China's Restriction on Coal Backfires

Drew Holland
May 13, 2018

Submitted as coursework for PH240, Stanford University, Fall 2017

Fig. 1: A coal-fired power plant in Shuozhou, Shanxi, China. (Source: Wikimedia Commons)

The Chinese Government's plan to transition to cleaner energy use with a ban on coal has backfired. They are making efforts to clean up their smog filled cities and reduce the countrys reliance on coal. Currently the country feels it relies too much on coal fired power plants (see Fig 1). The Chinese government made bans on coal in certain northern regions, and has enacted an aggressive energy policy that will cut natural gas use for electricity by 60 percent by 2020, however this move has proven costly for many citizens, homes, companies, and factories. [1,2]

In 2013 the Chinese government started an effort to switch 3 million homes in northern china from coal to gas. This is a move that has seriously increased demand and reliance on natural gas, significantly more than supply could sustain. [3]

Authorities in China have been forced to commandeer supplies of natural gas in order to make sure homes have heat, and the Natural Energy Administration has taken over gas allocation responsibilities from state-owned oil companies. To minimize effects of the shortage in Northern China, authorities in Beijing have diverted oil to the north, and ordered Chemical producers and factories in Sichuan and Chongqing to shut down operations. [4] This heightens the economic impact of the gas shortage, with one German chemicals company BASF declaring force majeure on products made from their chemical facility in Chongquin. [4]

Gas industry analyst for ICIS in Shanghai, Chen Yunying says: "The situation is quite serious due to the suspension of gas supplies to industrial and commercial consumers in hopes of meeting the demand from civilian use."

China is the world's biggest energy consumer, and it is forecast that it will rely on coal for at least two-thirds of its energy for the foreseeable future. The total gas consumption in China rose 17.8 percent from 2016 to 2017, verses only a 10.8 percent production increase. [4] So that left china with a 10-billion-cubic-meter shortage this winter, according to Chen Yunying. [4]

Companies have tried to invest money in order to help the crisis. The Asian Infrastructure Investment Bank, a Chinese-led company, just approved a $250 million loan to connect about 220,000 rural Chinese home to a natural gas distribution network. Billions of dollars have been invested to help in the shortage, but it has not been able to keep up with the added demand. A business news magazine said that farm families in Zhouzhou were forced to dismantle their coal-fired furnaces before natural gas pipelines had even been laid to their homes. [3]

The natural gas shortage has also effected public transportation in the region. Some 2,000 buses in Tianyuan City run on natural gas, and in the shortage have been forced to line up for hours to fill up with gas in freezing temperatures. Because of the shortage gas pumps arent able to fill at the same rate. Tianyuan City is in the Shaanxi Province, which is one of Chinas largest extractors of natural gas, however a local natural gas company has started its emergency contingency plan, which rations and limits supplies. The situation with buses and public transportation could get worse if natural gas supplies arent restored. [2]

© Drew Holland. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] A. Wu, "China's Natural Gas Shortage Brings Public Transport to a Halt," Epoch Times, 17 Dec 17.

[2] Abigail Lebovitz, "Coal: China and Beyond," Physics 240, Stanford University, Fall 2015.

[3] J. Mcdonald, "China Suffers Natural Gas Shortage as Coal Ban Backfires," AP News, 14 Dec 17.

[4] L. Hornby, "China Gas Shortages Spread After Botched Coal Conversion," Financial Times, 12 Dec 17.