Guest essay by Eric Worrall
h/t Vuk; Xi Jinping’s attempt to force China to hit unrealistic emissions cuts, ahead of the COP26 climate conference, has caused power blackout chaos throughout China, as cities switch off their coal plants rather than risk breaching central government quotas. The electricity supply crisis is affecting US companies which have outsourced some of their manufacturing to China.
China’s electricity crunch causes widespread power outages, hitting homes and closing factories
Global shoppers face possible shortages of smartphones and other goods ahead of Christmas after power cuts to meet official energy use targets forced Chinese factories to shut down and left some households in the dark.
Key points:
- China is facing widespread power shortages after vowing to cut its energy intensity to meet climate goals
- Widening power shortages have halted production at numerous factories during one of their busiest seasons
- The fallout has prompted some analysts to downgrade their 2021 growth outlook
In the north-eastern city of Liaoyang, 23 people were hospitalised with gas poisoning after ventilation in a metal casting factory was shut off following a power outage, according to state broadcaster CCTV. No deaths were reported.
Factories were idled to avoid exceeding limits on energy use imposed by Beijing to promote efficiency.
Economists and an environmental group say manufacturers used up this year’s quota faster than planned as export demand rebounded from the coronavirus pandemic.
Fallout expected to impact GDP
The disruption to China’s vast manufacturing industries during one of their busiest seasons reflects the ruling Communist Party’s struggle to balance economic growth with efforts to rein in pollution and emissions of climate-changing gases.
“Beijing’s unprecedented resolve in enforcing energy consumption limits could result in long-term benefits, but the short-term economic costs are substantial,” Nomura economists Ting Lu, Lisheng Wang and Jing Wang said in a report.
…
Power pinch unlikely to abate ahead of climate talks
The crunch comes as global leaders prepare to attend a UN environmental conference by video link on October 12-13 in the south-western city of Kunming.
That increases pressure on President Xi Jinping’s government, as the meeting’s host, to show it is sticking to emissions and energy efficiency targets.
…
Energy quotas nearing exhaustion
Some provinces used up most of their quotas for energy consumption in the first half of the year and are cutting back to stay under their limits, according to Li Shuo, a climate policy expert at Greenpeace in Beijing.
Utility companies, meanwhile, are being squeezed by soaring coal and gas prices.
That discourages them from increasing output because the government limits their ability to pass on costs to customers, said Mr Li.
…
Read more: https://www.abc.net.au/news/2021-09-28/china-power-outages-energy-targets-emissions/100497110
The power supply crunch is hitting US firms which outsourced their manufacturing to China, with Tesla and Apple component manufacturers reportedly forced to stop manufacturing due to power cuts.
China rocked by power crunch as Apple and Tesla suppliers suspend work
By Will Feuer
China is grappling with growing power shortages, prompting many factories — including suppliers to Apple, Tesla and other major global companies — to curb or suspend operations.
The power crunch comes as strict orders from Beijing to cut emissions collide with surging coal and gas prices as well as rising demand for electricity.
Apple supplier Unimicron Technology said that three of its China subsidiaries stopped production from midday Sunday and won’t resume until midnight on Sept. 30 in order to comply with local regulations.
…
Read more: https://nypost.com/2021/09/27/china-rocked-by-power-crunch-as-apple-tesla-suppliers-suspend-work/
This is not the first time Xi Jinping’s market interventions have caused energy supply chaos in China. In 2017, China’s botched attempt to convert cities from coal to gas led to widespread blackouts during a bitter winter. The reason? Bureaucrats put hitting gas conversion Xi Jinping’s central targets first, ahead of rational considerations, like whether the gas would be available in time to pump through pipelines to their converted home heating systems.
I’m not blaming the bureaucrats. When the boss can have you shot, and when questioning your orders could be a shooting offence, prudence dictates you do what you are told, even if your instructions don’t make sense.
China’s domestic coal price rise, another factor in the power supply crisis, was likely caused by Xi Jinping’s ban on Aussie coal imports – his punishment for Australia for objecting to Chinese expansionism in the South China Sea.
The coal import ban did not stop the flow of Australian coal to China. All it did was force Chinese companies to purchase Australian coal through expensive intermediaries, to disguise the true origin of their coal purchases.
Australian domestic climate policy has not helped the situation. Australian banks and government planning authorities have been obstructing Aussie coal field development, which has exacerbated the supply crunch.
Australia’s Federal Treasurer Josh Frydenberg has been pushing for Australia to embrace more aggressive climate policies, which may be discouraging coal investment. Josh thinks the decline of the Aussie coal industry is a good thing.
China’s Power Regulator has just now ordered utilities to stockpile coal, but this order may have come too late to prevent the current power supply crisis from worsening. Chinese companies currently have low inventories of coal, so it would take days, if not weeks, to repair those inventories, assuming they can find a supply of coal in an already tight market. It seems likely Chinese coal users have been running down their inventories in the hope that Xi Jinping would relax his ban on Aussie coal imports, which would allow them to restock their inventories at a lower price. But so far there is no sign the ban will be relaxed, so the game of paying a premium to intermediaries, so Xi Jinping can pretend on the world stage that China does not need Aussie coal, looks set to continue.
What can I say? If China, the world centre for manufacturing solar panels and wind turbine components, can not switch off their fossil fuel plants without chaos and massive power supply disruption, there is no chance anyone else can make it work.
There is another lesson which China should surely have learned by now. Don’t mess with the free market.
Xi Jinping’s push to assert Communist Party control over the Chinese economy, through more central planning, and through his heavy handed climate policy and import ban directives, is pushing the Chinese economy in the wrong direction.
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It doesn’t take days or weeks to replenish coal inventories, it takes months and years. Coal fired plants in the U.S. have kept close to 90 days of forward looking stock, and they do not have the problem of importing it from Australia, where bulk shipping availability can add months to the process. If China is lagging in the run-up to winter weather they are already screwed.
Quite likely. I think the Chinese currently have some of the best transport infrastructure in the world, so they might be able to achieve miracles if the coal was available- which it isn’t.
When I first read about this, severe cold in the north was mentioned as a dangerous factor. Since then, in one day, this has morphed into severe heat in the south. Gotta follow the narrative!
There goes the plummeting price of solar panels and wind turbines!
Yes – good spot.
Unless China decides to eat the losses to keep market share. Who knows?
What is it going to make them with unicorn farts or fairy dust 🙂
This is what you get when you are controlled by those in higher authority who mandate things that are unreasonable. Thu shall not violate Chairman Xi mandates. So we cut the power so we can brag that we met our emission goals regardless of the destruction it caused. Yeah. that is a good communist. Park your brain and keep in step. Big brother knows what is best.
As opposed to the “free market” in the US, where the entire private financial system has been subsisdized by $120 billion dollars in Fed bond purchases PER MONTH. And the free market fossil-fuel industry, where prices are set by open collusion of major governments and oil producers. If the Fed respected the”free makret” and started selling off its huge hoard of private bonds, Blackrock and every other major financial institution would be bankrupt overnight and the Fed would own every single one. The only thing “free” about the current market system is the free trillions that 0.1% of the population is getting from …taxpayer-backed dollars.
Your ignorance is manifest, Eric.
Precisely, and the ”free marketeers” are getting a serious haircut over Evergrande – the supreme irony of nominally communist China telling foreign investors to let the market decide.
The ‘free-marketeers’ here got massive bailouts after Lehman. China pricked the bubble before this cabal could terrify politico’s into submission.
This was a self-inflicted wound by China in banning Australia coal imports leading to a huge drop in coal-fired energy and energy shortages..
Unfortunately, the West is making the same type of mistake with its war on fossil fuels, and are disastrously trying to replace fossil fuel power with wind and solar, which will eventually cause a huge price increase gas and electricity prices, brownouts and blackouts, and eventually widespread grid collapse if these insane policies continue..
Under Trump, the US was 100% energy independent… now… not so much…and crude oil prices have already increased over 100% since Joe’s election..
Miss Trump yet?
Damned right I miss him. So many idiots who voted against him because they were offended by his tweets and by listening to the gross lies and distortions of the left-wing media. His policies were directed to the benefit of the United States more than any other president in my lifetime. Now, I’m afraid it may be too late to save the Republic without another revolution.
Genius – now Xi can tell COP26 ” look at the sacrifices China is willing to make to fight the climate crisis” to fool those Western green-socialist idiots into pledging disastrous emission reductions or net-zero pledges. Look for Australia and China to kiss and make up after November.
Boris has to resort to nasty old coal to keep the lights on for COP26.
Pooh Bear, “hold my beer”.
no coal in use in UK today, or yesterday.
coal only on once in last 5 days.
And if the UK builds 10 times as many wind turbines, they’ll STILL need coal and gas to keep the lights on when the wind doesn’t blow at the “necessary, but not excessive” required speeds. So what’s your point?!
It seems likely Chinese coal users have been running down their inventories in the hope that Xi Jinping would relax his ban on Aussie coal imports, which would allow them to restock their inventories at a lower price.
and that is related to upping use of renewables how?
a coal shortage would be worse in a 100% fossil fuel economy.
and there’s a lot of anti pollution action behind the Chinese ‘efficiency’ and power quota limits… they don’t want it smoggy for winter Olympics and they really need to take air quality action…
All they have to do is hide several million disgruntled locals from the press there for the Olympics 🙂
Lets hope XI follows what Griff wants and builds more unreliables so we can really get some momentum on this.
Poor griff, he actually thinks that coal, oil and natural gas shortages have nothing to do with the restrictions his side has been putting on exploration and development.
Tell me how upping renewables produced a coal shortage at Chinese power stations?
griffter, stupid comment. It takes a couple of days for the wind to dissipate coal smoke, not many months. China’s energy shortages are affecting areas hundreds to thousands of miles from the Olympic venues not just where the Olympics will be months from now. If the Chinese want clean air for the Olympics the only thing they can do since they get 70% of their electricity and 57% of their total energy from coal and ~90% of their total energy from fossil fuels is shut down all industry, all transportation not related to the Olympics, and most residential use of energy in the vicinity of the Olympics shortly before and during the games.
A good example of what China will do to get something from the West was the 2008 Beijing Olympics. I lived in Beijing from1996 to 2002. I lived in the Dongzhimen area of Beijing where most of the embassies are located as well as a bunch of swanky hotels and many government offices. So where did Olympic committee members stay whist evaluating Beijing? Dongzhimen.
So these people would travel from Dongzhimen to the Olympic sites which were out near the 5th ring road not far from the airport. Ok why is this relevant? During winter time when temps plummeted to about -5 degree Celcius the leaves would fall off the trees and they looked pretty ratty. One night as I was wandering around with nothing to do, I was looking at these trees and thinking that they shouldn’t have leaves. On close examination the Chinese authorities had interwoven strings of green plastic leaves through the trees and also added small green lights to really show them up at night. It was genius. They had done this to thousands of trees, cost be damned. The Chinese was out to impress just so they could get these games.
From January to August, China’s coal imports from the US increased by nearly seven times over the same period last year, and the amount of coal imported from South Africa soared from zero last year to 4.38 million tons, an industry report by cngold.org shows.
China ramps up efforts to ensure power supplies
Coal imports to expand amid rising demand
https://www.globaltimes.cn/page/202109/1235399.shtml
Meanwhile back at the ranch, er , The Times :
https://www.thetimes.co.uk/article/peter-brookes-times-cartoon-september-29-2021-gzh7n6zsv
BoJo is on the case!
China could try more of wind, solar and batteries, on a national scale, to ruin itself even more.
HIGH COSTS OF WIND, SOLAR, AND BATTERY SYSTEMS IN US NORTHEAST
https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-solar-and-battery-systems
Okay, that article is officially on my list of things that give me a bodacious giggle-snorttt.
Thank you. I needed that! (Falls off chair, laughing myself silly. Startles the cat.)
OK, who is lying? One day China is building 150 power plants and now it is short on power?
It just doesn’t have the coal at its coal power stations.
similar situation in India.
chinas also the leading exipient producer ie for just about ALL drugs/meds they then supply India who process for major multinats under their labels and generics
anyone requiring daily meds needs to hope they dont cut those manufacturers power off
bad enough the covid shortfalls prior affected supply chains for global medicine
The rest of the world is looking to the CCP for inspiration in to how to deploy energy poverty, and thus poverty overall for all except for the ruling classes.
Feature. Not a bug.
‘It’s just that the Chinese energy juggernaut has run out of steam after running down stocks of coal apparently in the hope that either Beijing would lift all environmental restrictions that increase the cost of producing electricity with coal or that world prices would fall. While Beijing has eased some emissions targets, world prices have carried on soaring.’
‘China has dramatically reduced its coal consumption since 2017, cutting back the proportion used to generate electricity from more than 80% to 51.8% in 2019. Renewable energy, including wind and solar, has made up most of the difference. But with more than half of all electricity still made using coal, generators remain heavily reliant on the black stuff.’
How bad is China’s energy crisis? | China | The Guardian
No Griff, they cut their own throat, supplies are now short so they are having to shut down power plants due to coal supply issues but claim they are doing it to be green in advance of COP26.
The classic “when you have lemons make lemonade”.
Do you really think they would imposed blackouts on themselves if they could avoid it?
It is my understanding that the ban on Australian coal imports is the only reason behind the cuts in electricity generation. The ban was highly irrational, but Xi Jinping has made a series of irrational decisions. I accept the opinion of some China watchers that Xi is trending rapidly to neo-Maoism. Instead of job and salary growth, China must look forward to suffocating state control over every aspect of life.
“In the north-eastern city of Liaoyang, 23 people were hospitalised with gas poisoning after ventilation in a metal casting factory was shut off following a power outage, according to state broadcaster CCTV.”
They should’ve worn their masks…. the “experts” around the world keep saying they work great.
Ah, the schadenfreude from this headline is delicious!
Perhaps Xi ultimately intends to use the malign effects of emission reductions to demonstrate why China can’t adopt them. He can say that they’ve been tried and failed.