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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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    5. 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.
    6. 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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    8. 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.
    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.
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    11. Zhang, Long & Yu, Jing & Sovacool, Benjamin K. & Ren, Jingzheng, 2017. "Measuring energy security performance within China: Toward an inter-provincial prospective," Energy, Elsevier, vol. 125(C), pages 825-836.
    12. Cao, Wensheng & Bluth, Christoph, 2013. "Challenges and countermeasures of China’s energy security," Energy Policy, Elsevier, vol. 53(C), pages 381-388.
    13. Markus Brueckner & Haidi Hong & Joaquin Vespignani, 2023. "Effects of Government Regulation of Diesel and Petrol Prices on GDP Growth: Evidence from China," ANU Working Papers in Economics and Econometrics 2023-690, Australian National University, College of Business and Economics, School of Economics.
    14. 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.
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    Keywords

    China; Coal liquefaction; Coal;
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