Because of a lack of electricity: China is accommodating the coal industry

Status: 13.10.2021 4:52 p.m.

China wants to further liberalize the market for coal power – in order to counter the power shortage in the country. That should help consumers and companies. But can the climate targets still be met?

By Benjamin Eyssel, ARD-Studio Beijing

China’s National Energy Commission has not met for two years. The fact that they met over the weekend shows how serious the situation is. As it became known yesterday, the market for coal power in the People’s Republic is to be liberalized. “These measures are a further step in the reform of the electricity market”, Wan Jinsong of the Development and Reform Committee said at a press conference.

The aim is to create an electricity price that can rise and fall due to supply and demand. By partially liberalizing the coal-fired electricity market, China wants to make it more attractive for power plant operators to produce electricity. Electricity prices are currently heavily regulated in the People’s Republic. Because there is currently little coal on the market in China and the prices for the fuel are extremely high, it is not worthwhile for many power plant operators to generate electricity.

Factories have to stop production

In many parts of the country, electricity has been temporarily turned off for weeks – for private households and in industrial areas. Another reason for the shutdowns is apparently that local governments want to meet the central government’s climate and environmental requirements.

The power shortage is causing great difficulties for the Chinese economy. In factories, all operations often have to be shut down with just a few hours’ warning. This is also increasingly causing problems for foreign companies.

According to Jörg Wuttke, President of the European Chamber of Commerce in China, the problems will continue for several months – and will even worsen in winter. The background to this is the many coal-fired district heating power plants in northern China, which will gradually be ramped up in the coming weeks.

“Some will fall off the back”

“The real guesswork doesn’t actually start until Friday,” says Wuttke. “On October 15th, the district heating will be switched on in north-east China as planned, and then things really get down to business. Then we have to see to what extent companies are cutting off electricity Buildings. Some of us will fall down in the back. “

The liberalization of the coal power market should ease the situation somewhat for companies and consumers. However, observers doubt that China can still meet its self-imposed climate targets. Also because more new coal-fired power plants are likely to be built than already planned.

China wants to be climate neutral by 2060

No country in the world emits more CO2 than China. The government says that emissions of the climate-damaging greenhouse gas will increase for almost ten more years. It should only decrease again after 2030 and the People’s Republic wants to be climate neutral by 2060.

However, the energy expert Yan Qin from the economic analysis company Refinitiv in Norway does not see the long-term goal in jeopardy. “Because energy security is now the government’s top priority, the short-term climate and environmental targets could be adjusted somewhat in the next six months,” she says. “We see how the coal industry is being promoted now. But short-term climate goals and medium- and long-term goals are two different things.”

China’s National Energy Commission only said that they would look closely at the situation and recalculate the schedule if necessary.

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