Chinese Cut Back Coal-to-liquids

a lump of coal

a lump of coal

Bloomberg had a significant story a week ago that I missed regarding Chinese coal-to-liquid efforts. This is something I’ve been watching closely, reasoning that there is a price point at which CTL becomes economical as a substitute liquid transportation fuel, and that we’re likely to see a strong shift in that direction as soon as it becomes clear to people with skin in the game that we have reached that point for good. Apparently the Chinese don’t think we’re there yet (though there’s no accounting for the whims of central planning):

China, the world’s second-biggest energy consumer, has ordered a halt to projects that use coal to make oil as the nation seeks to conserve its supplies of the fuel for power generation.

All coal-to-fuel projects must suspend operations, the Ningxia Provincial Development and Reform Commission said in a statement on its Web site. Shenhua Group Corp.‘s plants in Inner Mongolia and Ningxia are exceptions, the economic planning agency cited a document from the National Development and Reform Commission as saying.

Chinese coal companies are converting the fuel into gasoline and diesel to capitalize on record oil prices. China, which uses coal to generate 80 percent of its electricity, is battling with a sixth year of power shortages because of insufficient coal supplies.

Sasol Ltd., the world’s biggest converter of coal into motor fuels, said yesterday it would have to suspend construction on a project in China after the government ban.

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