On July 14th, the National Development and Reform Commission (NDRC) issued a notice titled "Strengthening the Construction and Management of Coal Chemical Projects and Promoting the Healthy Development of Industries." The goal of this notice was to ensure comprehensive planning, rational distribution, and scientific guidance in the coal chemical sector. Before the finalization of the national development plan, the NDRC suspended all approvals or filings for new coal chemical projects.
The notice highlighted serious overcapacity issues in traditional coal-based products such as calcium carbide and coke. In some regions, local governments ignored environmental and resource constraints, leading to a rush to build coal chemical projects without proper consideration. Rising oil prices and high operating costs have also fueled the rapid expansion of coal-to-methanol and dimethyl ether projects. By 2005, China produced 5.36 million tons of methanol, while ongoing construction projects were already nearing 9 million tons, with more than 10 million tons in the planning stages.
Under the notice, all coal chemical project approvals were put on hold until the national plan was finalized. Similarly, coal liquefaction projects would be paused until the national development strategy was completed. The NDRC encouraged the continued development of coal chemical industries in areas with sufficient coal resources but limited the growth in other regions. It also promoted the production of coal-based fertilizers and supported the gradual development of coal-to-oil products, methanol, dimethyl ether, and olefins, with coal liquefaction still in the demonstration phase.
According to the requirements of Guofa Document No. 11 in 2006, provinces that had not yet completed their rectification in the coke and calcium carbide sectors were prohibited from approving new projects in these industries. Coking coal was prioritized for the coking industry, while lower-quality lignite and bituminous coal were used for coal liquefaction. High-quality clean coal was reserved for power generation, industrial use, and residential heating, while low-grade coal was directed toward gasification. Anthracite was preferred for fertilizer production.
The development of the coal chemical industry must take water availability into account. It is strictly forbidden to divert domestic or agricultural water for industrial use. The construction of coal gasification and liquefaction projects in water-scarce regions was restricted. Water-intensive technologies were discouraged, while water-saving methods and wastewater reuse systems were encouraged. The adoption of advanced, indigenous technologies was strongly promoted.
In general, coal-to-oil projects with annual output below 3 million tons, methanol and dimethyl ether projects under 1 million tons, and coal-to-olefins projects below 600,000 tons were not to be approved. This move aimed to ensure sustainable and responsible growth in the coal chemical industry.
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