China’s Coal-to-Gas Push Could Reshape Global LNG Markets

China is building the world’s only large-scale coal-to-gas (CTG) industry as part of efforts to reduce dependence on foreign energy supplies and protect against geopolitical disruptions, according to energy research firm Rystad Energy.

The country’s 15th Five-Year Plan for 2026-2030 is expected to strengthen the role of CTG in China’s energy security strategy. Rystad estimates China’s coal-to-gas capacity will reach 9.4 billion cubic meters (Bcm) annually by the end of 2026 and grow to 28 Bcm per year by 2030.

Xinjiang province has emerged as the center of China’s CTG expansion due to low-cost coal supplies, allowing synthetic gas production to compete with imported liquefied natural gas (LNG). Existing CTG plants are operating at more than 90% capacity, while around 20 Bcm per year of new capacity is under development, mainly in Xinjiang.

China is also attempting to balance energy security goals with environmental concerns. New projects, including the CHN Energy Zhundong development, are being designed with technologies such as hydrogen integration, wastewater recycling and carbon capture systems.

However, analysts warn that water availability, carbon emissions and environmental compliance remain major challenges for the industry. While CTG is not expected to replace LNG imports, its expansion could reduce China’s future demand for imported gas and influence global LNG markets and long-term supply agreements.