Coal news and updates

China’s power crisis – prompted by emission targets, spiralling coal prices – infuriates global firms, pushes up manufacturing costs

Heavy-handed measures by local governments to meet Beijing’s energy consumption and carbon emission targets for fulfilling its climate commitments have drawn the ire of international manufacturers and caused costs to spike in many industries.

At least 20 of China’s 31 provincial-level jurisdictions are rationing electricity to play catch-up, after they were unable to meet Beijing’s annual dual targets earlier in the year. Nine provinces have been criticised by the central government for their failure.

Prices of coal, which have risen around 40 per cent in the last month, from around 780 yuan (US$121) a tonne in mid-August to around 1,100 yuan a tonne in recent weeks, have adversely impacted power producers, who are constrained from raising electricity tariffs.

“Recent uncoordinated actions by local authorities are jeopardising our member companies’ ability to operate with full compliance on environment and safety in China, [and] risk reducing China’s attractiveness for further investments and hurting China economy,” the Association of International Chemical Manufacturers, which counts nearly 70 members, said in a statement on its website.

“Without providing any legal basis, local authorities are approaching member companies, firmly ‘requesting’ the firms to reduce energy consumption immediately regardless of the associated losses,” the statement added, noting that they lack logic and appear arbitrary.

Germany-based BASF, one of the largest foreign chemical makers in China, said its plants in Jiangsu province have been notified by local authorities to reduce energy consumption this month.

A spokesperson declined to elaborate on the impact on its operations but said it was “actively preparing for relevant measures to ensure safe operation and stable product supply”.