![]() ![]() Millions of producers that relied on cheap and stable power supplies for decades would not be happy. WHAT WOULD HIGHER ELECTRICITY PRICES MEAN FOR THE ECONOMY? Some local governments, such as the southern provinces of Guangxi and Guangdong, have started adjusting the pricing mechanism to allow electricity suppliers to receive additional fees from the clients, according to industry publication bjx.com. Coal prices are soaring to unprecedented levels, but the prices utilities can charge customers are largely controlled by the government.Įven some of China’s most efficient power plants are losing money, state-run China Energy News reported in September. ARE CHINESE POWER PLANTS WILLING TO PRODUCE MORE?Ī lot aren’t because they are swamped with operating losses. ![]() The rationing of residential and public services in some north-eastern provinces in late September, even after curbs to factories, highlighted the tight supplies. Local power grids sometimes schedule cuts to manufacturing hubs to prioritise urban customers during peak periods. Rationing is actually normal in China, especially for factories. But the power crunch in China (as well as Europe) has exposed some of the disadvantages of relying on renewable sources such as wind and hydro.įor instance, a late start to the rainy season reduced hydropower generation in China’s southern provinces this year, forcing power rationing.Ī sudden reduction in supplies from wind farms was blamed in part for shortages in north-eastern China, where some homes lost power and traffic lights did not work over the last weekend in September, causing chaos on the roads. ![]() It has been gradually lifting the share of energy derived from carbon-free sources and plans to reach 20 per cent by 2025. Mongolia, China’s resource-rich neighbour, sold less coal this year partly due to China’s strict border controls to prevent the spread of COVID-19. ![]() Rising purchases from Indonesia helped make up for the missing Australian coal this year, but energy demand in Southeast Asia’s biggest economy also soared, and increases from other sources are in doubt. That tension is not likely to ease as US President Joe Biden seeks to rally allies, including Australia, to counter Beijing’s influence across the Indo-Pacific region. But it stopped buying the highly energy-efficient Newcastle grade from Australia starting last year amid a political dispute between the once-close trading partners, leading to sporadic shortages. WHY DOESN'T CHINA IMPORT MORE COAL?Ĭhina traditionally has been a major importer. The National Development and Reform Commission, the country’s top economic planning agency, has urged producers to secure supplies.īut any new or reopened mines also have to meet tighter environmental standards and workplace safety rules under Xi’s green push and following a spate of deadly accidents.Ĭomplicating things further is that, since China set goals to lower coal’s share of overall energy production, some financial institutions have stopped funding the business. WHY DIDN'T THE GOVERNMENT ASK COAL MINES TO DIG MORE?Īctually they did, but it is not that quick or easy. Coal-based producers account for more than 70 per cent of the country’s electricity generation, but Xi’s push to reduce greenhouse gas emissions and go “carbon neutral” by 2060 has capped the growth of coal mining.ĭemand for power from Chinese factories soared as orders from overseas mounted, but utilities were unable to buy enough fuel after prices surged.Ĭhina’s coal production grew by 6 per cent in the first eight months this year, but the power output from coal-fire generators surged 14 per cent in the same period, leading to a decline in coal inventories.Ĭertain northern areas also need to reserve enough coal for the upcoming winter heating season, which is worsening the current shortage. Part of the problem is that the economic rebound after COVID-19 lockdowns has boosted demand, while lower investment by miners and drillers has constrained production.īut the crisis in China is partially due to its own environmental agenda, as President Xi Jinping’s vision of de-carbonising the economy discouraged the burning of coal, a cheap energy source that subsidised its economic growth for decades. The shortages mirror tight energy supplies in Europe and elsewhere that have roiled commodity markets, as well. A power crunch across China has rippled from factory floors to homes and even traffic lights in some places, leading economists to cut their growth forecasts for the world’s second-largest economy. ![]()
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