The plan to extract methane from the new energy source was announced by China's National Energy Administration.
The agency said China's coal bed methane reserves are estimated at 36.8 trillion cubic meters, making them the third-largest in the world after Russia and Canada, the official Chinese Xinhua News Agency reported.
The Chinese government would allocate more money from the central budget and encourage the inflow of private capital into the sector, Xinhua said.
The report said China plans to complete construction of two major coal bed methane production bases in the central and western regions by 2015 and increase the number to three to five in another 10 years.
The Ministry of Land and Resources has announced plans to produce 16 billion cubic meters of coal bed methane.