China looks to Russian coal to help ease its power shortage crisis

·3-min read

China’s attempts to address its power shortage have received a boost through efforts to increase imports of coal and electricity from Russia, according to state media and government agencies.

The country’s overall coal purchases in September rose 17 per cent month on month to 32.9 million tonnes, the highest this year, according to the customs authority on Wednesday, as the government moved to ensure stable energy supply before the peak winter demand.

An energy crunch brought about by shortages and record high prices for fuel has prompted the government to take various measures to boost coal production and control electricity demand. Some provinces have introduced electricity-rationing measures.

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Vladimir Oschepkov, the Russian consul general in the Chinese city of Harbin – in Heilongjiang province, near the border with Russia – was on October 1 quoted by Russian news agency TASS as saying that import of Russian coal to Heilongjiang had fallen by 40 per cent since the start of the year because of tightened pandemic measures and a shortage of railway wagons.

But steps have since been taken to revive those imports, according to reports. State-run Xinhua on Wednesday said the Suifenhe railway port in Heilongjiang had improved logistical arrangements to facilitate coal delivery. More than 5,000 tonnes of coal a day were delivered via the port during the week of October 1 to 7, it said.

China’s state grid last week said electricity supplies from Russia to China through the Amurskaya-Heihe transmission line had increased from five to 16 hours a day, which “largely alleviates the tense situation with the power supply”.

More than 50,000 tonnes of coal were also delivered to Zhejiang province, in China’s east, on Sunday.

Artyom Lukin, an associate professor at Far Eastern Federal University in Vladivostok, said the energy crunch in China and Europe showed that the transition away from fossil fuels to greener energy was going to be more difficult and protracted than many expected.

“In the foreseeable future, there are just no realistic alternatives to coal and natural gas as the main sources of power generation and heating,” he said. “This is certainly good for Russia, the world’s largest exporter of hydrocarbons.

“The shortages in power supplies in China should reinforce the energy alliance between Moscow and Beijing, if only because Russia is the nearest external source of coal, gas and oil for China. As one consequence, Beijing may give the final go-ahead to the Power of Siberia 2 gas pipeline project, which would bring Russian gas from western Siberia into China via Mongolia.”

There are various reasons behind China’s power shortage. One is that the price of its coal is not regulated and recently hit a record high, while its electricity price is regulated, making power companies less willing to produce power because it is less profitable.

Everything you should know about China’s power crisis

Foreign businesses have expressed concern about shortages. Representatives of the European Union Chamber of Commerce said in a video conference on Wednesday that firms sometimes get just an hour’s notice to reschedule shifts at plants with 1,000 staff.

“We need far better communication from the government to help our companies to cope,” said Joerg Wuttke, the organisation’s head. “We don’t ask for privileges. We just ask for clarity.”

The chamber asked the authorities to revise how they decide which companies must cut or cease production, calling for a “scientific, transparent approach” and better communication of decisions.

Additional reporting by Bloomberg

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