Workers were ordered to climb the stairs, manufacturers were forced to significantly reduce production for Christmas, and households remained powerless for days. China’s power crisis has alerted authorities and panicked businesses.
Beijing to more coal miners on Thursday Expansion of production Dramatically, it casts doubt on China’s commitment to move to green energy and achieve peak carbon emissions by 2030.
However, analysts said the policy to tackle climate change was not due to lack, but instead turned to policy turmoil and coal supply issues.
What is the cause of the shortage?
Coal-fired power still accounts for about 70% of China’s electricity, but fuel investment is inadequate.
Beijing has been slowly closing coal mines and power plants for years for both environmental and safety reasons, but recently there have been other turmoil.
Most of the country’s domestic supply comes from Shanxi and Shaanxi, as well as Inner Mongolia. Anti-corruption campaigns in Inner Mongolia’s coal industry have disrupted supply since last year, and mines have been closed to clear the sky for events such as the Communist Party’s 100th anniversary, the National Congress in September, and the Chinese Mini-Olympiad.
Security concerns have highlighted another source of crisis, the duplication of policy decisions. This year, China has tightened penalties for miners who did not follow safety guidelines, and pit bosses have become reluctant to increase production.
This was despite the fact that China’s State Council and the State Council ordered an increase in coal production as early as May. “There seems to be a lack of coordination,” said Shanguo, a partner at Plenum China Research.
The directive was issued despite China’s “double management” strategy aimed at reducing energy consumption and intensity, or electricity usage per percentage of GDP. This policy has been in place for many years, but has become even more important after Xi Jinping has made dramatic climate change commitments.
Under this policy, the state is competing to meet stringent energy consumption targets and, in some cases, restricts financing of electricity projects with high energy consumption. States that failed to meet their goals in the first half responded by distributing electricity usage.
Soaring coal prices and government restrictions on the amount billed by producers have further restricted energy supplies.
Domestic supply accounts for 90% of China’s coal consumption, but import turmoil remains influential.
Beijing imposed sanctions on Australian coal last year after Canberra demanded an investigation into the origin of the coronavirus.
Those sanctions and “Indonesian flood [and] All new outbreaks of pandemics in Mongolia have contributed to the weakening of coal imports this year, “said Lara Dong of IHS Markit.
Even the economic recovery from the pandemic helped and exacerbated Shortage of manufacturing hubs in the south.
Lantau Group energy consultant David Fishman said renewable energy is not yet large enough to replace coal, and lack of rain has disrupted hydropower to help supply southern states. Said.
What is the impact?
Crisis as more than 20 states are affected country’s As an integral part of the global supply chain, GDP has reduced production and industry associated with limited construction experience.
Energy-intensive sectors such as metal and cement production are expected to be one of the worst blows.
The factory is worried about fulfilling year-end orders. Klaus Zenkel, head of the EU Chamber of Commerce in southern China, said some of his members rely on diesel generators to operate.
“Companies are very concerned that the situation is out of control. Customers may turn their backs and try to find other suppliers in different parts of China,” he said. Told.
Rationings are also affecting some homeowners, and authorities are nervous about potential social unrest, especially in the winter months of the country. “Household power outages can be a political issue, something policymakers don’t want to see,” said Shan Guo.
What is the solution?
The government ordered state-owned energy companies to secure winter supplies and ordered miners to increase production. In addition, Chinese banks and insurance regulators have called on financial institutions to increase their risk tolerance for loans to coal-fired power plants.
The country is also trying to increase imports.
However, there are concerns among environmental activists that increased coal production and coal-fired power may threaten the country’s green goals.
Analysts said there were few alternatives in the short term. Dong of IHS Markit said authorities need to balance environmental issues with coal with the need for energy security. “It’s rare [that] You can achieve multiple goals at the same time. That is why we call it the energy dilemma. “
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