China will cap its crude oil refining capacity at 1 billion metric tons by 2025 to streamline the country’s vast oil processing sector and reduce carbon emissions, the country’s state planning agency affirmed in an online post.

In 2022, China surpassed the United States as the world’s largest oil processor by increasing its oil refining capacity to 920 million tons per year (mtpa), equivalent to 18.4 million barrels per day (bpd).

The National Development and Reform Commission (NDRC) said earlier this month that it would limit new refining capacity and promote the upgrading and optimization of existing refineries in addition to accelerating the closure of small and outdated plants.

The capacity cap of one billion tons, or 20 million bpd, was initially mentioned in October 2021 when Beijing announced its action plan for reaching peak carbon emissions by 2030.

The recent posting by the NDRC provides more details on the specific curbs for the refining sector.

According to the notice, refineries with an annual capacity of 10 million metric tons or more will account for 55% of processing facilities by 2025. Furthermore, any new refineries established after the announcement must have capacities of at least 10 million tons per year.

China also aims to promote energy efficiency and better carbon emission management in the refining industry. The NDRC plans to conduct audits of key facilities to assess production capacities, crude oil sources, and energy efficiency levels.

To align with environmental goals, smaller oil processing facilities that often claim to be bitumen producers or are used for processing heavy oil and chemicals will be banned. Moreover, New refineries will also be sited close to or integrated with petrochemical facilities making products such as ethylene and paraxylene.