The world's biggest single coal-to-liquid (CTL) project went into production Wednesday in northwest China's Ningxia Hui Autonomous Region.

The project, undertaken by a subsidiary of the state-owned Shenhua Group, consists of homegrown technology, equipment and materials, breaking the longtime foreign monopoly in CTL core technology.

Chinese President Xi Jinping congratulated Shenhua Ningxia Coal Industry Group on the start of the project. He described it as a "useful exploration" of secure, effective, clean and low-carbon energy development and a major result of the country's innovation strategy.

It will help promote clean and effective use of coal, improve China's ability to guarantee energy security, and boost regional development, Xi said.

China has rich coal resources but lacks oil and gas. Currently more than 60 percent of its oil is imported. The National Energy Administration estimates that China will need 610 million tonnes of oil in 2020, 68 percent of which would have to be imported.

The project drew an investment of about 55 billion yuan (7.9 billion U.S. dollars). It is able to turn more than 20 million tonnes of coal to 4 million tonnes of oil products annually, including 2.7 million tonnes of diesel, 980,000 tonnes of naphtha petroleum and 340,000 tonnes of liquefied gas, according to Yao Min, deputy general manager of Shenhua Ningxia Coal Industry Group.

"Coal-to-liquid technology provides another solution to China's lack of oil," Yao said.

Byproducts include 200,000 tonnes of sulfur, 75,000 tonnes of mixed alcohol and 145,000 tonnes of ammonium sulphate, Yao said.

"If the oil products are promoted in first-tier cities like Beijing and Shanghai, they will help reduce car emissions and tackle the problem of smog," Yao added.

A trial use of the diesel made from coal on Beijing's sanitation vehicles showed significant declines of emissions of pollutants, according to Cai Lihong, who takes charge of the project's construction.

Spending on environmental protection in the project totaled 6.2 billion yuan, or more than 11 percent of the total investment.