Lu Lizhu, CPPCC member and Senior Engineer of the Sinopec Research Institute, urged keeping aware of the problem of illegal construction of oil and coal transformation production projects during group discussions of the Fifth Session of the CPPCC National Committee.

China should keep a prudent strategy in developing coal chemical projects as the nation has plans to invest over 1 trillion yuan in them by 2020, said Lu.

The past two years saw a craze in China for the coal chemical industry, especially oil and coal transformation production projects, despite tight controls of the National Development and Reform Commission (NDRC). Lots of oil and coal transformation production projects are still under construction nationwide, owing to two factors. The first is the surging price of oil. The second is that local officials want to accelerate local economic development through these projects. As a result, the present almost 8 million tons of coal chemical projects in China have far exceeded the approved number.

China has only 180 billion tons of coal at its disposal, added Lu. Only 40 percent of coal can be directly fluidified by transforming coal into oil, 60 percent of which is wasted, while 80 percent can be wasted during indirect transformation. Moreover, the risk of coal and oil transformation production is quite high due to the immature techniques under experiment.

With immature technologies, the coal chemical projects in China need large amounts of water resources. However, most of these projects are located in Shaanxi and Shanxi provinces, and Inner Mongolia and Ningxia Hui autonomous regions, which are the ecologically weakest areas of China faced with grave water shortages, according to Lu.

It's worth thinking over whether the projects are good for the sustainable development of these areas.

The first coal and oil transformation production project of China is the Shaanxi Shenhua project approved by the NDRC in 2004, which may not be completed by the end of this year, Lu continued.