China digs in on coal, oil gains as energy crisis deepens

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October 8 (Businesshala) – China ordered miners in Inner Mongolia to ramp up coal production and oil prices jumped on Friday as demand for the most polluting fossil fuels kept factories open and homes warm There was a record jump in the cost of regenerating gas.

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The rebound in economic activity from coronavirus restrictions has exposed dangerously short supplies of natural gas, leaving traders, industry executives and governments scrambling to winter in the Northern Hemisphere.

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The energy crisis, which has led to fuel shortages and blackouts in some countries, has highlighted the difficulty of reducing the global economy’s reliance on fossil fuels as world leaders discuss efforts to tackle climate change at talks in Glasgow next month. want to revive.

In China, where coal production was cut to meet climate targets, officials have ordered more than 70 coal mines in Inner Mongolia to increase production by about 100 million tonnes, or 10%, as the world’s largest The exporter is battling its worst power shortage in years. .

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India, the second largest coal consumer after China, is also facing power shortages due to coal shortages, as more than half of its coal-fired power plants have fuel stocks of less than three days, as That shows the data of the federal grid operator.

Oil prices edged higher on Friday, up nearly 5% this week, as industries switch fuels.

“There are too many catalysts to keep the oil market tight,” said Edward Moya, a senior market analyst at brokerage OANDA.

Reflecting the gravity of the situation, the United States has not ruled out tapping into its strategic petroleum reserves, which usually only occur after major supply disruptions such as hurricanes, or by imposing oil exports to reduce crude oil costs. does. However, it is doubtful that it is ready to take such action yet.

A Department of Energy spokesperson said, “DOE is actively monitoring the supply of the global energy market and will work with our agency partners to determine if and when action is needed.” ”

Stoking tension

Global fuel shortages are another blow to a world economy that is getting back on its feet after the coronavirus pandemic and consumers are at risk of a costly winter.

State broadcaster CCTV quoted a state meeting on Friday as saying that China is going to allow coal-fired power prices to fluctuate by 20% from the base level instead of the 10-15% earlier. Council, or cabinet.

Meanwhile, Bangladesh bought two cargoes of liquefied natural gas (LNG) for delivery in October at record prices, two industry sources said on Friday, as low stocks in Europe boosted competition with Asia for supplies before winter. Is.

“It is really difficult to face such unusual prices. At the moment, we have no other option but to buy to continue economic activity,” said an official from the state-run Petrobangla, which oversees the LNG supply.

Bangladesh is reviewing leases for five oil-fired power plants that are nearing expiration despite plans to move from oil to natural gas for power generation.

Even before the current energy crisis began, the world was far behind in efforts to prevent catastrophic climate change, with a United Nations analysis projecting global emissions in 2030 to be 16% higher than countries in 2010. was based on existing pledges.

Rising energy prices are fueling tensions over the green transition in Europe, with EU countries refuting their views on climate change policies. Rich countries want to maintain pressure to give up fossil fuels, while poor countries, concerned about consumer costs, are wary.

Britain’s energy regulator has warned that energy bills are likely to rise significantly in April.

Hungarian Prime Minister Viktor Orban blamed the EU’s actions to tackle climate change for the current crisis and said Poland and Hungary would present a united front at the next EU summit.

Analysts have said rising gas prices are the main driver of European electricity costs, while the rising cost of permits on the EU’s carbon market has driven about a fifth of the cost of electricity.

Written by Elaine Hardcastle; Editing by Carmel Crimins

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