Shanghai — Bread companies don’t have all the power they need for a bakery. Several chemical suppliers of the world’s largest paint producers have announced cuts in production. Port cities have changed their manufacturers’ electricity distribution rules four times a day.
China’s power shortages have spread to factories and industries as a whole, testing China’s position as the world’s capital of reliable manufacturing. Despite the authorities’ pledge to curb emissions that cause climate change, the shortage urged nationwide rush to mine and burn more coal. And the shortage raises questions about whether Beijing can achieve the strong economic growth that Chinese people have come to expect in the coming months.
The power crisis also revealed one of China’s strategic weaknesses. It is greedy, increasingly hungry, and consumes a lot of energy.
The world’s second largest economy relies on energy-intensive industries such as steel, cement and chemicals to drive growth. Many of the new factories are more efficient than US factories, but years of government price controls on electricity have forced other industries and most homeowners to postpone improvements.
With the arrival of the winter heating season when China needs to dig up and burn more coal, Beijing faces whether it will allow factories to continue operating full-tilt production industrial materials for the global supply chain. Must be.
Chen Long, co-founder and partner of Beijing’s economic and political research firm Plenum, said: “They have to cut energy-intensive industries.”
Power distribution seems to have eased somewhat since the end of last month when widespread power outages and power outages surprised factories. However, the winter heating season officially begins on Friday in the northeastern part of the country and continues to north-central China next month.
China faces tough choices. It burns more coal than the rest of the world combined and is the second largest consumer of oil after the United States.
China is rapidly expanding its use of natural gas, solar panels, wind turbines and hydroelectric dams. Still, China still does not have enough energy to meet demand. Even the transition to green energy can consume significant electricity. Due to the tight power supply in the country, the cost of manufacturing solar panels is rising.
Just as the rise in oil prices in the 1970s forced North America and European countries to change, continued tight supply could force China to rebuild its economy. These countries have developed more efficient vehicles, adopted other fuels, found abundant new supplies and moved their manufacturing abroad. Many have moved to China. However, the process was long, painful and expensive.
So far, China is increasing coal consumption in less than a month before world leaders gather in Glasgow, Scotland to discuss facing climate change.
Regulators announced last week that national banks should lend to the coal sector to increase production. Prime Minister Li Keqiang oversaw a meeting of top energy officials in the country on Saturday, promising to increase investment in green energy, but calling for more coal.
A board member of the European Union Chamber of Commerce in China said on Wednesday that electricity shortages worsened in some cities this week and eased in others. They predicted that the electricity problem would continue until March.
Until enough power comes online, factories in China run the risk of unexpected and unstable outages. Factories in China consume twice as much electricity as the economies of other countries. Ma Jun, director of the Institute for Public Environmental Issues, a research and advocacy group in Beijing, said factories in China tend to require 10 to 30 percent more energy than factories in the west.
Brian Motherway, Head of Energy Efficiency at the International Energy Agency in Paris, says China has improved energy efficiency more than any other country in the last two decades. But China has begun the century with an inefficient industrial sector, so it hasn’t caught up with the West yet, he said.
The effects of power shortages are mixed. Automobile assembly plants in northeastern China have been granted permission to continue operations, but tire plants have almost shut down. Wuxi Honghui New Materials Technology, which manufactures chemicals for paint manufacturers around the world, has revealed that electricity cuts have had a negative impact on production.
Other issues are revealed by Toly Bread, which has a national chain of bakeries, and Fujian Haiyuan Composites Technology, a manufacturer of battery cases for the fast-growing Chinese electric vehicle industry.
Fred Jacobs, a 57-year-old software marketer in Seattle, ordered two high-performance solid-state drives from China at the end of the summer, but refunded a week in advance due to factory delays due to power shortages. Was provided.
“I was surprised because I’ve heard about transportation issues with China, but not about electricity or infrastructure issues with Chinese suppliers,” he said. “Now the risk is much higher. If you need to pay more, buy from a US vendor.”
Power outages can cause human damage and can be exacerbated if a home loses power during the winter. At least 23 workers were hospitalized for carbon monoxide poisoning in northeastern China at the end of last month when a power outage occurred at a large chemical plant.
The government is taking steps to improve efficiency, including allowing utilities to raise prices for industrial and commercial users by up to 20% so that they can buy more coal.
China virtually stopped new coal investment in 2016 due to growing concerns about industry sustainability. Anti-corruption authorities have begun investigating several important coalfields in the Inner Mongolia region, discouraging further investment.
At the end of summer, many mines were closed for safety review. At least 60 mines were closed in a flood this fall in Shanxi Province, China’s largest coal mining center.
Prices skyrocketed as demand increased after the pandemic. The power plant was operating at about three-fifths of its capacity because it lost money for every ton of coal it burned.
Chinese authorities want to replace many coal-fired power plants with solar power. However, China’s solar panel manufacturing process requires enormous amounts of electricity, much of it from coal.
Ocean Yuan, president of Grape Solar, a solar panel distributor in Eugene, Oregon, said the price of polysilicon, the main ingredient in solar panels, has more than tripled recently, most of which has risen in the last two weeks. I am.
In China, the cost of building a large solar panel farm has skyrocketed by about 25% since the beginning of the year.
Frank Haugwitz, a consultant for the solar panel industry in China, said:
China is also aiming to improve steelmaking efficiency. The steel mill uses more electricity than every household in the country each year, accounting for about one-sixth of China’s greenhouse gas emissions.
Chinese steel companies still rely primarily on coal blast furnaces, which produce steel by melting iron ore. Western countries have primarily switched to steel production in efficient electric arc furnaces that melt a mixture of scrap and iron ore. China is trying to improve scrap collection from destroyed buildings, but the switch to electric arc furnaces will be phased in, said Sebastian Lewis, China’s energy and commodities consultant.
So far, China’s concerns are concentrated in winter. During the severe cold weather of December last year, coal shortages in some cities reduced factory operations, turned off street lights and elevators, and restricted office heating. Problems arose even though the power plant had stockpiled coal for weeks and began the winter.
According to CQCoal, this year, China’s largest state can only store 9 to 14 days …