What's Behind China Power Outage & What Does Climate Change Have to Do With It?

The high costs and reduced supply of coal along with China's climate goals have adversely impacted Chinese lives.

Power shortages that have hit northeast China in the provinces of Liaoning, Jilin and Heilongjiang have left people scrambling for electricity in the last couple of weeks. Various factories were also asked to suspend production activities, The Guardian reported.

Some Chinese people took to social media to complain about dark streets since streetlights and traffic lights had stopped working, while others used candles to light their shops and homes.

While residents have only recently started to experience the effects of the power crunch, Chinese industries, for instance in Inner Mongolia, have been struggling with intermittent changes in power costs and usage restrictions since March 2021.

The three provinces of northeast China have a population of almost 100 million, and the power shortage is expected to last until spring 2022. One power company, in a now deleted post on social media, said that unexpected power cuts were to become the "new normal", reported BBC.

What is Behind the Power Crunch?

There are numerous inter-related reasons that have caused China's power crunch problem.

The Gap in Supply & Demand of Coal

China is heavily dependent on coal burning for power production, with more than 70 percent of its electricity generation being reliant on coal, according to a Bloomberg report.

The problem is that because China is re-opening after spending months in lockdown, the demand for electricity has risen, which means the demand for coal has risen. Higher demands have led to a surge in coal prices.

But the Chinese government keeps electricity prices low, especially in residential areas, according to New York Times. Because electricity demand has risen but the prices haven't, power plants are operating below full capacity and unwilling to lose money by increasing electricity generation, according to Lin Boqiang, dean of Xiamen University, who is also the dean of the China Institute for Energy Policy Studies.

Meeting the Climate Change Target

Then there is the climate change factor. President Xi Jinping has set a target of China being completely carbon-neutral by the year 2060.

He wants to transform the Chinese economy from one that is dependent on fossil fuels like coal to one that uses renewable energy and green technology to limit carbon emissions.

This ambitious target has led to stricter emission standards that the Chinese are strictly following. China promised to slash energy intensity by three percent in 2021 in order to live up to its environmental vows.

Xi's promises regarding carbon intensity targets have not strayed far from the emission guidelines, especially due to enforcement at the provincial level, reported The Guardian.

In the first few months of 2021, only a third of the Chinese provinces reported that they had achieved their goals of cutting energy intensity.

Consequently, in the past few weeks, provincial authorities have started enforcing the rules more strictly, that led to an increase in the demand and supply gap for power.

For instance, in Liaoning, power generation had reduced dramatically since July, which has led to local governments asking residents to compromise on their power consumption.

In summary, while in some cases, Chinese people are confronted with electricity shortage due to the high demand, low supply, and high prices, in other situations, local authorities are themselves causing power cuts so that they don't missing emission reduction targets.

Possible Solutions & Their Shortcomings

There could have been three ways to tackle this kind of a crisis, but in China's case none seem to show any potential in working out in the long run – digging out more coal, importing coal, or relying on non-coal sources of energy.

Digging more coal mines is not as simple as it sounds because any new mines have to meet strict environmental guidelines, safety rules (especially after a deadly accident in Shanxi a few months ago), and the new rules regarding China's mission to reduce the share of coal in energy production, Bloomberg reported.

Coal imports could have been a solution since China has been a major importer. But it recently imposed an export ban on coal from Australia due to trade tensions. While it increased its coal purchases from Indonesia, the demand for coal within China has also risen sharply.

Therefore, unless other countries increase exports to China, like Mongolia, this solution is not viable either.

Completely relying on alternate, renewable sources for electricity generation is also risky. For instance, hydropower production in China depends on the rain. A delayed start to the monsoon decreased hydropower generation in southern China that forced authorities to begin power rationing, the Bloomberg report added.

Other sources of renewable energy like wind, solar and nuclear energy have only recently started growing.

How Have Factories and Residents Been Affected? 

Beijing is in damage control mode to combat the power crisis that has, while hitting northeast China the hardest, impacted the entire country.

Impact on Factories

Factories in provinces like Zhejiang, Jiangsu, Yunnan, and Guangdong, were asked to reduce their power usage and production, Reuters reported.

Notices have been sent to factories producing aluminium and steel to either halt production during those periods of the day that consume power the most or just completely shut operations for half of the week.

Fifteen listed firms that produce the above-mentioned materials recently reported that their output has been negatively affected by the restrictions on power usage, Reuters added.

Impact on Residents

Residents have also started to bear the brunt of power crisis.

In Huludao, a city in southwestern Liaoning, residents were asked by city authorities to limit the use of electronic devices like water boilers and microwaves because they consume too much energy, according to The Guardian.

In Harbin, the capital of Heilongjiang province, malls and other venues are shutting early.

The State Grid Corporation of China said in a statement on 27 September that it would take comprehensive steps to combat the power crisis.

The electric utility corporation, that is also largest one in the world, promised to "go all out to fight the battle of guaranteeing power supply", and to ensure that the Chinese people had adequate electricity and that they don't have to confront power cuts.

Global Impact of China's Power Crisis

Global supply chains are expected to be affected. China has been the largest exporter of goods for more than a decade. If such a country is going to restrict production due to the above-mentioned reasons, global supply is bound to experience a shock.

Analysts are foreseeing a shortage of exported goods such as smartphones, toys, textiles and machine parts, which has also made them reconsider their forecast for China's 2021 economic growth, The Guardian reported.

Balancing Climate Goals and People's Welfare 

Perhaps the biggest question that has emerged out of China's power crisis is how committed should a nation be towards its climate goals if their achievement is at the cost of the welfare of that nation's people?

China has maintained that it is still a developing country that should not be asked to sacrifice on its energy production to combat climate change.

Until China acquires the ability to completely shift to renewable energy production, the restrictions that the Communist Party imposed on Chinese provinces in terms of energy intensity and emission reductions will inevitably impact Chinese people and industry negatively.

These restrictions, in order to help the world combat change, are further deteriorating China's power crunch.

This crisis is not showing any signs of abating. It will be interesting to see whether Xi Jinping modifies his policies to limit the damage caused by the crisis, and whether these modifications deviate from what he has promised the world regarding China's role in the global battle against climate change.