China’s energy crisis grew on Friday, as cold weather inundated large parts of the country. Power plants scrambled for coal to stock up, sending fuel prices to new records.
As strong cold winds from northern China bring down temperatures, electricity demand for heating homes and offices will rise. Forecasters expect that the average temperature in certain eastern and central regions will drop by up to 16 degrees Celsius over the next two days.
High fuel prices, shortages of coal and an increase in post-pandemic demand have caused widespread power shortages in the second-largest country. Since September, rationing has been in effect in at least 17 of the more than 30 mainland China regions. This has caused some factories to stop production and disrupted supply chains.
The January Zhengzhou thermal coke futures reached a record high at 1,669.40 Yuan ($259.42 per tonne) early Friday. The contract has increased more than 200% in the past year.
Three northeastern provinces, Heilongjiang, and Liaoning were among those most affected by the power outages last month. To cope with the colder than normal weather, many regions of northern China, including Inner Mongolia, Gansu, and Gansu, have begun winter heating. This is primarily fuelled by coal.
However, power shortages will continue into next year. Analysts and traders expect a 12% decrease in industrial power consumption in the fourth quarter. This is due to a reduction in coal supply and priority is given to residential users by local governments.
China has set a goal to become “carbon neutral” in 2060. Beijing has been working to reduce China’s dependence on polluting coal power and to switch to cleaner renewable, solar and hydro energy. For some time, coal will still be the main source of electricity.
China isn’t the only country struggling to find power, as have other countries. This has caused fuel shortages and blackouts across some countries. As world leaders attempt to revive efforts to combat climate change, the crisis has shown the difficulties in cutting down the dependence of the global economy on fossil fuels.
According to state-run news agency Xinhua, Vice Premier Han Zheng stated that China would strive to reach carbon peaks by 2030.
He said that Russia and China are both important players in the energy transition and that they should cooperate to ensure the smooth progress of major oil-and-gas pipelines and nuclear power projects.
