil prices, many companies entered the coal chemical industry, leading to unregulated development of this sector. In some areas, ignoring the carrying capacity of resources, ecosystems, and the environment, there was competition to build coal chemical projects. With the current decline in international crude oil prices, the market risks associated with coal chemical projects have surged.   Regulation is also a strategy for revitalization. Revitalization plans involve both support and restraint; regulation as well as assistance are both strategies for revitalization. Since the problems in the coal chemical industry are caused by a combination of insufficient demand and overcapacity, the solution lies in boosting demand while also controlling the total production volume. By controlling the total volume and phasing out outdated production capacity, and by stopping the approval of new projects aimed at simply expanding production in sectors such as coke and calcium carbide where there is an overcapacity issue, it is undoubtedly possible to alleviate the mismatch between supply and demand, help bring them into balance more quickly, and at least prevent this mismatch from worsening further. It is also essential to firmly curb the reckless expansion of the coal chemical industry, to suppress the excessive growth of coal-to-oil production, and to ensure the healthy and orderly development of this industry.   In fact, as early as July 2006, **conscious efforts were made to regulate coal chemical projects and to slow down their development; however, due to the consistently high prices of international crude oil, these measures were not very effective. In August 2008, the **National Development and Reform Commission issued another notice titled \"Notice on Issues Related to Strengthening the Management of Coal-to-Oil Projects,\" firmly putting a stop to the overexpansion of coal-to-oil projects. Currently, international crude oil prices are falling, and the external conditions for coal chemical projects have also changed. At this time, by once again clearly calling for curbing the uncontrolled expansion of coal chemistry, better results can be achieved.   Traditional coal chemical industry focuses on improving efficiency. For this industry, it is necessary to promote the comprehensive utilization of resources and waste recycling technologies, as well as the development of a circular economy; in the future, energy conservation, emission reduction, and environmental protection will be the key factors driving its sustainable and healthy development.   Sun Weishan believes that the focus of regulation in the calcium carbide industry should be on promoting the use of closed-type calcium carbide furnaces, as well as accelerating the transformation of internal-combustion type calcium carbide furnaces. To achieve effective energy conservation and emission reduction, it is necessary to make comprehensive use of calcium carbide furnace gas. Each ton of calcium carbide produced in a closed-type calcium carbide furnace generates 160 kilograms of such gas. After purification, the CO gas can be used to produce steam or to fuel lime kilns for lime production; when there is an abundance of CO, it can be utilized to manufacture chemical products such as sodium formate or methanol.   Yang Wenbiao said that the coke industry should implement the revised \"Access Conditions for the Coke Industry\" issued by the Ministry of Industry and Information Technology in December 2008, step up efforts to rectify and reorganize this industry, and phase out 37 million tons of outdated production capacity. By leveraging resources and property rights, a number of large-scale coking enterprise groups are formed through integration and restructuring, thereby promoting the integrated development of coal and coking industries ; Coking manufacturers should adopt advanced and suitable technologies such as ramming coking, dry quenching of coke, production of methanol from coke oven gas, and deep processing of coal tar products ; Actively develop the recovery of chemical products to extend the value chain of refined products derived from coal tar.   The development of new coal chemical industries needs to be regulated. Liu Zhiguang pointed out that it is necessary to plan measures to curb the uncontrolled growth of coal chemical industries; however, this does not mean completely rejecting the future development of this industry. Instead, it is about regulating its development so as to ensure its orderly and healthy progress. At present, coal-to-oil, coal-to-olefins, and coal-to-natural gas are all in the demonstration phase. The demonstration projects have not yet been put into operation, and the risks associated with industrialization have not been fully addressed; therefore, widespread development is not feasible. It is necessary to wait until the demonstration projects are completed before proceeding with development in an orderly, measured, and optimized manner, depending on the specific circumstances.   Coal-to-oil production primarily relies on demonstration projects to master and refine the process technologies. When crude oil prices are low, coal-to-oil production is less competitive; moreover, its energy efficiency is the lowest among coal-based energy products, at around 30%. Producing 1 ton of oil requires approximately 4–5 tons of coal and 10 tons of water, in addition to high levels of carbon dioxide emissions. Coal-to-oil is necessary as a **strategic technical reserve to address emergencies, but its scale of development should be moderate.   Coal-based olefins best reflect the technological progress and innovation in coal chemical industry; they also serve as a link between the coal chemical industry and the petrochemical industry. The domestic technology has been validated through industrial-scale test facilities, making industrial implementation highly likely, and it holds great potential for development. Downstream products of olefins have high demand, wide applications, and high benefits from further processing. However, coal-based olefins also face issues such as long production processes and high investment costs; to optimize their development, scale and layout need to be considered in conjunction with those of the petrochemical industry. Furthermore, the development of coal-based olefins also requires close attention to factors such as crude oil prices, competitiveness, and economic benefits.   Coal-to-natural gas technology is mature, the process is simple, and its energy efficiency is high (46%–52%). Moderate development of this technology can serve as a supplement to natural gas; its target market is urban gas supply, and it can also be used as a reserve source and one of the methods for regulating peak demand in large cities.

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