China Briefing, 30 September 2021: Widespread power cuts; New orders on ‘dual control’; Emissions peak likely ‘before 2028’

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Snapshot

Blackouts and electricity rationing have struck around 20 provinces across China over the past month. Unlike previous ones, this round of power cuts has not only affected factories, but also hospitals, schools and people’s homes, according to local media. Analyses attributed the outages to a mix of factors, including power-generation shortfalls and a rush to hit energy-control targets. 

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Meanwhile, as the widespread power curtailments unfolded, the state macroeconomics planner this month issued new instructions to “improve” the country’s energy-control policy, known as “dual control”. The move aimed to prevent electricity rationing and production suspension as a result of curbing emissions.

Separately, China could peak its carbon dioxide (CO2) emissions “before 2028” or “even earlier”, Prof Zou Ji, chief executive and president of Energy Foundation China, told China Urban Energy Weekly. It came as the International Energy Agency (IEA) said in a new report that China is on track to peak its emissions by the mid-2020s.

Key developments

‘Unprecedented’ power cuts hit China

WHAT: A large part of China has experienced severe blackouts or power rationing over the past month, which has seen factories grinding to a halt, cities halting light shows and shops relying on candlelights, according to various reports (here, here and here). Three provinces in north-eastern China were hit particularly hard. Residents of Liaoning, Jilin and Heilongjiang reportedly saw their household electricity cut off suddenly without notice for days from last Thursday. Global Times, a state-run tabloid, described the blackouts as “unexpected and unprecedented”. Authorities of the three provinces – home to nearly 100 million people combined – have pledged to prioritise residents’ livelihood and minimise disruptions to homes, reported state broadcaster CCTV.

WHERE: According to Jiemian News, the “wave of power curtailments” has impacted 20 provincial-level regions in China since the end of August. However, the news website noted that only the north-east had seen household electricity being cut off. Elsewhere, restrictions had largely impacted industries deemed to have high energy consumption and emissions, the outlet said.

HOW: The causes vary from region to region, according to analyses from Chinese media outlets, including Caijing, Caixin, the Paper and Jiemian. Caijing reported that in provinces such as Jiangsu, Yunnan and Zhejiang, power rationing was driven by the over-implementation of “dual-control” policy, which saw the local governments ordering factories to cut back operation in order for them to meet their “dual” targets on total energy consumption and energy intensity (the energy use per unit of GDP). In provinces such as Guangdong, Hunan and Anhui, factories were forced to operate in off-peak hours due to power shortages, Caijing said. A report from Caixin noted that the blackouts in the north-east were caused by the compound effects of high coal prices and a lack of thermal coal, plus a “sharp decrease” in wind power generation. It cited an employee of the State Grid.

WHO: Dr Shi Xunpeng, a principal research fellow at the Australia-China Relations Institute, University of Technology Sydney, told Carbon Brief there were two “key reasons” behind the power rationing. He said the first cause was power-generation shortfalls. “The regulated power prices are below the true market price and, in that case, there [is] more demand than supply.” He explained that state-controlled power prices were low while thermal coal prices were high, so power generators were forced to slash their production to reduce financial losses. “The second factor…is local governments’ rush to meet their energy intensity and energy consumption targets set by the central governments. In this case, they enforce power rationing even when there is not a shortage,” Dr Shi added. Hongqiao Liu, Carbon Brief’s China specialist, also analysed the causes of the power rationing in this Twitter thread.

WHY IT MATTERS: This round of power rationing occurred in autumn – after a previous wave of rationing had occurred during summer peak months and before the demand for electricity would further rise in winter. China’s state macroeconomic planner said yesterday that the country would use “multiple measures” to “ensure stable energy supply this winter and next spring and guarantee residents’ energy-using safety”. Moreover, the power rationing has caused a blow to China’s manufacturing sector. Goldman Sachs estimated that 44% of China’s industrial activity had been affected by the outages, reported BBC News. State news agency Xinhua reported that, as a result, more than 20 listed companies had issued notices of production suspension. CNN noted that the power crunch could “place even more strain on global supply chains”. Dr Shi told Carbon Brief: “China’s power rationing manifests the challenge of managing energy transition in developing countries. The outcome will have a significant impact on the global commodity market and even the global economy.”

New directives to ‘improve dual control’

WHAT: As the “power crisis” – as some media outlets have described it – unravelled in China, the state macroeconomic planner had already been drafting a new scheme to prevent the country’s emissions-reduction efforts from causing disruption to its electricity supply and economy. On 16 September, the National Development and Reform Commission (NDRC) released the scheme to “improve” the “dual-control policy”. The policy – which sets targets on total energy consumption and energy intensity – was introduced by the central government to curb the country’s emissions.

WHAT ELSE: The scheme – which was sent to all provincial, regional and municipal governments – confirms the importance of “dual control”, according to 21st Century Business Herald. However, the scheme also points out a lack of “flexibility” in the total energy consumption target and the need for “differential measures” in implementing the overall policy, the outlet said. It added that the release of the scheme was particularly timely because “some provinces faced arduous dual-control pressure and were forced to resort to measures, such as rationing electricity and restricting production”.

HOW: The scheme stresses the importance of controlling “dual-high” projects – those with high energy consumption and high emissions. But it also puts forward some methods to add “flexibility” for the “dual-control” targets. It says that the central government will have the right to manage the energy consumption of “key national projects”. It also allows regional governments to be exempt from “dual-control” assessments if they hit a more strict energy intensity target, which signifies that curbing energy intensity is the priority. Most importantly, the scheme establishes “five principles” in pushing forward the “dual-control policy”, according to an editorial from financial outlet Yicai. The principles include “combining universal requirements and differentiated management” and “combining government regulation and market orientation”, to name just two.

WHY IT MATTERS: Prof Lin Boqiang, dean of China Institute for Energy Policy Studies at Xiamen University, told 21st Century Business Herald that the scheme aimed to better balance economic growth and energy-use reduction. Chai Qimin, director for strategy and planning at National Center for Climate Change Strategy and International Cooperation, a state-affiliated institute, told the outlet that it could ensure the development of some energy-intensive industries that carried “national strategic significance”. Dr Xie Chunping, policy fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, told Carbon Brief that the most significant directive in the scheme pointed to renewable energy. (Hongqiao Liu, Carbon Brief’s China specialist, explained the directive related to renewable energy in this Twitter thread.) Dr Xie said: “Under China’s strict implementation of ‘dual controls’, this instruction could effectively promote the consumption of green electricity.”

Other news

PEAKING TIME: Prof Zou Ji from Energy Foundation China projected that “China will peak carbon emissions before 2028, or even earlier”. He made the comments in an “exclusive interview” with China Urban Energy Weekly. Prof Zou told the outlet that China is entering a “quasi-peaking” emission plateau period, according to his team’s research. It is estimated that seven provinces and municipalities – whose combined emissions account for 20% of the national total – still see their emissions rising, Prof Zou said. He added that 23 provinces and municipalities have either “largely accomplished” or “come close to” peaking emissions.  Last year, Xi pledged that China would peak emissions “before 2030”. 

MID-2020S: Meanwhile, a new report from the IEA found that China’s existing policies put its CO2 emissions on track to peak by the mid-2020s, Argus Media reported. “China has the means and capabilities to accomplish an even faster clean energy transition that would result in greater social and economic benefits for the Chinese people and also increase the world’s chances of limiting the rise in global temperatures to 1.5C,” said Fatih Birol, the IEA’s executive director.

EMISSION FRAUD: A company in northern China’s Inner Mongolia became the first firm in the country to be caught with emission data fraud, Caijing reported. With estimated annual CO2 emissions of 10m tonnes, Ordos High-tech Material Ltd had forged multiple reports by changing the dates in an authentic emission report to avoid higher emission charges, the report said, citing “multiple industry insiders”. It added that the firm had tried to reduce the gap between its allocated emission permits and its actual emissions in 2019 by around 2m tonnes – a move that could save about 100m yuan (US$15m).

MORE ON FRAUD: Sources also told Caijing that there were likely to be other Chinese enterprises that were “falsifying or tampering with” their emission data reports. “More worryingly, the boundaries of the monitoring and supervision of carbon emissions are blurry and data deviations are prevalent,” the outlet wrote. Pan Jiahua, a member of China’s National Expert Committee on Climate Change, told Caijing that carbon emission data are hard to monitor, but an “open and transparent” system could help reduce the room for fabrication. 

CRYPTO CRACKDOWN: Ten Chinese authorities have ordered a joint clampdown on crypto mining. An official notice said the move was to “effectively prevent” the risks brought by the “blind and disorderly development” of crypto mining activities. In addition, the notice said that the crackdown aimed to enhance pollution and emission reduction, as well as propel the country’s efforts to reach its climate goals. Among other orders, the authorities pledged to ban new crypto-mining projects and accelerate the phaseout of existing ones. 

OVERSEAS COAL: President Xi’s recent pledge that China “will not build new coal-fired power projects abroad” potentially impacts 43 out of 319 new coal plants outside of China, according to a fact sheet by the Center for Global Sustainability at the School of Public Policy of University of Maryland. The authors assessed all new coal plants currently under development – both under construction and in the pre-construction phase – that involved direct investment and participation from Chinese companies. They found that the move could avoid 4.35 gigatonnes (Gt) of CO2 cumulative emissions over a 30-year lifetime.

MORE ON COAL: The above fact sheet identified the 43 projects based on a “more conservative interpretation” of the word “build”, without focusing on those that rely on Chinese “financing” only, the authors told Carbon Brief. They said that two elements in Xi’s announcement would need to be clarified: “Does ‘build’ include both direct investment and financing? Which project development stages does ‘new’ refer to, pre-construction only or both?” Last week’s China Briefing focused on Xi’s pledge at the UN General Assembly. 

OIL: New research has evaluated the responses of China’s three major natural oil companies to the country’s decarbonisation agenda. The report is penned by Dr Erica Downs, senior research scholar at the SIPA Center on Global Energy Policy of Columbia University. It found that the three firms must prioritise oil and natural gas supplies while still demonstrating their plan to help the nation fulfil its climate pledges. It also found that Beijing’s climate targets had further driven the firms’ domestic production mixes to shift from oil to natural gas.

NUCLEAR: Chinese scientists have started on the engineering design of future nuclear fusion power stations, according to Song Yuntao, director-general of the Institute of Plasma Physics at Chinese Academy of Sciences. Song told Beijing News that his institute hoped to finish building a “small exemplary project” within 10 years if they could get Beijing’s backing. He said fusion energy would make a “significant contribution” to carbon neutrality. Song and his team have been conducting experiments with a device nicknamed the “artificial sun” in their quest to develop a fusion reactor. The South China Morning Post also had the story.

Extra reading

New science

Observed changes of rain-season precipitation in China from 1960 to 2018
Environmental Research and Public Health

The total amount of precipitation that China receives during its principal rainy season (May to September) each year decreased between 1960 and 2018, according to a new study, despite increases in heavy rainfall. The researchers found that heavy (25-50 mm/day) and very heavy (greater than 50 mm/day) precipitation during the rainy season showed increasing trends, while moderate (10-25 mm/day) and light (0.1-10 mm/day) precipitation displayed decreasing trends. Changes in rain-season precipitation also showed clear regional differences, the researchers found, with north-west China and the Tibetan Plateau showing the largest increases, and negative trends for the north China Plain, north-east China and north central China. The authors noted: “The advance in [the] understanding of precipitation change in China will contribute to exactly predict[ing] the regional climate change under the background of global climate change.”

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