of International Trade and Industry in Japan. NEDO started basic research for coal liquefaction in early 1980 and developed the NEDOL coal liquefaction process. The fruit of this development activity was operation of a 150 t/day pilot plant that finished in 1998 with great results. The results, including engineering data for scaling up the plant to size, were compiled as a technological package. One of the great results was creation of a simulator for estimating liquefaction yields. Moreover, a procedure for analysing the hydrodynamics in liquefaction reactors was developed and used for analysing the difference between liquefied yields of small-scale and large-scale reactors. It was explained by the difference of actual residence time in the reactors through analysis of the hydrodynamics in small-scale and large-scale reactors. In parallel with the development of coal liquefaction, development of product upgrading technology was proceeding to make use of these products as transportation fuels. It was found that heteroatoms such as nitrogen, sulphur and oxygen can be removed up to the levels specified for gasoline and diesel fuel through hydrogenation. Moreover, the octane number for the upgraded naphtha satisfied the specifications for common gasoline, and the upgraded gas oil seems to satisfy the specifications for the cetane number for diesel fuel through the addition of agents that improve the cetane number.