According to a statement issued by the state planner, China will implement stricter controls on the approval and scale of new coal-to-chemical projects. This decision stems from the authorities’ focus on strengthening the coal supply to power plants. Coal-chemical processing involves using coal as a raw material to produce various industrial chemicals like synthetic ammonia and polyester.
The policy of adding 20 million metric tons of new coal-chemical capacity in demonstration zones, as outlined in the previous 13th five-year plan, will not be continued. The top priority will be ensuring an adequate coal supply for power generation and heating, underlying Beijing’s commitment to maintaining energy security using coal.
It is important to note that the restrictions on new capacity additions do not apply to the coal-to-oil or coal-to-gas sectors. The measures primarily target the downstream coal-to-chemical processing for non-fuel petrochemicals.
Several such projects have been established in coal-rich provinces like Shaanxi and Inner Mongolia, with major energy players venturing into this sector to extend the coal value chain. Besides concerns over coal supply to power plants and energy security, this decision coincides with a significant rise in China’s petrochemical refining capacity. As a result, China is increasingly capable of sourcing products derived from coal-chemical processing from other sources. It is projected that China will contribute to over half of the growth in global petrochemical processing capacity between 2023 and 2030, according to an energy agency.