A Chinese energy company decided to go ahead with a $10 billion coal-to-chemicals plant on the same day that Beijing announced its first short-term blueprint aimed at putting it on a path to carbon neutrality by 2060.
Ningxia Baofeng Energy Group Co.’s board approved the project Friday, just as the central government was releasing the 14th five-year plan, which focused on promoting renewable energy but lacked hard targets to cut greenhouse gas emissions. The decision by Ningxia and its timing is evidence that coal will still play a major role in China’s energy mix for the foreseeable future.
The company plans to invest 67.3 billion yuan in the coal-to-olefins plant in Inner Mongolia, it said in a filing to the Shanghai Stock Exchange Sunday. The massive plant, set to be completed by 2023, would be able to produce 11 million tons of methanol a year that would then be converted to 4 million tons of olefins, a building block used in the production of plastics.
The decision also came a week after Inner Mongolia’s provincial government released a draft plan cracking down on cryptocurrency mining and aluminum projects to reduce the energy intensity of its economy. Inner Mongolia should readjust and upgrade key industrial sectors in eco-friendly ways, President Xi Jinping said on a panel discussion last week, China National Radio reported.
The coal-to-chemicals project has already been approved by city and regional governments and promotes the innovative and efficient use of coal, Baofeng said in the statement. China plans to promote “the clean and efficient use of coal,” under its plans for carbon emissions to peak by 2030, according to a work report presented Friday to the National People’s Congress.
The International Energy Agency has a different take, however. “The coal-based chemical industry, particularly prevalent in China, poses a significant environmental challenge, as emissions intensities are significantly higher than from natural gas-based production,” it said in a report last year.
Baofeng will fund 30% of the project cost itself, with the remainder coming from bank loans or other financing. Bank of Communications Co. and Industrial & Commercial Bank of China Ltd. have agreed to provide 50 billion yuan in credit, Baofeng said in the filing.
(By Dan Murtaugh)
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