Gas-supply shortages are hitting north and central China as Beijing tries to accelerate a shift away from coal rather than miss environmental targets this year.
“It’s definitely tight right now,” said Zhou Xizhou, managing director for Asia gas and power at IHS Markit.
The strong demand for liquefied natural gas as users switch away from coal has pushed up prices by more than 40 per cent as of late November compared with the year before.
The state planning agency, the National Development and Reform Commission, has warned local gas companies to “standardise price behaviour”, according to state media.
Even hospitals are affected. One hospital near Baoding, about 150km from Beijing, this weekend circulated an appeal online on behalf of its 3,000 patients, including 200 newborns and children: “If you cut our gas supply, there’s no way to conduct normal check-ups and even some surgeries can’t go ahead,” it said.
On Monday the hospital said it had reached an agreement with Xinao Gas, the local supplier, to maintain normal volumes.
A plan to address choking and politically unpopular air pollution in northern China involves moving heavy industry away from wealthy and populous cities into the poorer hinterland.
Other measures involve switching small businesses off coal-fired boilers and on to the power grid, and converting residential neighbourhoods to gas heat.
Mr Zhou said the government had dealt with the “low hanging fruit” of managing large pollution sources such as power plants, but was having a more difficult time addressing diffuse coal use by smaller businesses and residential neighbourhoods. “This winter will be interesting for how severe the impact [of the coal control measures] will be. It will set the course for how they deal with it in the future.”
Beijing has banned the burning of low-quality coal briquettes for residential heating, even as it tears down migrant neighbourhoods in a campaign designed to cap the city’s population.
Heating and other residential uses account for about half of the coal used in Beijing and surrounding regions in the winter, when air pollution normally spikes.
Villages in the mountains outside Beijing have been supplied with cleaner-burning coal briquettes but in sprawling urban neighbourhoods, many residents have had to switch to electric space heaters. Some poorer migrants crammed into slums in the outskirts of the city are living with no heat at all.
“It’s cold! BRRR!” a migrant cleaning woman surnamed Chen texted from an unheated farmhouse near the Beijing airport, as night-time temperatures plunged well below zero last week. Her landlord began forbidding coal stove-heaters early this year, in line with the new regulations.
Expectations of rising Chinese gas demand are driving greenfield natural gas projects in Siberia and boosting hopes of LNG sales from the US, although prices of gas in east Asia are still too low to make US LNG cost-competitive. China imports about one-third the gas it uses, either through pipes from central Asia and Myanmar or in the form of LNG.
But in the short term, the shortages derive from Beijing’s ambitious attempt to redesign the energy-use patterns of much of the northern half of the country.
This year is not the first time that Beijing’s targets for improving environmental quality have bumped up against unexpectedly strong growth. In 2010, homes and hospitals in Quanjiao County, a car parts manufacturing hub along the Yangtze River, were plunged into darkness after a panicky local government shut down the county-wide electricity supply rather than miss targets for improving energy efficiency.