China’s drive for cleaner energy is causing a gas shortage for winter

China’s drive for cleaner energy is causing a gas shortage for winter

Ryan Pyle | Corbis | Getty Images

Farmers watch their sheep graze on a farm near a coal power plant in Baotou, Inner Mongolia, China.

China’s push to clean up its environment may have had an unintended consequence: a shortage of heating fuel supply is hitting some regions in the dead of winter, sending prices of domestic liquefied natural gas (LNG) to a three-year high.

To combat air pollution, Beijing this year implemented stringent measures restricting the use of coal for residential and industrial heating, sending demand to the cleaner alternative — natural gas.

However, even with a supply glut of natural gas globally due to mega-projects coming online, infrastructure constraints — such as slow pipeline construction — within the country limit gas use.

“Our supply-demand balance analysis shows that shortages on a large scale could be avoided if all supply sources and infrastructure are running perfectly, however, daily shortage will almost certainly happen if there are cold snaps,” Wen Wang, Wood Mackenzie’s China gas and LNG senior consultant, wrote in a recent note.

While the China National Petroleum Corporation — a massive state-run energy company — can guarantee gas in key areas by diverting the supply from domestic gas-production regions, it also needs to “balance regional interest,” added Wang.

The supply shortage is particularly acute in northern provinces relying on central heating supplied by the government, Chinese media report, and that’s sparking resentment among residents.

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