China is spending $14 billion on pilot projects to turn coal in remote parts of the country into natural gas, reports Armenpress. According to Reuters it is a risky bet that could help meet the country's surging demand for the cleaner fuel. The first of four pilot coal-to-gas (CTG) projects should ship gas by the end of the year, ramping up to 15 billion cubic meters (bcm) a year by 2015, or around 7 percent of China's gas demand.

Datang Power, parent of Datang International Power Generation Co Ltd , in 2007 started bringing in gasification know-how from Europe.

It started up the country's first CTG plant in July, a 1.33 bcm/year facility in Inner Mongolia that will pump gas to Beijing, the 20-milion-population capital that has over the years experienced gas shortages when heating demand peaks in winter. A CTG plant, costing 4-6 billion yuan ($630-$950 million) for every bcm of gas capacity, can break even with a pipeline feed-in price of $6.5 per million British thermal unit in Xinjiang and under $8 for Inner Mongolia, according to industry officials.

Over 30 firms proposed a total of about 125 bcm of CTG plants by 2020, but Beijing approved only four.

As China triples natural gas use to around 10 percent of total energy demand by the end of the decade, it needs to find fresh sources of supply if it wants to avoid costly imports fromcoverage of Australia, Indonesia, Qatar and Turkmenistan. If achieved, this level of output would put CTG on par with China's booming coal-seam gas sector and ahead of nascent shale gas. It could also give Beijing an advantage in marathon talks with Russia to secure gas from the Siberian basin.

The costly experiment relies on technology similar to that used in apartheid-era South Africa to produce oil from coal, but which has seen few commercial applications.

It is cheaper and easier to burn the coal directly, but China, which overtook the United States as the world's number-one energy guzzler and greenhouse gas emitter, struggles to move coal from remote western and northern regions to the east and south, where the bulk of its energy is consumed.