Liquid from coal (LFC) is a pyrolysis technology for upgrading lignite. LFC is close to viability as a large-scale commercial technology and is strongly promoted by the Chinese government. This paper presents an exergy analysis of the LFC process producing semicoke and tar, simulated in Aspen Plus. The simulation included the drying unit, pyrolysis unit, tar recovery unit and combustion unit. To obtain the data required for the simulation, Mengdong lignite was upgraded using a laboratory-scale experimental facility based on LFC technology. True boiling point distillation of tar was performed. Based on thermodynamic data obtained from the simulation, chemical exergy and physical exergy were determined for process streams and exergy destruction was calculated. The exergy budget of the LFC process is presented as a Grassmann flow diagram. The overall exergy efficiency was 76.81%, with the combustion unit causing the highest exergy destruction. The study found that overall exergy efficiency can be increased by reducing moisture in lignite and making full use of physical exergy of pyrolysates. A feasible method for making full use of physical exergy of semicoke was suggested. (C) 2015 Elsevier Ltd. All rights reserved.