11:56 10.12.2017

Freezing Cities Force China to Ease Anti-Smog Curbs on Coal

Source: Bloomberg
Freezing Cities Force China to Ease Anti-Smog Curbs on Coal

 (Bloomberg) -- China’s efforts to tackle air pollution are getting a reality check, with some regions told to revert to burning coal after shortages of natural gas left people without heating amid freezing winter temperatures.

Officials in China’s frigid northern provinces were ordered to prioritize keeping citizens warm and areas that hadn’t yet converted fully to gas were permitted to burn coal for heating, state media reported last week, citing a statement from the Ministry of Environmental Protection. Beijing, which reportedly stopped using coal for heating and power in March, asked a plant to restart its coal-fired units because of gas shortages, Caixin magazine said on Saturday.

Freezing Cities Force China to Ease Anti-Smog Curbs on Coal

The easing of curbs on coal came after some provinces were reported to have suspended heating to households and ordered factories and businesses to curtail power use because there wasn’t enough natural gas.

Reducing the reliance on coal-powered energy is key to China’s push to reduce smog, which can be particularly bad in the north and northeast, home to the rustbelt and cities like Beijing and Tianjin. President Xi Jinping has made the transition to cleaner power a priority, but implementation hasn’t been smooth.

Switching industrial and residential users to gas pushed demand up 19 percent during the first 10 months of the year, according to data from China’s National Development & Reform Commission.

Freezing Cities Force China to Ease Anti-Smog Curbs on Coal

And this is the second straight year that regulators’ efforts to reform the energy sector have fallen victim to their own success.

A drive in 2016 to limit coal output sent prices soaring and squeezed power companies. This year, the creation of natural gas infrastructure hasn’t kept up with the government’s push to tackle pollution, leading to the heating disruptions, a particular problem for the north, which has -- in parts -- a winter climate similar to the U.S. Midwest.

Last month, more than 1,000 households in the central Shaanxi province saw their heating suspended because of the gas shortage, cnwest.com reported. In the city of Wuhan, the local gas company reportedly said it would stop supplying gas to entertainment venues and asked people to stop cooking with the fuel during peak times of the day. In another town, gas-powered taxis and buses had to line up overnight after supplies were curbed.

Freezing Cities Force China to Ease Anti-Smog Curbs on Coal

Chinese have taken to social media to vent their frustrations, with some claiming their coal-fired heaters were dismantled and that elderly people and children were suffering from the cold. Even state media has spoken out, with the China Daily saying in an editorial last week that local officials were being too hasty in implementing the gas-for-coal drive.

28 Cities

The environment ministry’s circular encouraging the use of coal if needed was sent to 28 cities -- including Beijing -- and was marked urgent, according to the China Daily. Those cities, which have long used coal for heating, were told in August to cut air pollution, but some natural gas projects in the region are yet to be completed, the state-backed newspaper said.

Multiple calls by Bloomberg News to the ministry weren’t answered.

Beijing closed all coal-fired units in its heating and power plants in March, making it the first city in China to be powered by clean energy, according to Caixin. But the municipal government has asked for coal-powered sections of a plant run by China Huaneng Group to be restarted because of the gas shortages, the financial magazine reported on Saturday. Calls and a fax to China Huaneng weren’t answered.

The north often has issues with gas supply shortages, but it became a national issue this year after it got attention on social media, said Tian Miao, an analyst at North Square Blue Oak Ltd. in Beijing.

“There is a mismatch in these areas as the time taken to complete gas infrastructure projects -- including project bidding and planning -- has been much longer than it’s taken to dismantle coal-fired heating sources,” she said.

The NDRC, China’s top economic-planning body, has set up a monitoring system with local governments and gas suppliers to combat shortages of the fuel, particularly in the north, China National Radio reported Sunday.

But industry may get caught up in the scramble to make sure households have enough heating. On Monday, China National Petroleum Corp., the main gas supplier to the north, said it was reducing supplies to petrochemical industries and that other industrial users will also gradually see supply declines as they divert more of the fuel for residential use.

China faces a daily shortfall of 40 million cubic meters of gas, the energy administration of Guizhou province said in a statement Friday. The province, located in the southwest, asked PetroChina Co. to help secure supply after it limited flows to some provinces and cities, according to the statement. Guangdong province has also said it will probably face a gas shortage if the weather gets colder and supply from the north declines further.

While it’s trying to reduce coal use, China remains the world’s biggest consumer and producer of the fuel. The issues with natural-gas infrastructure and supply are likely to keep markets tight for the next two to three winters, according to Goldman Sachs Group Inc.

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