Abstract: The present situation and development trend of coal based synthetic natural gas (SNG) industry in China were introduced, and the influence of carbon tax on the coal based SNG investment project was analyzed. The influences of carbon tax rate on the product cost and the internal rate of return of coal based SNG project were discussed. It was pointed out that if the carbon tax rate reaches up to RMB 80-100 yuan/t, the cost of coal based SNG would lose competitiveness, and the economic feasibility of coal based SNG project would be greatly reduced.