China’s largest coal producer and Royal Dutch/Shell are in a 9-month feasibility study exploring the development of more coal-to-liquids plants in China. Earlier this year, China announced a $6 billion coal-to-liquids development project with Sasol. (Earlier post.)

China, with the world’s largest coal reserves, is looking to coal-to-liquids technology as a way to help satisfy its increasing thirst for oil and reduce its dependence on foreign sources. China’s oil imports have soared this year to almost 100 million tonnes—much of it from the Middle East.

Current coal-to-liquids technologies are derivatives of the original Fischer Tropsch process created by two German coal researchers in the 1920s. In the basic process, the producer gasifies the coal to create a synthetic gas, which then is treated to create a variety of liquid fuels and chemicals. This is same approach used in Gas-to-Liquids (GTL) projects that convert natural gas to liquid fuel, just with the additional step of first converting the mineral to a gas. The resulting fuels are very clean—much lower in emissions such as Volatile Organic Compounds, CO and Particulate Matter than standard petroleum fuels. However, the process itself is extremely resource-intensive.

China plans to invest some $15 billion in coal-to-liquids projects over the next few years.