4 ms·

China's renewable boom masks a quiet Coal-to-Liquids expansion

5 points by leonidasrup 2mo ago

alephnerd 2mo ago
India [0], Indonesia [1], Australia [2] (thanks to India [3]), and others are also doing this. And other states like Vietnam [4] and Brazil [5] are also expanding their coal footprint. A number of high value industrial products like fertilizers and steel have a carbon dependency that cannot be alleviated and which most of those states are expanding. If current intensity holds til 2050 (and based on infrastructure and manufacturing dealflow in ASEAN, India, and the GCC it will), we are breaking the 2.1*C threshold by then. It is NOT fatalistic or doomerism to accept that. This needs to be assumed as the base case because most climate projections are heavily optimistic. [0] - https://www.reuters.com/business/energy/india-clears-4-billion-plan-boost-gas-production-coal-2026-05-13/ https://www.reuters.com/business/energy/india-clears-4-billi... [1] - https://www.reuters.com/business/energy/indonesia-offer-energy-projects-worth-40-billion-2025-minister-says-2025-03-04/ https://www.reuters.com/business/energy/indonesia-offer-ener... [2] - https://www.energymining.sa.gov.au/industry/energy-resources/regulation/projects-of-public-interest/neurizer-in-situ-gasification https://www.energymining.sa.gov.au/industry/energy-resources... [3] - https://www.pm.gov.au/media/collaborating-india-energy-and-resources https://www.pm.gov.au/media/collaborating-india-energy-and-r... [4] - https://vnexpress.net/viet-nam-se-khai-thac-thu-nghiem-be-than-song-hong-truoc-2040-4702228.html https://vnexpress.net/viet-nam-se-khai-thac-thu-nghiem-be-th... [5] - https://www.reuters.com/business/energy/why-coal-still-clings-renewable-energy-powerhouse-brazil-2025-11-08/ https://www.reuters.com/business/energy/why-coal-still-cling...
- Gibbon1 2mo ago
  I've been wondering about that, South Africa has a lot of coal to gasoline/diesel. Developed during the apartheid era to bypass international oil embargoes. Places with good insolation could probably use green hydrogen + coal to produce fuels. Considering how much gasoline is taxed they probably could make it pencil out by adjusting fuel taxes. > industrial products like fertilizers and steel have a carbon dependency that cannot be alleviated and which most of those states are expanding. When I run the numbers I don't see that. Ammonia is about 18% Hydrogen. Using green hydrogen would cost $500 per ton of ammonia. Putting it in perspective world production of ammonia is about 25kg per capita.
  - alephnerd 2mo ago
    They are trying, and Green Hydrogen will become a reality with a decade for ammonia production, but steel, cement, and other industrial products still have hard carbon fixation dependencies. Based on dealflow and ongoing projects, most countries are basically assuming 2.1*C by 2050 is the reality and as such, they have an incentive to maximize capacity into the late 2030s and early 2040s. Think of it like the NPT - those who rushed nuclear weapons capacity by 2000 succeeded with little-to-no ramifications. You have to remember that we're halfway through 2026, so 2040 is only a little over 13 years away now, and any global consensus will only begin to seriously be negotiated around then add-subtract 5 years. > When I run the numbers I don't see that. Ammonia is about 18% Hydrogen. Using green hydrogen would cost $500 per ton of ammonia. Putting it in perspective world production of ammonia is about 25kg per capita. Green Ammonia is still 2x the cost of Grey (coal) Ammonia [0]. This difference is starting to fall (eg. in India the price difference is now 10% [1]), but it will stil take a decade for Green Ammonia to definitively become cheaper than Grey Ammonia, and most National Green Hydrogen strategies don't expect mass domestic capacity to finish being built out until the early-to-mid 2030s. And this ignores the fact that non-alloy steel (which is the primary steel used for most domestic infra projects across the world from ASEAN to India to Iran to the GCC to Turkiye to Russia to China) cannot be forged without carbon, and the cheapest input for that is metallurgical grade coal. Everyone is trying to rush as much production capacity as they can before everyone is forced to reach an agreement like the Montreal Protocol even though CFCs impact were know well before it. [0] - https://www.sciencedirect.com/science/article/pii/S2666352X25000123 https://www.sciencedirect.com/science/article/pii/S2666352X2... [1] - https://jmkresearch.com/green-ammonia-is-only-10-costlier-than-grey-in-the-latest-sight-mode-2a-auctions/ https://jmkresearch.com/green-ammonia-is-only-10-costlier-th...
    - leonidasrup 2mo ago
      Iron can be produced without coal, because hydrogen can be used for reduction of the iron oxide. https://en.wikipedia.org/wiki/Green_steel#Hydrogen_reduction https://en.wikipedia.org/wiki/Green_steel#Hydrogen_reduction
      - 2mo ago
- leonidasrup 2mo ago
  The difference between China and India,Indonesia,Australia,Vietnam,Brazil,South Africa is the scale of Coal-to-Liquids expansion. "The sector last year turned 276 million tons of coal - equivalent to almost a year of European coal use - into chemicals, oil and gas, according to the China National Petroleum and Chemical Planning Institute." https://www.reuters.com/sustainability/climate-energy/chinese-alchemy-cheap-fuel-powers-coal-to-gas-chemicals-boom-2025-09-04/ https://www.reuters.com/sustainability/climate-energy/chines... Ammonia based fertilizers don't have carbon dependency, they have hydrogen dependency. Steel can be manufactured from iron oxide by reducing with carbon or hydrogen. The problem is that the cheapest source of hydrogen is steam methane reforming. Therefor 98% of hydrogen production uses the steam reforming method. Regarding "fatalistic or doomerism", in Europe we hear from many politicians, that we need to invest more in renewables and phase out coal, oil and gas. When asked for reason why we need to do this investment, the usual answer is "to save the climate". So on hand we have Europe decreasing it's CO2 emissions and mostly Asia increasing it's CO2 emissions, so that Europe's decreases are canceled out.
  - alephnerd 2mo ago
    > The difference between China and India,Indonesia,Australia,Vietnam,Brazil,South Africa is the scale of Coal-to-Liquids expansion China began their buildout in 2008-09 following the oil shock due to the Iraq Civil War. India, Indonesia, Vietnam, and others are now starting the same kind of buildout at a similar scale over the next decade. > Ammonia based fertilizers don't have carbon dependency, they have hydrogen dependency. Steel can be manufactured from iron oxide by reducing with carbon or hydrogen Grey Ammonia remains 2x as expensive as Green Ammonia. This is changing (eg. as I mentioned elsewhere, India the price difference is only 10% now), but at global scale green hydrogen buildouts that will make it significantly cost competitive won't be finished until 2035 to 2040 depending on the country. The IP for Green Steel (ie. Low carbon steel) as scale is tightly held by 3-4 Western European steelmakers, and India and the ASEAN countries I listed are all dramatically expand their steel production capacity. And those European steelmakers and their customers like Volkswagen, Saab, and Volvo are uninterested in transferring their IP as it would destroy their CBAM advantage within the European market and Asia is not interested in using European steel as it would make infrastructure buildouts unneccesarily expensive. This is why China [0][1], India [1], Saudi Arabia [1], and ASEAN states like Vietnam [2] are all treating CBAM as a discriminatory tariff and pushing back. > Regarding "fatalistic or doomerism", in Europe we hear from many politicians, that we need to invest more in renewables and phase out coal, oil and gas. When asked for reason why we need to do this investment, the usual answer is "to save the climate". So on hand we have Europe decreasing it's CO2 emissions and mostly Asia increasing it's CO2 emissions, so that Europe's decreases are canceled out. Yep. And frankly, the EU-27 is not in a position to pressure Asia. Much of the steel, grey ammonia, and other industrial products being manufactured with heavy carbon intensity is not intended for export to the EU-27 or the products manufactured using them are easily financed by the EU's carbon credit scheme or domestic export tax credits made to alleviate the CBAM tariff. We modeled this standoff back in the late 2000s and early 2010s and it's happening exactly to the dot. [0] - https://www.bloomberg.com/news/articles/2026-01-01/china-calls-eu-carbon-border-tax-unfair-warns-of-counter-moves https://www.bloomberg.com/news/articles/2026-01-01/china-cal... [1] - https://www.ft.com/content/5675563c-b1d5-47b5-858b-69653248e852?syn-25a6b1a6=1 https://www.ft.com/content/5675563c-b1d5-47b5-858b-69653248e... [2] - https://eastasiaforum.org/2026/03/06/vietnams-carbon-market-faces-a-reality-check/ https://eastasiaforum.org/2026/03/06/vietnams-carbon-market-...
maxglute 2mo ago
I've been following PRC CT-X for few years, downstream effects still getting missed by analysts. At over $60/70 CT-x become profitable, CT-x build out last decade can only be rationalized as parallel strategic tech stack (i.e. blockade) or hedge against future oil price rise that has paid off passively. Either way, at high oil price PRC now has structural discount on industrial/petchem inputs at scale which synergizes with their already comprehnsive supply chains. They can displace ~4mb of industrial oil use, I think CTx already at ~2mbd equivalent and growing at 300kbd per year. Other consideration is PRC also going to displace like ~4mbd-8mbd of transport oil eventually, PRC extracts ~4mbd, is the worlds LARGEST refiner, and none of that expensive oil infra is likely going to sit idle/goto waste. So expect a PRC that uses less oil to sell more finished oil, and continue being massive swing buyer, i.e. their SPR and refinery size and reducing oil dependency will position them to be worlds largest oil SELLER, i.e. doesn't matter US somehow drills more, PRC can by more/store unfinished crude at volumes that can shape oil prices, while refining and selling finished oil for every barrel that gets electrifed / ct-xed. PRC will in all likely hood be an electrostate that has resells petro.

5 points by leonidasrup 2mo ago

India [0], Indonesia [1], Australia [2] (thanks to India [3]), and others are also doing this. And other states like Vietnam [4] and Brazil [5] are also expanding their coal footprint. A number of high value industrial products like fertilizers and steel have a carbon dependency that cannot be alleviated and which most of those states are expanding. If current intensity holds til 2050 (and based on infrastructure and manufacturing dealflow in ASEAN, India, and the GCC it will), we are breaking the 2.1*C threshold by then. It is NOT fatalistic or doomerism to accept that. This needs to be assumed as the base case because most climate projections are heavily optimistic. [0] - https://www.reuters.com/business/energy/india-clears-4-billion-plan-boost-gas-production-coal-2026-05-13/ https://www.reuters.com/business/energy/india-clears-4-billi... [1] - https://www.reuters.com/business/energy/indonesia-offer-energy-projects-worth-40-billion-2025-minister-says-2025-03-04/ https://www.reuters.com/business/energy/indonesia-offer-ener... [2] - https://www.energymining.sa.gov.au/industry/energy-resources/regulation/projects-of-public-interest/neurizer-in-situ-gasification https://www.energymining.sa.gov.au/industry/energy-resources... [3] - https://www.pm.gov.au/media/collaborating-india-energy-and-resources https://www.pm.gov.au/media/collaborating-india-energy-and-r... [4] - https://vnexpress.net/viet-nam-se-khai-thac-thu-nghiem-be-than-song-hong-truoc-2040-4702228.html https://vnexpress.net/viet-nam-se-khai-thac-thu-nghiem-be-th... [5] - https://www.reuters.com/business/energy/why-coal-still-clings-renewable-energy-powerhouse-brazil-2025-11-08/ https://www.reuters.com/business/energy/why-coal-still-cling...

Gibbon1 2mo ago
I've been wondering about that, South Africa has a lot of coal to gasoline/diesel. Developed during the apartheid era to bypass international oil embargoes. Places with good insolation could probably use green hydrogen + coal to produce fuels. Considering how much gasoline is taxed they probably could make it pencil out by adjusting fuel taxes. > industrial products like fertilizers and steel have a carbon dependency that cannot be alleviated and which most of those states are expanding. When I run the numbers I don't see that. Ammonia is about 18% Hydrogen. Using green hydrogen would cost $500 per ton of ammonia. Putting it in perspective world production of ammonia is about 25kg per capita.
- alephnerd 2mo ago
  They are trying, and Green Hydrogen will become a reality with a decade for ammonia production, but steel, cement, and other industrial products still have hard carbon fixation dependencies. Based on dealflow and ongoing projects, most countries are basically assuming 2.1*C by 2050 is the reality and as such, they have an incentive to maximize capacity into the late 2030s and early 2040s. Think of it like the NPT - those who rushed nuclear weapons capacity by 2000 succeeded with little-to-no ramifications. You have to remember that we're halfway through 2026, so 2040 is only a little over 13 years away now, and any global consensus will only begin to seriously be negotiated around then add-subtract 5 years. > When I run the numbers I don't see that. Ammonia is about 18% Hydrogen. Using green hydrogen would cost $500 per ton of ammonia. Putting it in perspective world production of ammonia is about 25kg per capita. Green Ammonia is still 2x the cost of Grey (coal) Ammonia [0]. This difference is starting to fall (eg. in India the price difference is now 10% [1]), but it will stil take a decade for Green Ammonia to definitively become cheaper than Grey Ammonia, and most National Green Hydrogen strategies don't expect mass domestic capacity to finish being built out until the early-to-mid 2030s. And this ignores the fact that non-alloy steel (which is the primary steel used for most domestic infra projects across the world from ASEAN to India to Iran to the GCC to Turkiye to Russia to China) cannot be forged without carbon, and the cheapest input for that is metallurgical grade coal. Everyone is trying to rush as much production capacity as they can before everyone is forced to reach an agreement like the Montreal Protocol even though CFCs impact were know well before it. [0] - https://www.sciencedirect.com/science/article/pii/S2666352X25000123 https://www.sciencedirect.com/science/article/pii/S2666352X2... [1] - https://jmkresearch.com/green-ammonia-is-only-10-costlier-than-grey-in-the-latest-sight-mode-2a-auctions/ https://jmkresearch.com/green-ammonia-is-only-10-costlier-th...
  - leonidasrup 2mo ago
    Iron can be produced without coal, because hydrogen can be used for reduction of the iron oxide. https://en.wikipedia.org/wiki/Green_steel#Hydrogen_reduction https://en.wikipedia.org/wiki/Green_steel#Hydrogen_reduction
    - 2mo ago
leonidasrup 2mo ago
The difference between China and India,Indonesia,Australia,Vietnam,Brazil,South Africa is the scale of Coal-to-Liquids expansion. "The sector last year turned 276 million tons of coal - equivalent to almost a year of European coal use - into chemicals, oil and gas, according to the China National Petroleum and Chemical Planning Institute." https://www.reuters.com/sustainability/climate-energy/chinese-alchemy-cheap-fuel-powers-coal-to-gas-chemicals-boom-2025-09-04/ https://www.reuters.com/sustainability/climate-energy/chines... Ammonia based fertilizers don't have carbon dependency, they have hydrogen dependency. Steel can be manufactured from iron oxide by reducing with carbon or hydrogen. The problem is that the cheapest source of hydrogen is steam methane reforming. Therefor 98% of hydrogen production uses the steam reforming method. Regarding "fatalistic or doomerism", in Europe we hear from many politicians, that we need to invest more in renewables and phase out coal, oil and gas. When asked for reason why we need to do this investment, the usual answer is "to save the climate". So on hand we have Europe decreasing it's CO2 emissions and mostly Asia increasing it's CO2 emissions, so that Europe's decreases are canceled out.
- alephnerd 2mo ago
  > The difference between China and India,Indonesia,Australia,Vietnam,Brazil,South Africa is the scale of Coal-to-Liquids expansion China began their buildout in 2008-09 following the oil shock due to the Iraq Civil War. India, Indonesia, Vietnam, and others are now starting the same kind of buildout at a similar scale over the next decade. > Ammonia based fertilizers don't have carbon dependency, they have hydrogen dependency. Steel can be manufactured from iron oxide by reducing with carbon or hydrogen Grey Ammonia remains 2x as expensive as Green Ammonia. This is changing (eg. as I mentioned elsewhere, India the price difference is only 10% now), but at global scale green hydrogen buildouts that will make it significantly cost competitive won't be finished until 2035 to 2040 depending on the country. The IP for Green Steel (ie. Low carbon steel) as scale is tightly held by 3-4 Western European steelmakers, and India and the ASEAN countries I listed are all dramatically expand their steel production capacity. And those European steelmakers and their customers like Volkswagen, Saab, and Volvo are uninterested in transferring their IP as it would destroy their CBAM advantage within the European market and Asia is not interested in using European steel as it would make infrastructure buildouts unneccesarily expensive. This is why China [0][1], India [1], Saudi Arabia [1], and ASEAN states like Vietnam [2] are all treating CBAM as a discriminatory tariff and pushing back. > Regarding "fatalistic or doomerism", in Europe we hear from many politicians, that we need to invest more in renewables and phase out coal, oil and gas. When asked for reason why we need to do this investment, the usual answer is "to save the climate". So on hand we have Europe decreasing it's CO2 emissions and mostly Asia increasing it's CO2 emissions, so that Europe's decreases are canceled out. Yep. And frankly, the EU-27 is not in a position to pressure Asia. Much of the steel, grey ammonia, and other industrial products being manufactured with heavy carbon intensity is not intended for export to the EU-27 or the products manufactured using them are easily financed by the EU's carbon credit scheme or domestic export tax credits made to alleviate the CBAM tariff. We modeled this standoff back in the late 2000s and early 2010s and it's happening exactly to the dot. [0] - https://www.bloomberg.com/news/articles/2026-01-01/china-calls-eu-carbon-border-tax-unfair-warns-of-counter-moves https://www.bloomberg.com/news/articles/2026-01-01/china-cal... [1] - https://www.ft.com/content/5675563c-b1d5-47b5-858b-69653248e852?syn-25a6b1a6=1 https://www.ft.com/content/5675563c-b1d5-47b5-858b-69653248e... [2] - https://eastasiaforum.org/2026/03/06/vietnams-carbon-market-faces-a-reality-check/ https://eastasiaforum.org/2026/03/06/vietnams-carbon-market-...

maxglute 2mo ago

I've been following PRC CT-X for few years, downstream effects still getting missed by analysts. At over $60/70 CT-x become profitable, CT-x build out last decade can only be rationalized as parallel strategic tech stack (i.e. blockade) or hedge against future oil price rise that has paid off passively. Either way, at high oil price PRC now has structural discount on industrial/petchem inputs at scale which synergizes with their already comprehnsive supply chains. They can displace ~4mb of industrial oil use, I think CTx already at ~2mbd equivalent and growing at 300kbd per year. Other consideration is PRC also going to displace like ~4mbd-8mbd of transport oil eventually, PRC extracts ~4mbd, is the worlds LARGEST refiner, and none of that expensive oil infra is likely going to sit idle/goto waste. So expect a PRC that uses less oil to sell more finished oil, and continue being massive swing buyer, i.e. their SPR and refinery size and reducing oil dependency will position them to be worlds largest oil SELLER, i.e. doesn't matter US somehow drills more, PRC can by more/store unfinished crude at volumes that can shape oil prices, while refining and selling finished oil for every barrel that gets electrifed / ct-xed. PRC will in all likely hood be an electrostate that has resells petro.