The prospects of coal liquefaction for oil production

The investment is too large; it’s better to go for a smaller scale operation. Although you won’t make a lot of money, you can still earn some. Converting used oil into diesel can yield earnings of around 500 to 800 per ton. Tasks like deodorization, color removal, and modification require less investment. Since we don’t have that much expertise, this is the only way we can operate on a small scale`

The prominent characteristics of coal-to-oil production are: new technology, huge investment, high pollution, and high risks. New technology: Currently, in China there are three companies capable of producing 160,000 tons of oil per year through indirect coal-to-oil processes, including Yitai; these companies have already begun producing oil. Large-scale coal-to-oil projects such as those undertaken by Shenhua and Ningxia Coal are still under construction. The National Development and Reform Commission has halted such projects, largely due to the immaturity of the technology and the lack of precedents for its large-scale industrial application. The success or failure of these two projects will determine the future of large-scale coal-to-oil production in China ； Huge investments: Investments in the order of tens of billions often deter many investors ； High pollution: Coal chemical industries cause significant pollution and high energy consumption. To achieve good economic returns, factories are often built near coal mines. In regions of China with abundant coal reserves such as Inner Mongolia, Ningdong, and Northern Shaanxi, water is scarce and the ecosystems are fragile. The production of oil from coal requires about 8-9 tons of water per ton of oil produced, with approximately 3 tons of CO2 being emitted per ton of oil ； High risk ； Given its immature technology and high investment, the risks are very high. Coal-to-oil production has seen rapid development in China in recent years, but it is necessary to return to rationality. I believe it would be better to make investments cautiously once coal-to-oil projects represented by Shenhua are operating properly and generating significant economic benefits.

It seems there are basically no prospects at the moment – the technology is lacking and the costs are too high; it’s far less cost-effective than buying oil. **Don’t get on the horse.

The technology is not new; it has a 70-year history of industrialization. It’s not new either for China; it was tried back in the 1950s. It’s true that large investments are required, but small-scale operations don’t necessarily fail to be profitable. High pollution? Does using more water and emitting carbon dioxide mean high pollution? Why not take a look at what the oil looks like? Does making other things from coal not require water or the emission of carbon dioxide? Don’t just follow what others say!

**Document No. 1350 issued by the National Development and Reform Commission, titled “Notice on Strengthening the Management of Coal Chemical Industry Projects to Promote the Healthy Development of the Industry,” states that in areas where conditions permit, the development of the coal chemical industry, with a focus on petroleum substitute products, should be accelerated appropriately； Following the concept of integrated development along the upstream and downstream chains, large-scale coal chemical industry bases shall be established. Therefore, from the perspective of **macroeconomic policy**, it is necessary to encourage the healthy development of the coal chemical industry in line with the scientific outlook on development, particularly by promoting the use of coal as a raw material to produce oil substitutes, thereby reducing pressure on oil supplies and ensuring **energy security**