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Coal liquefaction policy in China: Explaining the policy reversal since 2006

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  • Rong, Fang
  • Victor, David G.

Abstract

China has emerged as a leader in coal liquefaction. While the country's abundant coal resources and acute concerns about oil security help explain China's interest in liquefaction, the driving forces for this industry are complicated and policy has been inconsistent. Since 2006 Beijing has tried to slow down the development of liquefaction; even as China has become more dependent on imported oil, the central government has been wary about the large impact of liquefaction technologies on scarce resources such as water. However, local government officials in coal rich areas have strong incentives to pour investment into the technology, which helps explain the uneven development and policy. The future of coal liquefaction will depend on how these forces unfold along with major Beijing-led reforms in the Chinese coal industry, which is closing smaller mines and favoring the emergence of larger coal producing firms. Those reforms will have mixed effects on liquefaction. They temporarily contribute to higher prices for coal while over the longer term creating coal companies that have much greater financial and technical skills needed to deploy technologies such as coal liquefaction at a scale needed if this energy pathway is to be competitive with conventional sources of liquid fuel.

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  • Rong, Fang & Victor, David G., 2011. "Coal liquefaction policy in China: Explaining the policy reversal since 2006," Energy Policy, Elsevier, vol. 39(12), pages 8175-8184.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:12:p:8175-8184
    DOI: 10.1016/j.enpol.2011.10.017
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    3. Qi, Tianyu & Zhou, Li & Zhang, Xiliang & Ren, Xiangkun, 2012. "Regional economic output and employment impact of coal-to-liquids (CTL) industry in China: An input–output analysis," Energy, Elsevier, vol. 46(1), pages 259-263.
    4. Valentine, Scott Victor, 2014. "The socio-political economy of electricity generation in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 32(C), pages 416-429.
    5. Kong, Zhaoyang & Dong, Xiucheng & Jiang, Qingzhe, 2019. "Forecasting the development of China's coal-to-liquid industry under security, economic and environmental constraints," Energy Economics, Elsevier, vol. 80(C), pages 253-266.
    6. Huo, Jinwei & Yang, Degang & Xia, Fuqiang & Tang, Hong & Zhang, Wenbiao, 2013. "Feasibility analysis and policy recommendations for the development of the coal based SNG industry in Xinjiang," Energy Policy, Elsevier, vol. 61(C), pages 3-11.
    7. Zhaoyang Kong & Xiucheng Dong & Bo Xu & Rui Li & Qiang Yin & Cuifang Song, 2015. "EROI Analysis for Direct Coal Liquefaction without and with CCS: The Case of the Shenhua DCL Project in China," Energies, MDPI, vol. 8(2), pages 1-22, January.
    8. Wang, Jianliang & Feng, Lianyong & Tverberg, Gail E., 2013. "An analysis of China's coal supply and its impact on China's future economic growth," Energy Policy, Elsevier, vol. 57(C), pages 542-551.
    9. Zhou, Wenji & Zhu, Bing & Chen, Dingjiang & Zhao, Fangxian & Fei, Weiyang, 2014. "How policy choice affects investment in low-carbon technology: The case of CO2 capture in indirect coal liquefaction in China," Energy, Elsevier, vol. 73(C), pages 670-679.
    10. Yecid Muñoz-Maldonado & Edgar Correa-Quintana & Adalberto Ospino-Castro, 2023. "Electrification of Industrial Processes as an Alternative to Replace Conventional Thermal Power Sources," Energies, MDPI, vol. 16(19), pages 1-20, September.
    11. Cao, Wensheng & Bluth, Christoph, 2013. "Challenges and countermeasures of China’s energy security," Energy Policy, Elsevier, vol. 53(C), pages 381-388.
    12. Brueckner, Markus & Haidi Hong, Haidi & Vespignani, Joaquin, 2023. "Effects of Government Regulation of Diesel and Petrol Prices on GDP Growth: Evidence from China," MPRA Paper 122869, University Library of Munich, Germany.
    13. Höök, Mikael & Fantazzini, Dean & Angelantoni, André & Snowden, Simon, 2013. "Hydrocarbon liquefaction: viability as a peak oil mitigation strategy," MPRA Paper 46957, University Library of Munich, Germany.
    14. Robert J. Brecha, 2013. "Ten Reasons to Take Peak Oil Seriously," Sustainability, MDPI, vol. 5(2), pages 1-31, February.
    15. Guo, Meiyu & Xu, Yuan, 2018. "Coal-to-liquids projects in China under water and carbon constraints," Energy Policy, Elsevier, vol. 117(C), pages 58-65.
    16. Tang, Xu & Snowden, Simon & McLellan, Benjamin C. & Höök, Mikael, 2015. "Clean coal use in China: Challenges and policy implications," Energy Policy, Elsevier, vol. 87(C), pages 517-523.

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    Keywords

    China; Coal liquefaction; Coal;
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