Page 11 - AsiaElec Week 48 2021

AsiaElec EMISSIONS AsiaElec

Chinese emissions fall

0.5% in third quarter

CHINA CHINA’S CO2 emissions fell by around 0.5% in ongoing coal crunch. Sky-high coal prices affect
the third quarter of 2021 compared to a year ear- industrial users directly, as they purchase coal on
lier, new analysis for Carbon Brief showed. the market, while industrial electricity demand
The year-on-year decline in emissions from has also been affected due to electricity rationing.
fossil fuels and cement is a marked turnaround Last spring, the government started to tighten
from the approximately 9% increase in the first credit to the real-estate sector, a key driver of
half of the year, when the Chinese economy economic growth after Covid-19, but also the
surged back from the coronavirus pandemic on main driver of increases in debt and emissions.
a wave of stimulus spending. Tamping down on real estate-driven economic
Moreover, the declining trend in the third expansion is in line with Chinese leader Xi Jin-
quarter steepened into September – the first ping’s repeated statements that “apartments are
month during which monthly emissions for living in, not for speculation”, and his calls for
returned to 2019 levels – and looks set to deepen “high-quality economic growth”. Cooling down
further in October, based on preliminary data. real-estate expansion therefore appears likely to
This analysis is based on official figures for be a long-term economic policy theme.
the domestic production, import and export of The falling real-estate volumes are heavily
fossil fuels and cement, as well as commercial affecting upstream industries. As financial dis-
data on changes in stocks of stored fuel. In the tress spread through the sector, construction
case of coal and natural gas, the growth rates are activity slowed down, resulting in steel and
adjusted to match officially reported quarterly cement output beginning to fall rapidly from
growth rates, when available. July, as shown in the chart below.
Looking ahead, the drop in emissions could Steel and cement are the two largest CO2
mark a turning point and an early peak in China’s emitting sectors in China after coal power and
emissions total, years ahead of its target to peak they had seen blistering 12% and 14% increases
before 2030. in the first half of the year, respectively.
Alternatively, if the Chinese government Starting from September, China’s coal con-
injects further construction stimulus to boost its sumption has also been affected by record-high
economy, emissions could rebound once again, coal prices and supply shortage. Electricity prices
before peaking later this decade. are still regulated in China, while coal prices are
China’s CO2 emissions rose sharply in late determined on the market.
2020 and early 2021, as construction and heavy The government kept electricity prices paid to
industrial activity led the recovery from the ini- coal power plants low while fuel costs were rising
tial Covid-19 lockdowns. rapidly, leading to a shortfall in coal purchases
As a result, CO2 emissions in the last quar- and supply as it became unprofitable for plants to
ter of 2020 and the first quarter of 2021 saw the operate. This has led to electricity rationing, par-
largest year-on-year increases in a decade. The ticularly to energy-intensive industries, which is
increase in China’s emissions is also likely to also limiting coal demand.
result in global aggregated emissions rebounding In response to the crisis, the government has
close to pre-pandemic levels in 2021. been urging miners to ramp up output to plug
This backdrop makes the quarterly year-on- the gap between supply and demand. This has
year fall in the most recent three months of data caused a widespread – but inaccurate – per-
for China’s emissions look particularly stark. ception that coal demand is increasing at the
The emissions fell due to two reasons: a dra- moment, whereas data shows the opposite to be
matic drop in demand for construction materi- true. ™
als precipitated by the real estate slump and the

Week 48 01•December•2021 www. NEWSBASE .com P11