China to curb blind investment in coal-to-gas

China's National Energy Administration (NEA) has told local authorities to curb irrational development of coal-to-oil and coal-to-gas projects, after new technology sparked an investment spree regardless of environmental and economic realities.

The country will ban coal-to-gas projects with an annual output of no more than 2 billion cubic meters and coal-to-oil schemes that produce 1 million tonnes or less, according to an NEA document published on Tuesday.

Projects larger than those will be subject to regulatory approval from the State Council, China's cabinet, the NEA said.

Previous data showed nearly 70 percent of energy consumed in China comes from coal, a ratio much higher than in developed countries. The NEA noted that developing coal-to-oil and coal-to-gas is significant for ensuring China's energy security and the shift towards cleaner energy use.

However, some regions have been enthusiastic about building new plants, and there are signs of blind development regardless of realities in environment, water resources, as well as technological and economic capabilities, the NEA said.

According to the document, coal-to-oil and coal-to-gas projects will be banned in provinces that have a net import of coal. The excessive or improper use of water resources will also be strictly prohibited.

The NEA also said it is working with the National Development and Reform Commission on two separate documents to guide the orderly development of coal-to-oil and coal-to-gas projects. The documents will be released soon, it added.

Cities hoped to gradually increase the use of natural gas and other clean energy as an alternative for coal-burning, especially as problems such as heavily polluted air have irritated locals.

The country started construction of its first coal gasification project in 2009 in Inner Mongolia Autonomous Region, planning to supply Beijing with 4 billion cubic meters of natural gas, nearly half of the city's current annual gas demand. The first phase of the project was completed at the end of 2013.

Several major coal-to-gas projects are also under way in northwest China's Xinjiang Uygur Autonomous Region, Shanxi Province and northeastern Liaoning Province, according to earlier reports.

In April, the government raised its natural gas supply target to 420 billion cubic meters per year by 2020, compared with a consumption of nearly 170 billion cubic meters last year.