China Coal-to-olefin (CTO/MTO)

China's Energy Policy 2012 White Paper issued by the State Council in October 2012 interprets China's dependence on foreign energy sources as a major threat.  For example, the proportion of imports in total Chinese oil consumption rose from 32% in 2000 to 57% presently, which makes China vulnerable to potential risks from international transportation and oil price fluctuations. In line with the intent of the country's feedstock diversification strategy, alternative routes to produce olefin, whether coal-based (CTO) or directly methanol-based (MTO), are currently explored to complement the oil (naphtha) route.

While China's CTO business shows preliminary potential with a broad range of industry players are currently trying to enter this area, the CTO industry still presents many challenges and risks, such as the price and quality consistency of coal, water supply accessibility and costs, MTO technology stability and maturity, superior sales and forward integration capabilities. Carbon tax is another major uncertainty of the economic viability of CTO projects.