China's coal-to-gas ambitions dented by Datang's divestment

Report summary

Datang's decision to divest its coal-to-gas (CTG) projects, along with three coal-to-chemical projects, is raising questions about the attractiveness of a sector seen as a potential solution to China’s twin energy challenges of air pollution and rising gas demand. While the decision is primarily motived by loss-making coal-to-chemical, an improving outlook for China’s power generators and the high levels of capex associated with coal conversion could be taking the shine off CTG.