CNN Business June 30, 2021 3:33 AM “China is facing its worst power shortage in a decade. That’s a problem for the whole world” by Laura He
Image from Reuters
Read CNN Business for all detail.
Summary provided by 2244
In what could last for months “extreme weather, surging demand for energy and strict limits on coal usage” is straining China’s economic recovery “and weighing on global trade.” Rationing now for over a month could last for the rest of the year. Guangdong province has “companies across the province [having] to shut down for a few days per week.” Nine other provinces are reportedly experiencing similar shortages. Rationing will “reduce output across virtually every sector of the economy.” 70% of power is used by construction and manufacturing. Manufacturing output could fall by 20% putting more strain on internal and global supply chains and port activity. Such a decline could ultimately hamper the “holiday shopping season.”
The root causes are less hydroelectric-enabled power generation relating to the extreme weather including drought and less coal-enabled power generation due to the Chinese government goal to be “carbon neutral by 2060.” Coal-enabled power generation supplies 60% of China’s electricity. Given the carbon-neutral goal, mining companies have also pulled back on production and they have been hobbled by safety issues as well. Making matters worse Beijing has restricted coal imports from Australia. With demand high and supplies constrained, coal mining firm’s have raised the price of coal. In addition, while the extreme weather continues, demand for air conditioning and refrigeration is increasing.
More green energy is being developed but so far these efforts are not sufficient to make up for the gap between supply and demand. An added dilemma for power companies are Chinese government imposed price controls that prohibit increases in price to end-users of electricity.
Comments