China is considering halting efforts to make oil from coal due to concerns about the expense and energy demands, a state news agency on Sunday quoted an official as saying.
China is hoping to ease its rising dependence on imported oil by promoting alternative energy sources such as oil-from-coal and solar, wind and nuclear power.
But scientists have warned that oil-from-coal projects produce large amounts of greenhouse gases.
China "may put an end to projects which are designed to produce petroleum by liquefying coal," the official Xinhua News Agency said, citing an official of the country's top economic planning agency who spoke on condition of anonymity.
"Liquefied coal projects consume a lot of energy, though the successful industrialization of liquefied coal could help reduce the country's dependence on petroleum," the official of the National Development and Reform Commission was quoted as saying Saturday.
Concern about the expense and water demands of such projects were also expressed, Xinhua said.
Scientists also say use of liquid coal could increase the total amount of greenhouse gases released because pollutants would be created during production and by burning the fuel.
A report in April by the U.S. Environmental Protection Agency said use of liquid coal could lead to a 119 percent increase in greenhouse gases released per barrel of fuel if production and vehicle emissions were counted.
A U.S. environmental group, the National Resources Defense Council, in a report in February, put the increase at 85 percent.
The Chinese government announced plans in March to invest $13 billion to build Asia's largest facility to make diesel fuel from coal.
The facility in the northwestern region of Ningxia would be due to start operation in 2020 and be capable of producing 75 million barrels of diesel fuel a year, according to news reports.