China doubles down on coal gasification with 13 new projects in pipeline

• Coal gasification helps reduce reliance on LNG imports
• China shifts coal use towards synthetic gas, petrochemicals 

China has revived a dormant coal gasification project in Liaoning province — and it is just one of 13 new projects either under construction or in planning. The move signals that China sees coal as a long-term feedstock for gas production, not just power generation.

Fuxin project revival

The Fuxin project was first started by state-owned China Datang Corp. in 2011 with an estimated cost of $3.7 billion. It was quietly dropped in 2014 due to cost and logistical problems. But work resumed in the second half of 2025, and more than 2,000 workers are now on site.

The first phase is planned to be operational in October 2026. It will convert 7.5 million tonnes (mnt) of domestic low-CV coal per year into 1.33 billion cubic metres of natural gas. Initially, the gas will supply five cities in Liaoning Province via a dedicated pipeline. Later, it will connect to the national gas grid and supply northern China.

Bigger picture: 13 projects in pipeline

The Fuxin project is not an isolated case. China has 13 new coal gasification projects either under construction or in planning. Most are located in Xinjiang in the west, a region that will be a major beneficiary of this push.

Once all 13 projects are completed, China’s synthetic gas production is estimated to jump by about seven times, exceeding 52 billion cubic metres per year. Synthetic gas would then account for about 12% of the country’s total gas supply.

Why is China doing this?

There are several drivers:

1. Energy security: Coal gasification reduces exposure to volatile LNG imports, especially after the Persian Gulf closure.
2. Heating costs: The government needs to provide affordable heating to northern households. Cheap domestic coal is a solution.
3. Air quality: Converting coal to gas burns more cleanly than burning coal directly, helping Beijing’s pollution problem.
4. Employment: Projects in underdeveloped regions such as Liaoning (which borders North Korea) create jobs.

What ‘peak coal’ really means

The revival of coal gasification shows that the idea of “peak coal” is far removed from Chinese policymaking priorities. China’s latest Five-Year Plan explicitly signals that the use of coal for gas, oil, and petrochemicals will be expanded. Coal is not being phased out — it is being transformed.