China’s ambitious targets for the commercial production of coal-bed methane need “a reality check”, according to a consultant’s report into the country’s efforts to extract the high-energy gas trapped in coal deposits.

This autumn marks the fifth anniversary of China’s first commercial CBM production. Beijing announced an aggressive target of 5bn cubic metres a year by 2010.

However, production of the gas is currently just a quarter of that.

China will soon announce ambitious targets of 10bn cubic metres a year by 2015, and double that for 2020, according to a report from Wood Mackenzie.

“A reality check is needed,” the report warns. “CBM is still far from providing another major source of gas supply.”

China has massive reserves of unconventional gas — forms of natural gas such as shale gas and coal-bed methane – which could supply as much as 12bn cubic feet per day by 2030, playing a crucial role in meeting China’s huge gas needs. Coal-bed methane alone could account for 14 per cent of domestic gas supply by 2030, according to the consultancy.

But key questions remain over how the unconventionals sector will develop, and whether government policies will move fast enough to open up the sector.

China’s oil companies have planned huge investments in the sector, with PetroChina announcing a $1.5bn CBM investment plan this year and ambitions to produce 4.5bn cubic metres of the gas a year by 2015. Sinopec, which announced a new CBM discovery in Shanxi province last month, aims to produce 2.5bn cubic metres of unconventional gas by 2015. And China United Coalbed Methane is planning for 10bn cubic metres a year by 2020.

Some are optimistic that production will soon pick up, thanks to government subsidies and the end of the government-granted monopoly of China United Coalbed Methane in 2008.

“We are bullish on CBM,” said Sharad Apte, head of Bain & Company’s Asia- Pacific Energy practice. “The Chinese government is currently trying to eliminate a lot of the hurdles, particularly regionally, for CBM development.”

Foreign groups have long been involved in China’s CBM industry, providing about 70 per cent of the funding for early CBM exploration. This summer, PetroChina announced a joint effort with BP to look at a CBM field in Xinjiang province.

China’s total gas demand last year was about 9bn cubic feet per day. By 2015, gas demand is expected to reach 20bn cubic feet per day and import dependency will increase to about 30 per cent, according to Wood Mackenzie.