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China to Expand Coal-to-Gas Capacity by 2030, Says Rystad Energy

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China is rapidly building the world's only large scale coal-to-gas industry, with capacity projected to hit 28 billion cubic meters annually by 2030, according to a note by Rystad Energy on Friday.

As the world's sole developer of synthetic gas at this magnitude, China's 15th Five-Year Plan transitions CTG from a concept into active execution, noted Wei Xiong, Vice President of Gas and LNG Markets at Rystad Energy.

Xiong said that this program is a direct expression of China's energy security doctrine to produce, store, and move essential fuels independently of foreign suppliers.

According to Rystad Energy data, Xinjiang province has emerged as the core expansion hub, leveraging mine-mouth coal prices averaging $30 per tonne to deliver synthetic gas to East China at $9.1-$9.6 per million British thermal units, undercutting typical LNG import prices.

Existing plants are running at over 90% utilization due to high demand, cost competitiveness and China's CTG capacity is on track to reach 9.4 Bcm per year by the end of 2026, according to the note.

While environmental hurdles, water constraints, and carbon compliance remain challenges, prompting innovations like CHN Energy's hydrogen-integrated Zhundong project, the global security imperative is driving robust growth.

Eryu Wang, Carbon Capture, Utilization and Storage Analyst at Rystad Energy, said that while China has a well-established market for utilization-based carbon capture with practical end-use cases, whether the economics of decarbonized CTG will prove bankable over the long term remains an open question amid varying environmental requirements.

Ultimately, Xiong warned that this rapid domestic expansion will act as a structural dampener on future LNG demand, carrying material implications for exporters from Australia to Qatar and the US.

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