Global energy crisis could dim climate hopes


Axios 14 October, 2021 - 04:30am

Why are there energy shortages?

Most energy crises have been caused by localized shortages, wars and market manipulation. Some have argued that government actions like tax hikes, nationalisation of energy companies, and regulation of the energy sector, shift supply and demand of energy away from its economic equilibrium. wikipedia.orgEnergy crisis - Wikipedia

China announced on Wednesday a national rush to mine and burn more coal, as the country’s electricity shortage threatens to damage its image as a reliable manufacturing base.

BEIJING — A bread company can’t get all the power it needs for its bakeries. A chemicals supplier for some of the world’s biggest paint producers announced production cuts. A port city changed electricity rationing rules for manufacturers four times in a single day.

China’s electricity shortage is rippling across factories and industries, testing the nation’s status as the world’s capital for reliable manufacturing. The shortage prompted the authorities to announce on Wednesday a national rush to mine and burn more coal, despite their previous pledges to curb emissions that cause climate change.

Mines that were closed without authorization have been ordered to reopen. Coal mines and coal-fired power plants that were shut for repairs are also to be reopened. Tax incentives are being drafted for coal-fired power plants. Regulators have ordered Chinese banks to provide plenty of loans to the coal sector. Local governments have been warned to be more cautious about limits on energy use that had been imposed partly in response to climate change concerns.

“We will make every effort to increase coal production and supply,” Zhao Chenxin, the secretary general of the National Development and Reform Commission, China’s top economic planning agency, said at a news briefing on Wednesday in Beijing.

Depending on how much coal can be mined and burned soon, China’s electricity shortage could call into question whether Beijing can deliver in the coming months the strong economic growth that China’s people have come to expect.

The electricity crunch has also laid bare one of China’s strategic weaknesses: It is a voracious, and increasingly hungry, energy hog. China has also emerged as the world’s largest emitter of greenhouse gases by a wide margin, thanks mainly to its already heavy dependence on coal.

The world’s No. 2 economy relies on energy-intensive industries like steel, cement and chemicals to power growth. While many of its newer factories are more efficient than their counterparts in the United States, years of government price controls for electricity lulled other industries and most homeowners into putting off improvements.

As the winter heating season arrives, which will require China to dig up and burn still more coal, Beijing must confront whether to allow factories to continue running full-tilt producing industrial materials for global supply chains.

“They have to sacrifice something to make sure households will have heat and power,” said Chen Long, a co-founder and partner of Plenum, a Beijing economics and politics research firm. “They have to cut energy-intensive industries.”

Power rationing appears to have eased somewhat since late last month, when widespread blackouts and power cuts caught factories by surprise. But the winter heating season officially begins on Friday in the country’s northeast and continues into north-central China next month.

China faces tough choices. It burns more coal than the rest of the world combined and is the No. 2 consumer of oil after the United States.

China has been rapidly expanding its use of natural gas as well as solar panels, wind turbines and hydroelectric dams. Yet China still does not have enough energy to meet demand. Even shifting to green energy could take significant power — the country’s tight electricity supplies have raised its costs for making solar panels.

Sustained tight supplies could force China to remake its economy, much as the high oil prices of the 1970s forced North American and European nations to change. Those countries developed more efficient cars, embraced other fuels, found plentiful new supplies and shifted manufacturing overseas, much of it to China. But the process was long, painful and costly.

For now, China is revving up coal consumption less than a month before world leaders gather in Glasgow, Scotland, to discuss confronting climate change.

Board members of the European Union Chamber of Commerce in China said on Wednesday that electricity shortages had worsened this week in some cities, and eased in others. They predicted electricity problems would last until March.

Until enough power comes online, China’s factories risk unexpected and destabilizing stoppages. Factories in China consume twice as much electricity as the rest of the country’s economy. China’s factories tend to require 10 to 30 percent more energy than counterparts in the West, said Ma Jun, the director of the Institute of Public and Environmental Affairs, a Beijing research and advocacy group.

China has made more gains in energy efficiency in the past two decades than any other country, said Brian Motherway, the head of energy efficiency at the International Energy Agency in Paris. But because China started the century with an inefficient industrial sector, it still has not caught up with the West, he said.

Mr. Zhao said that even with Wednesday’s push for more coal production, China would continue efforts to become more energy-efficient. He pointed out that the United States has also been burning more coal this year as the American economy has begun to rebound from the pandemic.

The impact of the power shortages has been mixed. Car assembly plants in northeastern China had been given permission to keep running, but tire factories nearly stopped running. Wuxi Honghui New Materials Technology, which makes chemicals for the world’s paint manufacturers, disclosed that electricity cuts had hurt production.

Others disclosing difficulties include Toly Bread, with its national chain of bakeries, and Fujian Haiyuan Composites Technology, a manufacturer of battery cases for China’s fast-growing electric car industry.

Fred Jacobs, a 57-year-old software marketer in Seattle, ordered two high-performance, solid-state drives in late summer from China, only to be offered a refund a week ago because a lack of electricity would cause factory delays.

“I was flabbergasted, because I’ve heard about shipping issues with China but not power issues or infrastructure issues with Chinese suppliers,” he said. “Now the risk is much higher, and I will buy from U.S. vendors even if I have to pay more.”

The power outages have taken a human toll, which could worsen if homes lose power during winter. At least 23 workers were hospitalized in northeast China late last month with carbon monoxide poisoning when the power failed at a large chemicals factory.

The government has been taking steps to improve efficiency, like allowing utilities to raise prices for industrial and commercial users as much as 20 percent so that they can buy more coal.

China practically stopped new coal investments in 2016 as concerns developed about the industry’s sustainability. Anticorruption officials have launched investigations focused on some important coal fields in the Inner Mongolia region, discouraging investment further.

In late summer, many mines were closed for safety reviews. Flooding this autumn in Shanxi Province, China’s biggest hub for coal mining, has forced the closing of at least a tenth of the province’s mines.

With demand rising post-pandemic, prices jumped. Power plants found themselves losing money with every ton of coal they burned, so they ran at around three-fifths capacity.

Chinese officials hope to replace much coal-fired power with solar power. But China’s manufacturing processes for solar panels require enormous amounts of electricity, much of it from coal.

Polysilicon, the main raw material for solar panels, has more than tripled in price recently, with most of the increase in the past couple weeks, said Ocean Yuan, the president of Grape Solar, a solar panel distributor in Eugene, Ore.

In China, the cost to build large solar panel farms has jumped about 25 percent since the start of this year.

“We haven’t seen such a level in years,” said Frank Haugwitz, a Chinese solar panel industry consultant.

China is also looking to improve steel-making efficiency. Its steel mills use more electricity each year than all the country’s homes and account for about a sixth of China’s greenhouse gas emissions.

Chinese steel companies still rely on coal-fired blast furnaces that melt mostly iron ore to make steel. The West has mostly switched to producing steel in efficient electric arc furnaces, which melt a mix of scrap and iron ore. China is trying to improve scrap collection from demolished buildings, but switching to electric arc furnaces will be gradual, said Sebastian Lewis, a Chinese energy and commodities consultant.

For now, China’s worries are focused on the winter. During a severe cold snap last December, some cities ran short of coal and curtailed factory operations, turned off streetlights and elevators and limited heating of offices. The problems appeared even though power plants started the winter with several weeks of coal in stockpiles.

This year, China’s biggest provinces have only nine to 14 days worth in storage, according to CQCoal, a Chinese coal data firm.

“The stocks are low, much lower than they should be,” said Philip Andrews-Speed, a specialist in Chinese energy at the National University of Singapore. “And they’re panicking for winter.”

Li You and Claire Fu contributed research.

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Column-China's energy woes showing up in divergent commodity imports: Russell By Reuters 14 October, 2021 - 11:13am

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Customs data showed exports rose 28.1% to $305.7 billion. That was slightly faster than the 26% increase logged in August, and above economists' forecasts. Imports rose 17.6% to $240 billion, less than the previous month’s 33% increase. 

This year’s trade figures have been distorted by comparison with 2020, when global demand plunged in the first half after governments shut factories and shops to fight the pandemic. Chinese exporters reopened after the ruling Communist Party declared the virus under control in March 2020, while their foreign competitors still were hampered by anti-virus curbs. 

"China’s foreign trade performance is leading the field among the world’s major economies, and China has seen an increase in its international market share," said Li Kuiwen, a spokesman for the customs agency.

"Taking into account the impact of the high base of foreign trade in 2020, the growth rate of imports and exports may fall in the fourth quarter of this year, but the overall upward trend of China’s foreign trade will not change, and rapid growth throughout the year is still expected," Li said. 

Still, economists have forecast that surging global demand for Chinese goods will level off as anti-disease controls ease and entertainment, travel and other service industries reopen. 

"The bigger problem for exports is that foreign demand has been buoyed by large stimulus in developed economies and shifts in consumption patterns due to the pandemic, both of which are likely to unwind over the coming quarters," Julian Evans-Pritchard of Capital Economics said in a commentary. 

He said imports are also likely to weaken as property construction slows and commodity prices retreat after surging in the initial rush of manufacturing as economies loosened pandemic-related restrictions. 

China's global trade surplus rose to $68 billion in September from $52 billion in August. That was the highest level since 2015. 

The politically sensitive trade surplus with the U.S. rose to $42 billion in September from nearly $38 billion in August, the report said. 

Exports to the U.S. jumped 30% to $57.4 billion, while imports from the U.S. rose nearly 17% to $15.4 billion. American retailers are refilling bare store shelves, helping to keep demand strong, economists said. 

More than three years after former U.S. President Trump launched a tariff war against Beijing, his successor Joe Biden’s administration has not said if it will agree to Chinese demands to roll back some of those punitive duties. 

Some rancor between the two biggest economies has eased in recent weeks. But Biden’s top trade official, Katherine Tai, said last week that she planned frank talks with Beijing about complaints over policies that foreign businesses say give their Chinese competitors an unfair advantage. 

Southeast Asia was China's biggest export market in September, reflecting expanding trade ties as countries lower tariffs and dismantle some barriers as part of regional trade agreements. 

The data released Wednesday showed strong growth in exports of vehicles, mobile phones, consumer electronics and auto parts in January-September. 

Imports of metals and semiconductors weakened, partly due to shortages of computer chips that are used in a wide range of products manufactured in China. 

The ruling Communist Party has been moving to curb rising levels of debt and cool a construction boom that has driven a large share of economic activity in recent years. That is slowing demand for construction materials. 

The authorities also are imposing some curbs on use of coal as they strive to meet targets for reducing carbon emissions and clear smoggy skies. But rising prices for oil, coal and other commodities mean a less obvious impact on easing demand in dollar terms. 

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Winter chill keeps China's coal prices high, power crunch stokes inflation

Reuters 14 October, 2021 - 11:13am

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MINNEAPOLIS — Millions of americans have put work on the shelf.

In fact, in August, more people voluntarily quit their jobs than in any other time in the last 21 years.

According to the U.S. Bureau of Labor Statistics, 4.3 million Americans quit their jobs in August — the highest on record since December of 2000 — piling on to a trend in labor since spring.

Last spring, Farrell talked to KARE 11 when quitting became the new working, and when word came down this week that the quit rate skyrocketed, he spoke with us again.

These are things so many of us are thinking about after nearly two years of our lives upended. 

"This is a really healthy development because I think on their deathbed, there are very few people who say, 'I wish I had bought that Mercedes Benz,' but there are a lot of people who say, 'I wish I had spent more time with my friends or family, or pursuing a cause or advocacy I believe in.' Thinking about purpose, thinking about meaning; thinking about what I want out of life isn't a luxury. It's really important to who we are and what we are," Farrell said.

So this reset offsets our labor force.

"It's something of a fundamental shift, or hopefully it's something of a fundamental shift, in the relationship between management and labor," Farrell said.

Farrell sees that shift as a positive for you, the worker. You get to choose how you want to work — if you want to work in the labor force sense. 

Now that isn't everyone; many say they've been looking for the right job for months to no avail. That's real, too. Which is why this subject is so subjective. But the data doesn't lie: Workers are leaving, and that leaves employers with a tough job filling their places.

"If you think about the mantra in the 2000s and 2010s, what was the mantra? You are going to have to do more with less. That's what people were told over and over again. 'Hey, do more with less.' Well, now what people are saying is, 'No, I am not going to do that.'" 

One of the reasons shared quite a bit? Childcare.

The average cost of childcare per month in Minnesota is in the $1,400 to $1,600 range.

Many low-wage workers say what they make, stacked against what they have to pay to make it, doesn't add up.

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