Global Supply Chains Threatened By Power Shortage In China
While China has been under pressure to lower its carbon emissions, it has come under fire for building new coal plants. Yet, it is now suffering from a power shortage. And due to this, the entire global supply chain may be at risk.
The power plants they plan to add will help alleviate the issue, but as the manufacturing capital of the world, China simply needs more power than any other country.
The shortage has initiated energy rationing which has cut power in some areas.
In some cases, factories have had to cut production, which will have an impact on global trading.
What Is Power Rationing?
Power or energy rationing is when restrictions are put in place on the amount of energy that industries and residents can use.
Priority is given to critical businesses in certain areas. For instance, a hospital will have a higher priority than a restaurant. Yet, when it comes to the rationing that is happening in China, it is becoming one of the most extreme cases in history.
Why Is There a Power Shortage in China?
China, as well as much of the rest of the world, is experiencing record-high costs for fuel.
Yet, what separates China is that they heavily rely on coal. In fact, in 2020, coal made up 56.8% of the country’s energy generation. And the cost of coal is rising exponentially as the supply is beginning to stagnate.
Or to say it another way, coal is being retired.
Despite this, coal will be necessary for China and India, for the next decade. However, the incentive to build new infrastructure to increase the supply of coal is extremely low.
After all, the world is trying to move away from it.
Combine this with a massive increase in the demand for energy and you have a real disaster. The reason the demand has increased is that the world is getting back to normal.
Demand for everyday products is increasing, and China needs to keep up.
Ambitious Climate Goals
In an ironic turn of events, the climate goals of China, which have been heavily scrutinized for being too slow or not enough, are far too ambitious for the nation to handle. And the government is starting to enforce these rules.
Simply put, while on paper, China is the second richest country and the manufacturing capital of the world, it is still a developing nation. While many might disagree with that statement, and for good reason, it doesn’t change the fact that China is still building its power grid.
If China begins to enforce a new climate policy, it will be felt around the world. And this power shortage is proof of that.
That said, it is a necessary change, the real question is can it be mitigated? And if so, is it feasible to do it?
What Other Options Are Available?
The most obvious option is to expand the renewable energy sector in China, though, that’s already being done. In fact, China is leading the rest of the world when it comes to renewables.
And not in a small way, either.
To put this into perspective, China generates 895 GW of electricity from renewables. The US, in second place, generates 292 GW.
That’s nearly three times as much! While this number can certainly expand, it’s hard to penalize the country for not doing more as far as renewables are concerned.
So what else can be done?
Well, the next idea would be to hold industries to a higher standard. By improving the equipment they use to consume less energy, it could have a huge impact. It could also raise the cost of doing business.
And that could end up driving businesses out of China.
The energy transition for China is not going to be easy, and the power shortage is just the beginning.
Robert has been following and writing about environmental stories for years at GreenGeeks. He believes that highlighting environmentally friendly practices can help promote change in every household.
