Home Blogs Asian Chemical Connections China Coal Cap: What It Means For Chems

China Coal Cap: What It Means For Chems

Business, China, Company Strategy, Economics, Olefins, Polyolefins
By John Richardson on 04-Mar-2013

By John Richardson

IF China’s decade-long focus on coal-fuelled heavy industry is really coming to an end, as this article in The Sydney Morning Herald suggests, then the prospects for further approvals of coal-to-olefins (CTO) projects seem very bleak indeed.

“In the first 12 years of this millennium, China increased annual coal use by a staggering 2.4 billion tonnes, or 163%, accounting for more than four-fifths of global coal consumption growth,” wrote The Sydney Morning Herald.

China now, however, plans to cap coal production at 4bn tonnes per year by 2015, just slightly above the 3.9bn tonnes that it consumed last year (see chart below).

Chinacoal.pngCTO projects, as they are less of an economic priority than new coal-fired power plants, seem likely to face the administrative chop by local officials.

Previously, local officials were measured by their ability to deliver growth for growth’s sake at huge environmental cost.

But now, Beijing is giving indications that regional administrators will be evaluated on their ability to deliver better quality growth, including, perhaps, helping to meet the ambitious coal-capping target.

Cynics will rightly say that they have heard it all before: China issuing bold promises about dealing with its atrocious air and water quality, only for policies to flounder on vested interests and corruption.

This time seems different as the attempt to cap coal consumption has backing from the State Council – China’s highest administrative.

And the blog gets the impression that China’s new leaders are serious about dealing with the environmental crisis. They have to be as political pressure is building.

This is further evidence of what we discussed yesterday: A redefining of what represents social good in China, and therefore a political priority. This, we think, will have implications for all chemicals projects in China – and for existing chemicals production.

As for coal-to-chemicals in general, the Tianji Coal Chemical Industry Group pollution incident will have done it no favours.

Tianji Coal officials, reportedly, delayed letting local authorities know about an aniline spill for five days.

“After sending a team to Handan in January, Greenpeace East Asia issued a report on the spill. It said that there were about 100 coal-to-chemical factories on the upper reaches of the Zhuozhang River,” wrote the New York Times in this article.

“‘There is a history of clashes between heavily water-consuming coal-to-chemical factories and citizens downstream who are trying to compete for water to drink,’ the report said.

“Larger factories like those of Tianji use 2,000 to 3,000 tons of water per hour, equivalent to the amount of water that more than 300,000 people use in a year “