China Tripling Coal-to-Gas Capacity Amid LNG Import Concerns

China's coal-to-gas industry is set to triple by 2030, according to the country's 15th Five-Year Plan. The plan aims to convert 28 billion cubic meters of coal into gas per year, making it a significant supplement to liquefied natural gas (LNG) imports. This move is driven by China's need for energy security and economic stability.

The cost competitiveness of domestic synthetic gas versus imported alternatives is evident in existing plants operating at over 90% utilization rates. China is currently developing about 20 billion cubic meters per year of coal-to-gas capacity, much of it in Xinjiang where coal prices are low. The average mine-mouth coal price in Xinjiang province is around $30 per metric ton, less than 40% of the equivalent price in Inner Mongolia.

China's reliance on imported LNG has decreased by 14% in 2025 due to a 6% increase in domestic production. However, the country still imports 39% of its natural gas supply, with pipeline gas imports accounting for less than LNG imports at 77.8 billion cubic meters.

The growth of China's coal-to-gas industry has significant implications for global energy markets and the environment. While it provides a domestic solution to energy security concerns, it also emits nearly three times as much carbon dioxide during conversion as is released when the gas is burned.