CHINA DROPS COAL-TO-OIL

China seems to be coming to its senses.

The expensive, emissions-intensive idea of turning coal into oil and then into transportation fuel (the idea that lost World War II for Germany and Japan and has led South Africa to severe energy shortages) still has adherents on the conservative side of the political spectrum in the U.S.

But China has put a moratorium on the building of Coal-To-Liquid (CTL) plants.

Maybe the best part of the news is the China National Development and Reform Commission (NDRC) decided to make the move based on cold hard numbers: "[The intention is to] control the business risks of the country's coal-to-oil industry…"

The decision is undoubtedly also based, in part, on environmental concerns. Zhang Ke , analyst, Fortune Securities: "The main reason China sought to obtain oil from coal was to help ensure energy security…[but CTL] is not suitable to be developed on a large-scale basis due to environmental concerns…"

The announcement comes not a moment too soon, providing one less dreadful global climate change-aggravating factor to worry about.

Now if there was just some way to get to those coal industry-funded politicians in the Congress and stop the waste of R&D funds they have allocated to CTL development projects, funds that could be so much more profitably spent on New Energy, New Energy storage and advanced battery research…

A National Day of Action Against Coal is planned for November 14-15, 2008, by activist groups across the U.S. Click through for more info.

CTL Development in China

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Is it the end of the line for coal-to-oil in China?
Zhang Qi, 2008 –10 – 09 (China Daily)

WHO
China National Development and Reform Commission (NDRC); the Shenhua Group; Sasol Limited; Huang Shengchu, President, China Coal Information Institute

WHAT
China has officially halted all but 2 of its coal-to-liquids (CTL) projects.

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WHEN
- Official notification came September 4.
- By 2010: Inner Mongolia had planned to convert ~50% of its coal output to liquid fuel and petrochemicals.

WHERE
- A notice of the decision was posted on the NDRC website.
- The 2 remaining projects are in the Inner Mongolia Autonomous Region and the Ningxia - Hui Autonomous Region.
- Sasol Limited is based in South Africa.

WHY
- Due to environmental and economic concerns, no more CTL projects will be allowed to go forward in China without official approval.
- 1 of the 2 remaining projects, already launched, is a direct liquefaction plant operated by the Shenhua Group. The other is an unfinished indirect coal liquefaction project (projected cost: $5-$7 billion) jointly owned by the Shenhua Group and Sasol Limited.
- Direct CTL converts coal directly to liquid fuel.
- Indirect CTL converts coal to syngas and then to liquid fuel.
- There are a number of CTL projects under construction will now be individually reconsidered.
- China has extensive coal reserves and derives 70% of its power from coal-fired power plants.
- The Shenhua plant produces the equivalent of ~20,000 barrels of oil/day. China's consumption: ~7.2 million barrels/day.
- In addition to greenhouse gas emissions, the CTL process requires enormous water resources (10 tons of water>5 tons of coal>1 ton of oil) and leaves dreadfully polluted water.

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QUOTES
- NDRC website notice: "[CTL is] a technology-, talent- and capital-intensive project at an experimental stage with high business risks".
- Huang Shengchu, President, China Coal Information Institute: "The NDRC's notice has darkened prospects for CTL investors in China…"