China has little choice but increase coal use, analysts say
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The Wujing Coal-Electricity Power Station is a smokestack in Shanghai, China. It was inaugurated on September 28th 2021.
Hector Retamal | AFP | Getty Images
China may have to set aside its ambitious plans to cut carbon emissions — at least in the short term — in order to tide over its worsening power crisis, said analysts.
“Like other markets in Asia and Europe, China must perform a balancing act between the immediate need to keep the lights on — via more coal — and showing its commitment to increasingly ambitious decarbonisation targets,” said Gavin Thompson, Asia-Pacific vice chair at energy consultancy Wood Mackenzie.
Thomson said in a report, “But the immediate reality is that China (and many other countries) have limited options but to increase their coal consumption to satisfy power demand.”
However, the reality in short term is that China and other countries have no choice but to raise coal consumption in order to supply power.
Gavin Thompson
Asia-Pacific Vice Chair, Wood Mackenzie
China’s environment targets
Chinese President Xi Jinping announced last year that China’s carbon emissions would begin to decline by 2030, and the country will reach carbon neutrality by 2060. This means that China will offset its carbon emission by taking an equal amount of carbon dioxide out of the atmosphere.
China has introduced the following measures to help it achieve these goals: “dual-control” policy that requires provinces to limit energy use and cut energy intensity — defined as the amount of energy used per unit of GDP.
China’s economic planner agency in mid-August announced that at least 20 provincial governments had failed to reach the targets for the first half 2021.
Last month, the agency updated the “dual-control” policy with more stringent measures — and that partially It also contributed to the widespread use of power rationing throughout the county.
Strictly implementing those targets would slash China’s economic growth by between 1 and 3 percentage points in the fourth quarter of 2021 and first quarter of 2022, Barclays Research estimated. According to economists from Barclays, the Chinese authorities will likely relax these targets in 2019.
“With three months left before year end, we think it will be very difficult to achieve the ‘dual-control’ target this year,” they wrote in a report.
“We think the government is likely to adopt a more flexible approach to its targets especially given already slowing growth and a potential for a colder-than-usual winter,” they said.
To’substantially Increase’ Coal Imports
This could also include easing restrictions on the imports of Australian coalSome said: Analysts
Barclays economists stated that “the ban on coal imports Australia has exacerbated domestic co shortages.”
According to the bank, Australia was China’s largest coal supplier and contributed 39% of all Chinese coal imports in 2019.
Barclays anticipates that China will “substantially raise” its coal imports during the fourth quarter. This is especially true for major coal exporting countries.
China stopped buying coal from Australia last year. The bilateral relationship between Australia and China deteriorated after Australia supported an international inquiry into China’s treatment of Covid-19.
China’s recent week has seen a rise in exports. release Australian coal stranded at Chinese ports due to the import ban, reported Reuters. According to the news agency, around one million tonnes worth of coal from Australia have been stored in bonded warehouses on China’s coastlines.
Renewables: A Boost
China will avoid an extended power crisis and economic decline by increasing its coal use. But that will come at the expense of the country’s goal to reduce carbon emissions — at least temporarily, said analysts.
Thompson of Wood Mackenzie said that such a balance act might be difficult for China.
China, like many other countries is preparing for the future COP26 climate change summitGlasgow, Scotland. At the November summit, global leaders and environmentalists will hash out individual countries’ emissions targets and adapting to the effects of climate change.
Just weeks later, China will also see a rise in coal use Xi said the country would not build new coal-fired power projects abroad, Thompson added.
Xi pledged to support overseas coal projects during the United Nations General Assembly last week.
Morgan Stanley said that increasing coal production cannot solve the problem of power supply shortages. It is also not sustainable because it will lead to a reduction in carbon emissions.
The Wall Street Bank said that this means China could increase investments in renewable energy. It noted that as of August, China was already channeling around 69% — on a three-month moving average basis — of its electricity generation investment into wind and hydropower.
According to a bank report, “The Bank anticipates that investments in renewables will continue in a steady pace over the next years.”
“The recent emergence and severity of local shortages ought to be an incentive for local governments, which should encourage them to speed up their plans.”
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