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GLNG COMMENTARY GLNG

China brings back coal switching

The central government has unveiled plans to switch out coal in heating systems across

northern China, this time for a range of cleaner energies

POLICY CHINA has returned to its strategy of switching The central government has a somewhat
out coal for natural gas, confident in its ability to chequered past when it comes to coal conversion
WHAT: meet the surge in winter demand the transition efforts, however, with efforts to switch 4.74mn
The Chinese Ministry of will bring. households from coal to gas heating ahead
Ecology and Environment The Chinese Ministry of Ecology and Envi- of the 2017-18 winter leading to acute supply
wants to convert coal- ronment aims to replace coal with cleaner shortages. Colder-than-expected temperatures
fired systems that heat sources of energy – including gas – in the heat- drove gas demand beyond the capacity of the
7.09mn households. ing systems of 7.09mn households by the end of country’s supply system, exposing inadequacies
this month. in the country’s pipeline and storage network.
WHY: The return to a programme that left homes Heavy demand for liquefied natural gas (LNG)
The government wants to and business without vital gas supplies in the road tankers ended up sending road truck rates
cut the northern regions’ depths of the 2017-2018 winter highlights the soaring.
pollution levels. government’s confidence that it is better placed Insufficient supply and inadequate infra-
this time around to overcome energy supply structure meant industrial users’ gas volumes
WHAT NEXT: chain challenges. were diverted to the residential sector, leading
Beijing should be able to many businesses to temporarily close as a result.
pull off the switch without Winter of discontent Several years of investment in new domes-
triggering gas supply The ministry said on September 28 that the tic pipeline capacity, new LNG and piped gas
shortfalls. proposed plan had been submitted to a range import capacity as well as the development of
of central and provincial government depart- underground gas storage capacity, however, have
ments – including the National Development convinced Beijing that the gas supply chain will
and Reform Commission (NDRC) and National not break this time around.
Energy Bureau (NEB) – for feedback before Sep-
tember 30. Green goals
The environment ministry’s latest plan will The ministry made it clear that it wanted to meet
see households in the northern Beijing-Tian- this year’s air pollution targets set out in the cen-
jin-Hebei (BTH) metropolitan region as well tral government’s three-year Blue Sky Defence
as Shanxi, Shaanxi, Shandong and Henan prov- action plan unveiled in July 2018.
inces converted to clean coal, electricity and gas. S&P Global Platts Analytics lead analyst for
Government subsidies will be available for rural global coal Matthew Boyle suggested, however,
conversions to gas and electricity, while the city- that colder-than-expected winter temperatures
gate gas price will be capped during the northern could see coal and gas being used for heating in
heating season. tandem.

Week 40 09•October•2020 www. NEWSBASE .com P9