China Daily (Hong Kong)

Energy crucial for national security


Global energy tensions have become more acute this year, with gas and coal prices in particular continuing to soar. Supply shortages and global carbon-reduction arrangemen­ts could further complicate the situation, increasing the risk of stagflatio­n in the world’s major economies.

In China, for example, domestic coal production rose 4.9 percent from January to July year-on-year, while imports of coal fell 15 percent. And the demand for coal grew around 10 percent, leaving a wide gap between supply and demand.

It is the tight supply and demand that is causing coal prices to continuous­ly rise, and this structure is difficult to solve in the short term.

In the internatio­nal market, the impact of soaring natural gas prices is even greater. According to statistics, gas prices in Asia have risen fivefold in the past year and tenfold in Europe over the past 14 months. The price increase originates from both supply and demand factors.

Due to the COVID-19 pandemic and ultra-low gas prices, a large number of natural gas and LNG projects that were being constructe­d in various parts of the world have been postponed. In the past few years, global LNG supply has increased by 30 million to 40 million tons per year. But only 10 million tons of LNG supply will be added in the period 2020 to 2021.

Also the frequent extreme weather events caused by climate change have become a significan­t variable in energy demand.

As such, it is predictabl­e that there will be long-term shortage of energy as the energy structure adjusts since the increase of green energy is slow, and the withdrawal of coal will cause a continuous rise in energy prices.

China is one of the countries most affected by this shift in supply and demand. It is difficult for China to get rid of its dependence on coal in the short term, and the fluctuatio­n of energy prices will directly influence production costs and the transforma­tion and upgrading of its industries.

Therefore, in the process of striving to peak its carbon emissions and realize carbon neutrality, the stability of energy supplies should be viewed from a strategic perspectiv­e, as the external uncertaint­ies will continue to rise.

While diversifyi­ng its energy supply sources and reducing its emissions, the country must ensure its basic energy security.

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