The industrial chemical industry is united. It must work to reduce carbon emissions. It must focus on sustainability. It must strive for circularity.
Yet China has a dirty little secret—coal remains a key source of energy and feedstock for industrial chemical production. And the amount of coal being used is growing.
Analysis conducted by the independent research organization, the Centre for Research on Energy and Clean Air (CREA), recently finding that in China during the first half of 2024, the chemicals industry was the largest driver of energy consumption and emissions growth. The report specifically highlighting that over the first eight months of the year, the Chinese chemical industry’s coal consumption grew by 18% year-on-year. A trend which increased China’s national CO2 emissions by 54 million tonnes.
A recent report by the environmental watchdog, Dialogue Earth, noting that, “… year-on-year coal consumption in the chemicals industry was up 46.5% in February 2024. From January to July, that consumption totalled 220 million tonnes, up 8.5% on the same period last year. Of the four major coal-consuming industries, the chemicals industry is the only one experiencing growth. Overall, its consumption of coal is forecast to climb by 14% this year.”
The increasing dependency on coal as an industrial chemical feedstock has been brought on by a re-assessment of supply chains following the pandemic turmoil. This has led all nations to look at securing reliable sources of key raw materials and energy. The result is a Chinese central government policy establishing coal as a dependable feedstock which allows Chinese chemical companies to expand production at the price of emissions targets. This is despite China’s much publicised ‘Blue Skies Policy’ which from 2017 to 2020 looked to improve air quality by closing the worse polluting factories and chemical facilities.
Furthermore, with most nations turning away from the dirty option of coal, prices have steadily fallen, making it the cheaper industrial chemical feedstock. A situation which large, state-owned companies, such as China Shenhua Energy Company and Shanxi Coking Coal Group are capitalising on in their domination of China's coal-to-chemicals sector. With close connections to the ruling Chinese Communist Party, major projects were greenlighted at both the national and local level, even for smaller chemical producers, such as the privately held Qiya Group and the state-owned Shaanxi Coal and Chemical Industry.
It is a development which strikes a blow at the global chemical industry’s efforts to reduce pollution, with coal being one of the dirtiest chemical feedstocks. According to The Oxford Institute for Energy Studies, coal-based chemical production was responsible for 5.4% of Chinese carbon emissions in 2020. The institute noting that, “producing ammonia using coal emits around 2.2 times more CO2 than using natural gas and 0.4 times more CO2 than using oil.”
The increasing use of coal as a chemical raw material flies in the face of China’s shifting industrial policy, with approvals for new coal power plants dropping by more than 80% in the first half of 2024, and the government suspending the building of new steel plants.
Specifically, a 2022 report by the Xi'an Dechuang Electric Technology Co. noted that overall coal use is predicted to decline in China's energy industry as well as in other industrial sectors. Stating that, “Under the strict coal control policy, China's coal consumption will enter a downward trend ahead of schedule and is expected to gradually decline from the current 1.93 billion tons of oil equivalent to 1.3 billion tons of oil equivalent in 2050, with an average annual negative growth of 1%.”
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Meanwhile, coal consumption is expected to increase significantly in use, emissions, and production capacity for coal-to-chemicals.
The reason behind the trend is that China's chemical industry is far more dependent on coal than other major chemical-producing nations as it lacks plentiful oil and natural gas reserves, yet ninety-four percent of the country’s energy resources are coal, with gas and oil making up 3.5% and 2.5%, respectively. Central government has even labelled coal as the ‘ballast stone’ of Chinese energy.
China's significant reliance on coal in the chemical industry as both an energy source and industrial feedstock poses complex challenges as the country seeks to balance economic growth with environmental sustainability.
Over time, it is hoped that policymakers, chemical industry leaders, and environmental advocates will collaborate to implement innovative technologies and sustainable practices to reduce the environmental footprint of the chemical industry in China. Western consumers—the final marketplace for most chemical products made in China—also need to play a role in demanding cleaner, more sustainable raw materials be used.
For while coal offers cost-effective solutions for energy and raw material needs, the environmental impact of its extraction and burning cannot be ignored.
Photo credit: Dexter Fernandes on Unsplash, Wirestock on Freepik, Wirestock, & John Cameron
