Reactivating coal heating units 'temporary'
Experts said this weekend that China's shift toward clean energy, notably natural gas, remains on course even as the city of Beijing had to reactivate some of its coal-fired generation capacity to address an acute shortage of natural gas this winter.
According to media reports, the National Development and Reform Commission (NDRC), the top economic planner, told the Beijing municipal government on December 7 to reactivate coal-fired power generation units owned by China Huaneng Group in eastern Beijing.
The facilities that were reactivated were among the last coal-fired plants closed this March amid a plan covering 2013 to 2017 in the Chinese capital to reduce coal use in favor of clean energy sources.
That plan saw the closing of four key coal-based plants.
The NDRC move is to relieve pressure on a supply shortage of natural gas that has hit North China this winter and supply had been suspended at some industrial plants and gas stations in northern China.
State-owned oil giant China National Petroleum Corp said in a statement on its website on Saturday that the company has, per the instructions of the NDRC, activated its emergency plan to ensure civilian natural gas supply for winter heating by reducing supplies to some industrial clients.
China National Offshore Oil Corp has purchased millions of tons of LNG to meet increasing demand, domestic media reported on Sunday.
Amid this shortage, the price of liquefied natural gas (LNG), the cleanest fossil fuel, soared from a low of about 4,000 yuan ($604.35) per ton in mid-November to 7,600 yuan on December 1, the highest since 2014, according to a report by the China Energy News on the same day.
However, the temporary return to coal will not affect China's energy shift toward natural gas and other clean energy sources, and it will likely speed up the process, experts said.
Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said the prompt remedy does not mean there is any backpedaling in China's shift toward clean energy and away from coal to reduce pollution and emissions. Lin said that natural gas will drive the country's energy sector.
"Natural gas will continue to be the main driver for China's climate agenda, as its proportion in China's energy mix is much larger than that of renewable energy such as wind and solar, or that of nuclear energy," Lin said.
"The dominant role of natural gas in the country's energy transition is further ensured by natural gas' moderate price and global supply glut, which is expected to last till 2020," Lin noted.
In 2016, China was the third-largest natural gas user and sixth-largest producer of natural gas, according to data provided by global oil giant BP in November.
"The current move should be seen as a very short-term measure, and the government can fix this issue in a matter of months," Lin said.
He noted that while the domestic natural gas price has surged, global prices have not changed much.
Han Xiaoping, chief analyst at energy website china5e.com, told the Global Times on Sunday that the event could actually put the transition to natural gas on a faster track, as it showcased the importance of further reforms in the oil and gas sector, now largely a monopoly of State-owned enterprises.
"When more entrants are allowed into the market through reforms, the investment in infrastructure, in particular on natural gas storage facilities, will increase greatly and China's shift toward more natural gas use will become swifter," Han said.
Han noted that upstream exploration, pipeline construction and storage facilities are three key steps in addressing natural gas supply bottlenecks.
The gas supply shortage this year was mainly caused by Chinese energy companies' lack of preparations, experts said.
The Chinese government has set targets to increase the share of natural gas in the primary energy mix from 5.9 percent in 2015 to 10 percent by 2020 and 15 percent by 2030. To achieve the nation's stated climate goals through consistent pollution-fighting campaigns, the two experts estimated that natural gas would need to grow about 15 percent annually.
However, growth last year was just 6.6 percent, which convinced some market participants to believe that a glut existed and led them to become complacent about capacity building.
