For both energy security and CO2 emission reduction, synthetic natural gas (SNG) production from coal is an important path to implement clean coal technologies in China. In this paper, an overview of the progress of coal to SNG technologies, including the development of catalysts, reactor designs, synthesis processes, and systems integration, is provided. The coal to SNG system is modeled, the coupling between SNG production and power generation is investigated, the breakthrough points for further energy savings are determined, and the system performance is optimized based on the first and the second laws of thermodynamics. From the viewpoint of the first law of thermodynamics, the energy conversion efficiency of coal to SNG system can reach 59.8%. To reduce the plant auxiliary power, the breakthrough points are the development of low-energy-consumption oxygen production technology and gas purification technology or seeking new oxidants for coal gasification instead of oxygen. From the viewpoint of the second law of thermodynamics, the major exergy destruction in a coal to SNG system occurs in the coal gasification unit, SNG synthesis unit and the raw syngas cooling process. How to reduce the exergy destruction in these units is the key to energy savings and system performance enhancement. The conversion ratio of the first SNG synthesis reactor and the split ratio of the recycle gas are key factors that determine the performance of both the SNG synthesis process and the whole plant. A “turning point” phenomenon is observed: when the split ratio is higher than 0.90, the exergy destruction of the SNG synthesis process will increase sharply, which causes a decrease in overall system efficiency. Keeping the conversion ratio of the first synthesis reaction between 0.78 and 0.90 not only avoids the rapid increase of exergy destruction in the SNG synthesis process but also produces the SNG product with a high CH4 purity (>94.0%), and the catalyst can be maintained with a high activity. When the split ratio of the recycle gas is approximately 0.85, the best coupling/balance between SNG production and power generation can be attained and thus the highest overall system efficiency of approximately 62% is achieved, much higher than approximately 55% efficiency in a traditional coal to SNG plant. The findings presented in this paper are important steps for future improvements of coal to SNG systems, especially the SNG and power cogeneration systems, integration in the future.