煤液化被用来从煤生产液体合成燃料、甲烷，和石油化工产品。

煤液化分为直接液化和间接液化两种。直接液化意味着碳化和氢化。

热解和碳化过程

所谓热解和碳化过程，就是将煤隔绝空气加热，生成焦碳、煤气和煤焦油。将煤焦油脱硫后加氢，生成液体燃料。但是这种方法生成的液体燃料不经过深加工很难应用到内燃机上，所以实用性不大。

氢化过程

用氢化过程将煤液化是德国在20世纪20年代发明的，将煤粉和重油混合，在催化剂的作用下，在400 °C至5000 °C温度和20到70兆帕的条件下反应：

n C + (n + 1) H₂ → C_nH_{2 n + 2}

Coal liquefaction is a process of converting coal into liquid hydrocarbons: liquid fuels and petrochemicals. The conversion industry is commonly referred to as "coal conversion" or "Coal To X". "Coal to Liquid Fuels" is commonly called "CTL" or "coal liquefaction", although "liquefaction" is generally used for a non-chemical process of becoming liquid. Today, the share of converted coal used for CTL is less than 50%. It will decrease dramatically in the next years with the development of "coal to chemicals" and "coal to SNG" units, principally in China.