- Several of Asia’s biggest economies are promoting coal gasification as a viable part of their clean energy transition, arguing that turning coal into synthetic gas yields a cleaner fuel and reduces dependence on imports of natural gas and liquefied petroleum gas.
- But activists and experts point out that gasified coal is still a highly polluting fossil fuel, and that relying on it prolongs coal mining, which has long been linked to environmental and human rights violations.
- In China, coal gasification to replace industrial petrochemicals usually produced from oil and natural gas grew by 18% in 2023, consuming more than 340 million metric tons of coal a year.
- However, cost concerns may slow the push elsewhere: investors have jumped ship from Indonesia’s inaugural gasification project, while the tab for a gas refit of a coal-fired power plant in Japan has grown so big that experts question its feasibility.
In Nagasaki prefecture, on the southern Japanese island of Kyushu, J-Power, the operator of the aging Matsushima coal-fired power plant, has an idea to keep the unit operating despite the country’s no-coal pledge: gasification.
“Japan considers coal gasification a form of abatement, and thus in line with their commitments to phase out unabated coal power,” said Evan Gach, program coordinator at Kiko Network, a Japanese NGO. “But in reality, it’s a loophole.”
The technology to turn coal into a synthetic gas, to be used in power generation or for industrial use, has been around for decades. But in recent years, the coal industry has revived it as an alternative to conventional fossil fuels like natural gas and petroleum, with projects planned in Indonesia, China and India.
While gasification can result in less air pollution than conventional coal burning due the ability to separate pollutants during liquefaction, studies published by the Wilson Center and international researchers indicate that expanding coal gasification would result in significantly greater greenhouse gas emissions than relying on liquefied petroleum gas (LPG) or natural gas, due to coal’s higher carbon intensity. Another concern is that demand for coal could also result in greater methane emissions from continued or increased exploitation of Indonesian, Chinese or Indian coal mines.
Across Asia, climate advocates warn that loopholes are allowing for a technology that, despite industry claims, is seen by scientists and experts as both polluting and costly.
“The fact that coal gasification is an energy- and emissions-intensive process means that its spread puts climate goals at risk, yet is often not covered by energy transition or coal phaseout commitments,” said Christine Shearer, a researcher with U.S.-based nonprofit Global Energy Monitor (GEM).
Regional gasification plans
China is leading the gasification push, with coal for chemicals — the use of gasification to replace industrial petrochemicals usually produced from oil and natural gas — growing by 18% in 2023 and consuming more than 340 million metric tons of coal a year. According to Finland-based think tank the Centre for Research on Energy and Clean Air (CREA) and media reports from China, several new projects are planned in coal-rich regions including a coal-to-oil plant in Shanxi province and a coal-to-chemicals plant in neighboring Shaanxi.
“Large coal companies have been quite interested in turning excess coal into chemicals,” said Chengcheng Qiu, a China policy analyst with CREA. “The coal to chemical sector is the only sector in China where we’re seeing increased coal consumption.”
Right activists have flagged a project in the Xinjiang region for particular concern. It will be located in the homeland of the Uyghurs, where coal has been linked to widespread human rights violations.
“Coal and resource extraction is a form of colonialism, because it’s about control, extraction and the subjugation, and abusing the land and its people who have lived there for centuries,” said Rushan Abbas, a Uyghur-American from Xinjiang and executive director of the nonprofit Campaign for Uyghurs.
Indonesia broke ground on its first coal gasification plant in 2022, and the government is still looking for investors to build as many as eight plants across the country, many adjacent to coal mines. There, too, coal mining has been linked to human rights abuses and land rights issues.
The Indonesian government has been pushing coal gasification for two reasons: as an alternative to importing liquefied natural gas (LNG), and to shore up domestic demand for coal. Novita Indri, a researcher with Trend Asia, an Indonesian nonprofit, notes that gasification is currently considered a “new” energy in the new and renewable energy bill being debated in parliament, making it eligible for subsidies and government support.
“The coal companies and the government want to prolong the use of coal,” Novita said. “Coal companies and investors have a good relationship with the government who give them many fiscal and non-fiscal benefits for downstreaming coal for coal gasification.”
“The Ministry of Energy and Mineral Resources is quite optimistic that the coal gasification project will continue, but there’s no timeline or clear information about financing,” Novita added.
India, which, like Indonesia and China, has ample domestic coal resources, has also set up a national coal gasification mission, with a coal-to-ammonium-nitrate pilot plant being planned in Odisha state. Government documents show similar motivations as its Asian neighbors.
“We often see coal gasification promoted in countries with large domestic coal resources, to find a new market for the coal, whether for chemicals or as an alternative to gas,” said Shearer from Global Energy Monitor.
Another oft-cited reason for pursuing coal gasification is energy security. Indonesia, China and India are dependent on imports of LPG and natural gas for petrochemical production. Replacing imported fuels with domestically produced coal would be economically beneficial. Reducing reliance on Russia, a major exporter of LPG and natural gas, is also cited as a reason to build up domestic coal gasification capacity.
“We are seeing this significant increase because of the energy security concerns that China’s officials have,” Qiu said. “Last year the world had many conflicts and many issues over energy security, and that has led China to look at its more abundant resource, coal, and put a focus on developing coal to chemicals.”
In Japan, too, despite limited coal, natural gas or petroleum resources, companies argue that importing coal from Indonesia, Australia or the United States is less risky than Russian natural gas or Middle Eastern oil.
“The Japanese power industry is trying to keep the coal market [alive] as long as possible,” said Yasuko Suzuki, also with Kiko Network. “They keep saying coal is a stable and reliable energy source even while the energy transition proceeds.”
Cost challenge
Beyond the environmental impacts, the economic viability of coal gasification is increasingly coming into question. Producing methanol or other chemicals from coal is costly, and in recent years, planned projects in the United States, the Netherlands and Australia have faced setbacks.
“Most plants in the world have been canceled due to the high capital costs,” Shearer said. “The technology cannot compete with lower-cost power options like solar and wind or conventional fossil plants.”
This is already affecting Indonesia’s plans, which stalled after U.S.-based Air Products withdrew its planned $15 billion investment in 2023 due to cost concerns. According to Trend Asia, new investors have not yet been identified. To compete with petrochemicals produced from LPG or natural gas, coal gasification would require subsidies, such as tax breaks or guaranteed buyers, the costs of which would fall on consumers or taxpayers.
In Japan, J-Power’s plan is to add a gasification facility to the more than 40-year-old Unit 2 at the Matsushima plant, to potentially produce hydrogen. Gach said he fears this could provide a loophole for other old coal-fired power plants.
“The biggest concern is that this won’t be confined only to Matsushima Power Station, but that the project’s completion would signal the beginning of a greater trend of granting Japan’s oldest, dirtiest coal plants a lifeline by constructing new gasification facilities instead of phasing them out,” he said.
Notably, the J-Power project plans to not only include gasification, but other so-called clean coal technologies like carbon capture and sequestration (CCS) and cofiring with ammonia. Shearer said it’s questionable whether this is at all feasible.
“All of these technologies are going to make the plant very expensive to build and difficult to replicate economically, if it is built at all,” she said.
Banner image: Coal miners in Meghalaya, India. Image by Environmental Change and Security Program via Flickr (CC BY-NC-ND 2.0).
World Bank still backs coal in Asia, despite climate claims, report reveals
Citations:
Tanaka, K., Cavalett, O., Collins, W. J., & Cherubini, F. (2019). Asserting the climate benefits of the coal-to-gas shift across temporal and spatial scales. Nature Climate Change, 9(5), 389-396. doi:10.1038/s41558-019-0457-1
Kholod, N., Evans, M., Pilcher, R. C., Roshchanka, V., Ruiz, F., Coté, M., & Collings, R. (2020). Global methane emissions from coal mining to continue growing even with declining coal production. Journal of Cleaner Production, 256, 120489. doi:10.1016/j.jclepro.2020.120489
