GlobalData forecast: Growth of CTO/MTO projects in China may decelerate as government intensifies efforts to meet clean energy goals

The share of coal-based petrochemical production in total production has been on the growth trajectory in the country since 2010

With China working actively to meet its clean energy goals to reduce carbon emission and reducing the usage of coal, the upcoming CTO/MTO projects timeline are likely to be affected.
With China working actively to meet its clean energy goals to reduce carbon emission and reducing the usage of coal, the upcoming CTO/MTO projects timeline are likely to be affected.

New coal-to-olefins (CTO)/methanol-to-olefins (MTO) projects in China are expected to face the risk of delay due to the government’s intensified efforts to reduce pollution by reducing coal usage and changing crude oil and coal prices, says GlobalData.

Abundant availability has made ‘coal’ the low-cost advantageous feedstock for petrochemical production in China. The share of coal-based petrochemical production in total production has been on the growth trajectory in the country since 2010. It has gradually increased from a mere 3% in 2010 to around 16% in 2018.

Dayanand Kharade, oil and gas analyst at GlobalData, says: “With declining crude oil prices from mid-2014, coal started losing its low-cost advantage as feedstock for petrochemical production, which may prompt producers to turn back to dominant feedstock naphtha.

Kharade concludes: “With China working actively to meet its clean energy goals to reduce carbon emission and reducing the usage of coal, the upcoming CTO/MTO projects timeline are likely to be affected. The cost of environmental protection is likely to be one of the key factors for dragging down the competitiveness of CTO projects.”

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