Section I: Modern Coal Chemical Industry Enters Phase 2.0

Coal and petroleum are nature's endowment to humanity – akin to the 'sacred fire' stolen from the heavens by Prometheus. While coal's history as a fuel spans millennia, its utilization as a raw material for energy and chemical production only began haltingly in the 1920s-1930s, nearly a century behind modern petrochemical exploration. Thus emerges a dualistic paradigm: coal versus petroleum, coal chemical industry versus petrochemical industry – twin stars locked in both rivalry and synergy.

Preceding Nazi Germany's bold experiments with coal-to-oil conversion and South Africa's Sasol succeeding in large-scale coal liquefaction, China stands unique in pioneering a groundbreaking new pathway for deep coal conversion. In the mid-1950s, confronting severe domestic nitrogen fertilizer shortages and insufficient coke supply, Yongli Ning Factory pioneered using lump anthracite to produce synthetic ammonia feedstock gas. This innovation unlocked China's abundant anthracite resources and diversified fertilizer raw materials.

This breakthrough held epoch-making significance for New China's chemical industry—marking the birth of coal chemical engineering in China and ushering in a new chapter beyond millennia-old practice of direct coal combustion.

Subsequently, through primary pathways like coal-to-syngas and coal-to-coke production, traditional coal chemical industry achieved substantial growth over half a century in New China. Today, China's nitrogen fertilizer industry leads globally in both scale and technological capability, with coal serving as the cornerstone—accounting for over 80% of nitrogen fertilizer feedstocks. Similarly, China's coke and calcium carbide industries dominate worldwide, with production capacity and output ranking first globally for years, underpinned by coal as the primary raw material. Monumental leaps in technology and equipment have laid a robust foundation for China's traditional coal chemical industry to stand prominently within the global chemical sector.

Amidst the rapid development of traditional coal chemical industry, China—endowed with abundant coal but scarce oil and gas resources—ignited a new revolution in advanced coal processing at the turn of the millennium, as oil crises brewed and prices surged.
Coal chemical engineering was redefined: leveraging coal as feedstock and cutting-edge technologies, it pioneered the production of oil/gas, olefins, aromatics, ethylene glycol, ethanol, andother energy-chemical products. Thus emerged China's modern coal chemical industry as a disruptive force, marking the dawn of Coal Chemical 2.0.

Post-1997, as China's oil demand surged rapidly, previously sporadic efforts in coal-to-liquids (CTL) technology regained strategic priority. China accelerated both technological reserves and strategic planning for CTL. From 2003 onward, rising global oil prices reignited worldwide interest in coal liquefaction. Against this backdrop, in February 2006, China formally launched its first modern CTL demonstration project—Yankuang Group's Yulin Coal-to-Liquids Project in Shaanxi—unleashing the industrial dawn of modern coal chemical engineering. Subsequently, major projects followed:

• Shanxi Lu'an Group's Indirect Coal Liquefaction Demonstration Project

• Inner Mongolia Yitai Group's Indirect Coal Liquefaction Demonstration Project

• Shenhua Group's Direct Coal Liquefaction Project in Ordos

• Ningdong Indirect Coal Liquefaction Project (later known as Shenhua Ningxia Coal's 4M-ton/year facility)

Beyond the groundbreaking coal-to-liquids (CTL) and coal-to-gas (SNG) technologies, the new millennium has witnessed the emergence and vigorous growth of modern coal chemical formats—including coal-to-olefins (CTO), coal-to-aromatics, coal-to-ethylene glycol, coal-to-ethanol, and coal-based high-end chemicals. Over the past two decades, China's modern coal chemical industry has secured an indisputable global lead in both technological innovation and industrialization, making unique and exceptional contributions to the diversified evolution of the modern energy-chemical sector.

As the world's most populous nation, second-largest economy, and top exporting power, China exhibits massive and growing demand for energy and chemical products, alongside immense processing capacity. Yet constrained by resource endowment—scarce in oil and gas—the country has seen external dependence on oil and gas persistently rise. By 2018, China's crude oil import dependence reached 70% (touching the red alert line for energy security), while natural gas dependence exceeded 45%.

Amidst once-in-a-century global transformations and geopolitical-economic upheavals, China's pursuit of modern coal chemical engineering—leveraging indigenous coal resources to supplement and substitute petrochemicals—transcends industrial development. It has evolved into a strategic imperative for national security, providing an essential pathway to overcome energy resource bottlenecks and achieve diversified supply security.

Thus, China's modern coal chemical industry now stands at the summit of our times, before the window of opportunity, and at the forefront of market trends.

Simultaneously, after two decades of development, deep-seated issues accumulated in modern coal chemical industry have now surfaced collectively. Under the demands of the new era, new requirements, and new objectives, the urgency of transformation and upgrading has become particularly pronounced.

Against this backdrop, China's modern coal chemical industry has entered the Coal Chemical 2.0 phase: transitioning from a venture-driven stage prioritizing scale and speed, to a high-quality development era characterized by innovation leadership, green foundations, exceptional quality-efficiency, and an integrated industrial ecosystem. While the prospects remain promising, the metamorphosis will inevitably be arduous and winding.

II. Coal-to-Olefins Emerges as the Industrial Leader

Although the modern coal chemical industry remains a dynamically evolving system with continuously expanding dimensions, coal-to-olefins (CTO) has taken the lead among established pathways—including coal-to-gas, coal-to-aromatics, coal-to-ethylene glycol, and coal-to-ethanol—demonstrating leadership potential in both technological maturity and market competitiveness.

Only when the tide recedes can we discern who has been swimming naked and who are the true trailblazers. In modern coal chemical industry, coal-to-liquids (CTL) and coal-to-gas (SNG) were the first emerging forces, yet they became the hardest-hit sectors following the 2008 financial crisis and subsequent oil price collapse. Chronic operational losses have become the norm, forcing many facilities into prolonged idleness.

Coal-to-aromatics, hailed as the last unconquered frontier of modern coal chemical engineering, is currently advancing through multiple industrial pathways with large-scale projects underway, though its market validation remains pending.

Coal-to-ethylene glycol (CTEG), despite brief market success over its decade-long development, now faces near-universal unprofitability or even losses due to persistent overcapacity concerns and drastic price declines.

Solely coal-to-olefins via methanol (CTO)—leveraging China's massive market demand and supply gap, alongside continuous technological innovation—has steadily expanded in scale and improved economic returns. Amidst the industry's struggles, it shines as the lone beacon of progress.

Coal-to-olefins (CTO) technology enables the production of fundamental organic chemical feedstocks via methanol derived from coal or natural gas. As a vital component of modern coal chemical engineering, it serves as a crucial supplement to traditional petroleum-based olefin production routes. Through persistent benchmarking against petrochemical counterparts, CTO's technological innovations have advanced by leaps and bounds, increasingly demonstrating unique market competitiveness. It now rivals the 80-year-refined petrochemical olefin industry in both technological maturity and commercial viability.

China's coal-to-methanol industry, evolving over nearly half a century, has achieved remarkable maturity through advanced large-scale coal gasification technologies. Its competitiveness now rivals international methanol production routes based on light hydrocarbons and natural gas.

As a versatile foundational chemical, methanol enables the synthesis of dozens of organic products. With the maturation of methanol-to-olefins (MTO) and methanol-to-propylene (MTP) technologies, olefin production from methanol has accelerated significantly. Concurrently, methanol is emerging as a novel automotive fuel, with methanol-fueled vehicles poised for widespread adoption.

Owing to its extensive applications and vast market potential, methanol is increasingly recognized as a 'foundational platform' — catalyzing visions of a vibrant and prosperous 'methanol economy'. In 2018, China's methanol output exceeded 55.75 million tons with capacity surpassing 85 million tons. Projections indicate steady growth over the next 5-10 years, positioning methanol to join the 100-million-ton mega-platform club of pivotal chemical feedstocks.

Processing extension into olefins and fine chemicals industry constitutes the most promising blue ocean market for coal-to-methanol applications, and forms the cornerstone of the methanol economy blueprint.