China’s coal production suddenly increased sharply in the past week, bringing the country’s coal production rate to an all-time high.

If China’s coal production rate continues at the current rate, it will significantly increase electricity generation capacity in the country where most of its electricity is generated from coal, and contribute to alleviating concerns about world leader on the risk of economic growth slowing down due to the energy crisis.

China’s coal production soars just days before world leaders meet in Glasgow for the United Nations’ COP26 Summit on Climate Change – to prevent climate change. change rapidly due to the large emissions caused by burning coal and other dirty fuels.

Beijing’s policymaking body, the National Development and Reform Commission (NDRC), said coal production rose to 11.6 million tonnes per day as of Oct. with the end of September, after a series of measures were implemented to overcome the coal shortage.

The energy crisis has forced China to allocate energy use to each sector/region, reducing economic growth.

The NDRC said it is aiming to produce 12 million tons of coal per day to cool down inflation.

China’s October output is on track to hit a record high.

So far, there has been no announcement on whether Chinese President Xi Jinping will attend the COP26 Conference, which dims the prospect of China’s commitments on cooperation in the field of anti-variables. global climate change.

However, analysts doubt the power crisis will end soon, saying that the power generation industry in China can only be “rescued” for a short time as China is about to enter the winter with high temperatures. If the climate is colder than average, the demand for heating will skyrocket, causing the balance of supply and demand for electricity to tighten.

Correlation of China’s coal use and carbon dioxide emissions.

However, even if production does not surpass the current level of 11.6 million tonnes, China’s average daily coal production rate in October will still mark a new monthly record of 359.6 million tonnes. ton. If maintained for the entire final quarter, that figure would amount to 1.067 billion tonnes. That would bring total 2021 production to 3.997 billion tonnes, about 4.0 percent higher than 2020’s total and 0.6 percent above the previous record set in 2013.

Urgent actions

China is the world’s leading coal miner and consumer, while coal use emits CO2. The country has pledged to drastically cut carbon, or carbon dioxide emissions per unit of gross domestic product, by 2030, become carbon neutral by 2060, and stop building coal power plants. in another country.

However, none of China’s carbon targets excludes the possibility that coal and energy consumption will increase in the near term.

Tight coal supplies and record prices are the main drivers behind the power crisis that has slowed business activity across the country in recent weeks. In response, Beijing has taken several urgent steps to increase supplies of coal and electricity, including approving new coal mines and giving power companies the rare opportunity to raise electricity prices for customers. Full Story (Full Story)

Thermal power (electricity produced from coal) accounts for about 60% of China’s total electricity production. In the first three quarters of 2021, China’s electricity production increased 11% year-on-year, but electricity consumption increased 13% as heavy industry and manufacturers increased output after anti-corruption measures. Covid-19 is eased.

China’s total energy consumption increased by nearly 14% in the first nine months of 2021.

“The increase in electricity demand in China this year has more than doubled the UK’s total electricity consumption,” said Alex Whitworth, Wood Mackenzie’s Asia Pacific head of Energy and Renewable Energy Research. UK – the biggest increase of any country in the world.

Due to pressure on power generation plants to increase production, the additional coal mined will translate into more energy.

If all the additional daily coal mined in October – about 460,000 tonnes – were used to generate electricity, that could raise China’s daily electricity production by 6.7% to 1.52 billion kWh. , according to calculations by the National Energy Administration (NEA).

The amount of coal that China increased imports in September is expected to reach power producers in the coming weeks. That will boost thermal power production in the country further.

Will the energy crisis subside soon?

It is difficult to determine exactly how much China’s ability to increase electricity generation will help alleviate the energy crisis, analysts say.

“I think the severe energy shortage will be resolved in the coming weeks, especially as demand is also growing,” said Lauri Myllyvirta, principal analyst at the Center for Clean Air and Energy Research. However, as long as prices remain at current levels, production will not be profitable, even if tariff flexibility is utilized, so factories will remain operational at least. maybe.”

Thermal coal prices in China nearly tripled from early 2021 to mid-October, reaching historic highs. Although coal prices have plummeted in recent days, following Beijing’s aggressive interventions, prices are still 200% higher than they were in the same period a year ago.

The price of thermal coal in China has increased by 200% in the past year.

Another complicating factor impacting the energy crisis is heating demand expected to increase after temperatures are forecast in northern China to drop below normal for the rest of October. – raised concerns about the ‘ghost’ of a cold spell that lasted all winter.

Temperatures across China dropped below average.

“Electricity demand for the rest of the year is an important parameter to determine how high electricity prices will affect electricity demand. The (Chinese) government is making strong efforts to increase coal supply. but so far has not been able to meet the demand,” said Wood Mackenzie’s Whitworth.

Reference: Refinitiv

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