Over the last several weeks, we have heard that China is facing an energy crunch. Factories were ordered to energy ration. Some of this is due to the fact that it has stopped imports of coal from Australia in a political dispute, and so it didn’t have enough coal to fire its coal-fired power plants. So the story goes out of Beijing.
Either way, China’s energy rations mean factories making things for Apple, and other American companies, were left idle for a time. That hurts supply chains. It can drive up prices.
The blackouts in China should remind everyone in Congress, and in American business, that the over-reliance on China has to end.
China: Going Green, Only in America and the EU
China is less of a climate change partner, or more of a climate change adversary in terms of its greenhouse gas emissions, and in its ability to crush supply of solar equipment to the U.S. Wind is next. China is poised to overtake the Europeans in this market.
China has couched the energy rationing as the CCP doing its best to fight climate change. The argument is they that don’t want coal anymore (it powers roughly 60% of China’s electric power grid) and are going green like their friends in Europe and the U.S. Xi Jinping said this year that he would bring China to zero carbon by 2050, a hallow, impossible promise no matter who makes it.
That all this is happening in the land that producers more solar panels than any other nation, and is the fourth largest producer of nuclear power, shows just how much of China is heated by coal and oil.
Some in the U.S. see China’s recent energy rationing as a good thing. To them, it means China will switch to clean energy faster.
It is more likely that China got caught flat-footed in an oil and gas price spike and couldn’t get coal to its power plants fast enough to make up for it. China is only worried about climate change insofar as it means more opportunities to sell wind turbines and solar panels to the world.
Meanwhile, Beijing has ordered more coal production.
“U.S. consumption is aiding and abetting China’s power demand through neoliberal free trade that has turned China into an American factory,” says Michael Stumo, CEO of CPA. “All we are doing is outsourcing pollution to a country with weak environmental regulations. Reshoring is better for the environment.”
Beijing’s not going green as fast as some want. Its climate change tune and is mostly sung for the ESG money managers and climate policy advocates in the U.S. and Europe.
Treasury Secretary Janet Yellen said Thursday at the World Bank’s Making Climate Action Count: Turning Action into Reality conference that “there is renewed urgency for all nations to take the necessary steps toward the global goal of keeping warming below 1.5 degrees Celsius.” She hinted that the World Bank and others would integrate climate change issues into its lending criteria.
“We are committed to using our position of leadership to help facilitate a global transition toward net-zero emissions by midcentury,” she said.
But none of that will matter unless China is on board and China is only onboard if you grant them permission to be the world’s Green OPEC. In a sense, China is holding the planet hostage. Beijing knows the U.S. and Europe are deathly afraid of this issue and have positioned themselves as the go-to factory for all things solar and wind, not to mention some of the metals that go into battery powered cars.
Meanwhile, Beijing is faced with whether to allow factories to continue running full speed producing goods for export.
“They have to sacrifice something to make sure households will have heat and power,” Chen Long, a co-founder and partner of Plenum, a Beijing economics and politics research firm, told the New York Times. “They have to cut energy-intensive industries.”
China’s energy rationing hurts American supply chains already in trouble. Diversification away from China should continue full speed ahead for anyone concerned with economic security.