(Yicai Global) March 16 -- Baofeng Energy Group, a Chinese coal chemical products maker, has kicked off construction of the world’s largest facility for the production of olefins from green hydrogen and coal.

Baofeng Energy yesterday told investors that the plant in Ordos in China’s Inner Mongolia Autonomous Region broke ground earlier this month, The Paper reported today. The first phase is expected to be completed next year.

The CNY47.8 billion (USD6.9 billion) project will use coal and green hydrogen as feedstocks, reducing carbon dioxide emissions, the report added, noting that oxygen as a by-product will replace some fuel coal to lower energy consumption.

The Ningxia-based firm said earlier that the project would have the capacity to turn out 3 million tons of olefins a year -- 2.6 million tons from coal and 400,000 tons from green hydrogen. 

Green hydrogen is produced by splitting water into hydrogen and oxygen using renewable electricity through a process called electrolysis, which results in very low or zero carbon emissions.

Compared with pure coal projects, Baofeng Energy’s ‘green hydrogen + coal’ projects is expected to produce more than 1.2 million additional tons of methanol, save more than 2.5 million tons of coal, and reduce carbon emissions by 6.3 million tons each year.

Olefins are basic raw materials in the chemical industry. They are widely used in the fields of packaging, furniture, home appliances, autos, medical and health, and aerospace. With the rapid development of the olefins downstream industry, China’s demand is increasing.

China’s production capacity of polyethylene and polypropylene, the most common polyolefins -- polymers deriving from a small set of simple olefins -- rose 7.7 percent to 65.2 million tons last year from 2021, according to data from Oilchem.net. The country’s total output was 54.1 million tons, an increase of 6.4 percent in the period.

Both figures are growing at a faster pace than the global average.

Baofeng’s shares [SHA: 600989] closed down 3.2 percent at CNY14.99 (USD2.17) each today. The Shanghai Composite Index fell 1.1 percent.

Editors: Shi Yi, Futura Costaglione