China Raises Entry Barriers Into Coal-To-Liquids Industry
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BEIJING -(Dow Jones)- The Chinese government plans to raise the entry barriers into China's booming coal-to-liquids industry, concerned about inefficient production and a potential product oversupply, said the National Development and Reform Commission, or NDRC, the country's top economic planning agency.
Local governments shouldn't approve coal-to-oil projects with annual production capacity of less than 3 million metric tons, methanol or dimethyl ether projects with output capacity of less than 1 million tons a year, and olefin projects with annual production capacity below 600,000 tons, the NDRC said in a statement posted on its Web site Thursday.
The measures come as China tightens macroeconomic controls to ease overcapacity problems in sectors such as the steel and coal mining industries.
However, large coal-to-oil, methanol, dimethyl ether and olefin facilities that use advanced technology are encouraged, the NDRC said.
Due to soaring international oil prices, a number of Chinese companies have increasingly turned to producing oil and chemicals from coal, which is widely found in the country.
Methanol and dimethyl ether, a gas derived from coal, are possible alternatives to conventional, more polluting motor fuels, while olefin is widely used as a chemical feedstock.
But coal-to-liquids projects require complex technology and consume large amounts of coal and water resources. They are also a risk to the environment, the NDRC said.
China produced 5.36 million tons of methanol last year, of which 3.5 million tons was derived from coal.
Additional methanol facilities with a combined output capacity of nearly 9 million tons a year are being built, and more facilities, with a total yearly production capacity of around 10 million tons, are being planned.
The NDRC also said the coal-to-calcium carbide industry is suffering from overcapacity, which is unlikely to ease even by 2010. Last year, around half of China's calcium carbide production facilities stood idle. The country's calcium carbide output totaled 8.95 million tons in 2005.
-Renya Peng contributed to the story, Dow Jones Newswires; (8610) 6588 5848; renya.peng@dowjones.com
-Edited by Ryan Woo
- 14/07/2006 | 10:48 -
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