The massive Asian chemical sector is in complete disarray due to the blockade of the Strait of Hormuz. Due to the lack of resources like Saudi Arabian oil and Qatari natural gas, the region's plastics and fertiliser industries are reducing or even closing their operations. That is, everywhere except China.
China is unique in the petrochemical industry. It has a parallel production that depends on its plentiful native coal in addition to a traditional industry that employs gas and oil as fuel. The desire of India and other regional nations to replicate the Chinese approach is not surprising. It won't be simple or climate-friendly.
There will be worldwide repercussions. Since China and India jointly utilise 70% of the world's coal, any additional use will prolong the demand for the dirtiest fossil fuel.

Increased consumption results in increased warmth and CO2 emissions.
This is largely due to the coal-to-chemicals sector in China. Consider urea, a crucial nitrogen fertiliser used in the production of maize and rice. While India makes nearly all of its own urea from oil and gas, China produces around 80% of this material from coal.
This Chinese industry has largely gone unnoticed despite its enormous scope. However, as a feedstock, it uses roughly 380 million metric tonnes of coal. It would be the third-largest coal consumer if it were a nation, behind China and India but ahead of the US, Japan, and other major coal consumers.

With a goal of processing up to 75 million tonnes of the fossil fuel into fertilisers, plastics, and other synthetic products by 2030, India has committed roughly $4 billion to rapidly establish a coal-to-chemicals enterprise. In order to ensure long-term supply, the New Delhi government will pay 20% of the construction costs for new plants and assist in allocating coal reserves for future projects.
The same benefits that drew China decades ago are now available to India thanks to this emerging sector. It improves energy security first. Because India has an abundance of coal, it can generate tonnes of petrochemicals without the need for imported gas and oil. Second, utilising coal to produce fertilisers enhances the nation's food security, which is another top priority for the government.

Then there are the financial advantages, which reduce the cost of petrol and oil imports and, consequently, the strain on the nation's foreign exchange. Lastly, it's an innovative method of using domestic resources that extends the life of the coal sector by supplementing its usual clients, such as steel furnaces, cement firms, and power plants. About 750,000 people in India are employed in the fossil fuel mining industry, which is a significant employer in a number of states.
Replicating the Chinese model won't be simple, either. The fuel itself is the first issue facing New Delhi: domestic Indian coal contains too much ash to be readily transformed into chemicals. The technology is another disadvantage.

The original extraction method, known as the Fischer-Tropsch synthesis after the two German chemists who patented it a century ago, has been reimagined in China over the past few decades. India lacks the same expertise, especially in more developed regions where coal is transformed into methanol to create products like olefins, which are used to make plastics.
Another barrier is money. Businesses will find it difficult to produce fertilisers and other goods at competitive prices when natural gas and oil prices decline (or if they do) without additional government assistance.In 2020, India unveiled their initial coal-to-chemicals plan, but not much was constructed. It provided funding to launch projects in 2024 following an increase in petrol costs, but few businesses accepted the incentives. The financial support has now increased fourfold, and the private sector appears prepared for the first time.
New Delhi's accomplishment would provide coal with yet another unanticipated life extension. And the current situation is already depressing. The demand for the fossil fuel reached a new high worldwide last year, and all indications point to it setting another record in 2026 and remaining near its peak for a number of years to come.Coal had tremendous growth during the oil crises of 1973 and 1979, especially in the most developed countries, as many switched from oil to coal to generate energy. The Hormuz shock threatens to have a similar effect, but this time it's about chemicals.