Sept. 11- China’s National Development and Reform Commission (NDRC) has released a notice on its website immediately banning converting coal to liquid fuels (CTL) projects except those by Shenhua, the country’s largest coal producer and a joint venture between Shenhua and South Africa’s Sasol.

As far back as 2006, the agency had already issued a warning against investing in large CTL projects.

CTL is a profitable investment because of high petroleum prices compared to cheaper coal although the process wastes vast amounts of water and releases more carbon dioxide.

Coal is converted from a solid to a gaseous form through catalysis. The resulting product can then be used as fuel for electricity or as raw material for chemical products.

“Many investors divide their big CTL projects into smaller ones, so that they can be approved by local governments eager to get tax revenues from the profitable projects,” said Han Jun, a coal analyst for the chemical industry website Chemistry World.

In China, local governments are authorized to clear projects costing under RMB100 million yuan.

‘Unlike the NDRC order in 2006, which also required industries to be cautious in developing coal chemicals, this time the NDRC ban only covers CTL, which is not bad news for coal chemical sectors,’ Gao Guang, deputy director for logistics at ENN Chemicals in Hebei Province, told Chemistry World.