Government cuts back on coal conversion projects

By Xinhua (China Daily)

Updated: 2014-07-23

China's National Energy Administration has told local authorities to curb the irrational development of coal-to-oil and coal-to-gas projects, after new technology sparked an investment spree without regard to environmental and economic realities.

The country will ban coal-to-gas projects with an annual output of less than 2 billion cubic meters, and coal-to-oil projects that produce 1 million metric tons or less, according to an energy administration document published on Tuesday.

Projects larger than those will be subject to regulatory approval from the State Council, China's Cabinet, the administration said.

Previous data show that nearly 70 percent of energy consumed in China comes from coal, a ratio much higher than in most developed countries.

The administration noted that coal-to-oil and coal-to-gas development is significant for ensuring China's energy security and the shift toward cleaner energy use. However, some regions have been overenthusiastic about building new plants, and there are signs of blind development that overlook environmental considerations and water resources, as well as technological and economic limitations, the administration said.

According to the document, coal-to-oil and coal-to-gas projects will be banned in provinces that have a net import of coal. The excessive or improper use of water resources will also be strictly prohibited.

The administration also said it is working with the National Development and Reform Commission on two separate documents to guide the orderly development of coal-to-oil and coal-to-gas projects. The documents will be released soon, it said.

A number of cities hoped to gradually increase the use of natural gas and other clean energy as an alternative to coal, especially as problems such as heavily polluted air have irritated local residents.

The country started construction of its first coal gasification project in 2009 in the Inner Mongolia autonomous region, planning to supply Beijing with 4 billion cubic meters of natural gas, nearly half of the city's current annual gas demand. The first phase of the project was completed at the end of 2013.