Because China will raise electricity prices
In China, electricity prices may rise up to 20% above base values. The central government is looking for a way to solve the coal shortage and the energy crisis
China will allow the prices of electricity generated by coal-fired plants to fluctuate up to 20 percent above base levels. The Wall Street Journal writes that the country hopes market forces can resolve an energy crisis that could threaten the growth of the world's second largest economy.
THE ENERGY CRISIS IN CHINA
The Chinese energy crisis is mainly due to a shortage of coal – the most widely used fuel for electricity generation – and is causing disruption to industrial activities and rationing of electricity to citizens in most of the country's provinces.
THE PRICES OF COAL
Domestic thermal coal prices are close to record highs: at the beginning of October the main contract on the Zhengzhou Commodity Exchange (one of the most important commodity futures trading venues in China) reached $ 216 per ton.
THE DECISION OF THE AUTHORITIES
In recent days, the State Council, the main administrative authority in China, has authorized the increase in electricity prices up to 20 percent compared to the reference value: the previous maximum threshold was set at 10 percent.
In the statement of the State Council – Bloomberg reports – we read that the costs of electricity for the most energy-intensive industries (ie those that consume large quantities of energy) will be aligned with supply and demand, therefore without a maximum price cap.
It is also specified that power and coal companies will be offered tax deferral, that limits must be placed on the expansion of energy-intensive industries, and that local governments must improve the control of emission levels.
CHARCOAL STIMULI
To ensure an increase in coal production, and thus avoid that power plants run out of fuel, the CBIRC (the Chinese authority that deals with regulating the banking sector) has ordered banks and other national financial institutions to give priority to financing. to mines and energy plants.
Some mining companies are having difficulty accessing finance due to climate policies introduced by President Xi Jinping which aim, among other things, to reduce the share of this fuel in the energy mix (today it is very high: around 70 percent) . China is the country responsible for the largest amount of greenhouse gas emissions in the world, but it is committed to reaching “net zero” by 2060, aligning itself with the global trend towards carbon neutrality.
THE IMPACT ON INDUSTRIAL PRODUCTION
According to financial services firm UBS, a coal shortage could cause a 10-15 percent reduction in industrial energy consumption in November and December, which could translate into a 30 percent slowdown in steel and chemical activities. and cement.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/cina-elettricita-prezzi/ on Wed, 13 Oct 2021 07:55:45 +0000.