Executive Summary

  • To mitigate the impact of the Iran war on oil supplies, China is accelerating domestic coal-to-liquids (CTL) and coal-to-gas projects to ensure long-term energy self-sufficiency.

Strategic Deep-Dive

As the Middle East conflict threatens global maritime oil supply lines, China has rapidly pivoted toward its vast domestic coal reserves to ensure national security. In 2026, the Chinese government has fast-tracked dozens of large-scale Coal-to-Liquids (CTL) and Coal-to-Gas (CTG) facilities, primarily in the coal-rich regions of Ningxia and Inner Mongolia. These facilities transform abundant solid coal into synthetic gasoline, diesel, and natural gas, providing a critical buffer against potential blockades in the Strait of Hormuz.

While this strategic shift complicates China’s “Dual Carbon” targets, Beijing views it as a mandatory defense mechanism to sustain its industrial base and military readiness during a period of extreme geopolitical instability.