By Chen Li, China National Chemical Information Center
“Coal is China’s main energy, but to halt the rise of carbon emissions by 2030 and reach carbon neutrality by 2060, transformation and upgrading of coal consumption will accelerate via making green, low-carbon development strategies, limiting total consumption, gradually replacing coal with alternative energy, etc.,” said Chinese President Xi Jinping. “Coal chemical industry has huge potential, and the keys to become more high-end, diversified and low-carbon lie in improving use efficiency of raw material coal, making new technical breakthroughs, and developing advanced products (e.g. coal-based special fuels, coal-based biodegradable materials, etc.).”
A period of adjustment
Coal chemical firms convert coal into gas, liquid and solid fuels and chemicals. Traditional coal chemical companies are mainly engaged in coking, calcium carbide, nitrogen fertilizers and methanol; modern ones– mainly engaged in coal liquefaction, coal to olefin, coal to ethylene glycol and coal to natural gas – are on the rise, spurred by requirements on efficient use of energy and cleaner production.
Traditional coal chemical firms actively upgraded product structure and technologies during 2016-2020, especially nitrogen fertilizer enterprises, which raised capacity proportion of synthetic ammonia employing new coal gasification technology by 16.9 percentage points from 2015, and decreased synthetic ammonia capacity by 8.7% from 2015 through phasing out outdated 19.79 million t/a (urea capacity, down 19.1%, abandoned 17.87 million t/a). As for the methanol industry, it phased out 11.78 million t/a capacity, and the total capacity was up 22.6% from 2015 to 91.41 million t/a in 2020, when coal to methanol capacity was 70.7 million t/a, accounting for 77.3% of the total, up 34.6 percentage points from 2015. Coking capacity declined by more than 50 million t/a in the past five years, and in 2020, domestic capacity of coke oven gas to methanol reached 14 million t/a, that of coke oven gas to natural gas more than six billion cubic meter/a, and that of coal tar processing capacity 24 million t/a.
Modern coal chemical industry is important for efficient utilization of coal and oil-gas complement. By the end of 2020, industry players had constructed nine coalto liquids units, 36 coal (methanol) to olefin units, 25 coal to ethylene glycol units and four coal to natural gas units, pushing capacities of the four kinds of products to 8.23 million t/a, 10.62 million t/a, 4.83 million t/a and 5.1 billion cubic meter/a, respectively, all in 2020, when the modern coal chemical industry converted around 155 million tons of standard coal, making up 5.6% of the nation’s total coal consumption.
Challenges
The coronavirus pandemic and more stringent environmental protection policies greatly hit the coal chemical industry, profits of which shrank due to factors like fluctuation of international oil prices – being low in 2020, rebounding in 2021, and forecast to stay at a reasonable in the future. Most modern coal chemical projects suffered losses owing to tight supply and high prices of coal, and only coal to olefin projects kept low profits. Hence, production cost is a key factor for firms’ survival.
Petrochemical enterprises exerted great pressure on coal chemical firms. More specifically, private, state-owned and foreign refining enterprises developed rapidly. Private firms Hengli, Rongsheng and Shengheng extended businesses to refining; Sinopec, CNPC, CNOOC and Sinochem changed the traditional model of using crude oil to mainly produce oil products, and extended product portfolio to downstream high value-added chemical products; ExxonMobil, Shell, Saudi Aramco and BASF constructed projects in China.
Opportunities
China needs to import a large number of oil and gas to satisfy domestic demand, resulting in potential hazards to energy security, which could be guaranteed via measures such as developing modern coal chemicals.To help the nation cap carbon emissions and realize carbon neutrality, energy and chemical enterprises are stressful. Modern coal chemical firms maximize clean, efficient utilization of coal (e.g. making high-quality, clean oil). Carbon, hydrogen, sulfur, oxygen, etc. could be fully converted or utilized.In addition, ethylene, ethylene glycol and paraxylene are in short supply and demand for new carbon-based materials, α-olefin and biodegradable plastics will increase, although basic products (e.g. fertilizers, chemical fiber and rubber) are in surplus.
Development trends
China is rich in coal, accounting for 94% of the nation’s proven fossil energy reserves. Coal chemicals could diversify sources of raw materials of petrochemicals, ensure energy security, propel efficient use of coal, optimize petrochemical industrial structure, etc. But given carbon emissions related targets, coal chemical companies should reduce carbon emissions per unit of product, and increase investment in researching green and low-carbon technologies, carbon dioxide comprehensive utilization technologies (e.g. making methanol via carbon dioxide hydrogenation and making degradable plastics utilizing carbon dioxide), new applications of carbon dioxide, etc. Energy and water consumption per unit of product will decrease. Waste gases, waste water and waste residue will be disposed more properly. Coal chemicals should have higher added value, and be more high-end and diversified.
