Price of clean air

Beijing’s pollution fight fuels gas supply shortage


What do freezing children, a Lycra shortage and arrests for burning coal have in common?

The answer: they were all part of China’s drive to meet cleaner air targets in 2017. The good news is that in Beijing, at least, the ambitious goal was met. On Wednesday the city’s environmental agency announced that yearly average concentrations of the smallest, most hazardous category of airborne pollution – PM2.5 particles – had dropped 36% from 2012 levels.

The goal to reduce PM2.5 levels by 25% in the capital and surrounding area was set in 2013 by the State Council as part of a national action plan. Over the last four years the city has closed nearly 2,000 factories, shut down coal-fired power plants and eliminated nearly two million high-emission vehicles.

But a spike in bad air readings in early 2017 – caused by an uptick in industrial production – meant the Beijing-Tianjin-Hebei area was in danger of missing its target. So the government launched further actions to wean the area off coal: all heating in the region would be powered by natural gas or renewables, and factories that did not switch from coal furnaces to gas would be shuttered for the winter months. The problem was these directives only began emerging from late August, leaving two and half months for millions of households and factories to be retrofitted.

The scramble to meet this target has resulted in extreme and sometimes absurd measures. Last month schools in Hebei went without heat, causing the children to take their classes outside where at least the sun offered some warmth.

Bureaucrats in neighbouring Shanxi province put up red banners saying “burn coal and we will catch you”. At least one man, a construction worker who was burning coal to keep warm, was caught breaking the rule and was punished with five days in a detention centre, according to China News Service.

At the end of November – two weeks after the official date for the mandatory switching on of household heating across northern China – hundreds of thousands of households were still waiting for gas connections or gas to be supplied to their new boilers. “We are freezing,” said one woman who lives on the outskirts of Beijing. “I just had an operation. My body can’t heal in these temperatures.”

Aside from the difficulty of converting five million homes to gas in a short period of time, there was also the issue of its supply. As the pace of conversions picked up toward the end of the year so did demand for the fuel, but there wasn’t enough time to increase imports – China consumes more natural gas than it produces.

Instead, as people in the north began to freeze the government ordered some 300 factories across the country to cut production so their gas could be pumped to homes in the 28 target cities around Beijing.

On December 12, German chemicals group BASF declared ‘force majeure’ on products made at its plant in Chongqing “due to a supply shortage of natural gas”.

The plant makes 5% the world’s supply of MDI – a chemical used in the production of Lycra, and thus causing a knock on effect for that material’s manufacture too. “The supplier has not yet provided a timeline for the restarting of the syngas,” the company said on its website.

The sudden spike in demand also led to a price surge: international prices for shipped gas hit the highest levels since 2014 (as of this week East Asia’s benchmark gas price was $11.2 per million BTU versus the year’s summer low of $5.40).

As the crises began to bite the Ministry of the Environment blamed China’s energy giants CNPC and Sinopec for failing to secure adequate gas supplies. In turn they blamed poor communications. “The number of gas project [conversions] were first reported to the county, then to the city, then the province and other central departments,” Reuters reported a Sinopec official as saying. “When it got to us, it was almost too late to adjust our plans accordingly.”

On December 4 the government allowed some homes and power plants to temporarily resume burning coal but by the end of the month Xinhua reported belated success: all the capital’s planned boiler conversions had been completed.

Gas shortages remain. In December China imported 5.05 million metric tonnes of LNG, its highest ever for a single month, says S&P. For the year as a whole China passed South Korea to become the world’s second biggest LNG importer.

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