Asean Tribune

The combined forces of extreme weather, the COVID-19 crisis and political pressures may be setting the stage for energy shortages in China next winter, analysts say.

The country’s electricity generators have been racking up losses due to record prices for coal and natural gas, while summer power demand spikes in a punishing season of heat waves and floods.

Spot market costs for liquefied natural gas (LNG) have climbed to nearly double the break-even rate for profitable power production, S&P Global Platts news service said.

Last winter brought unusually cold temperatures to both Europe and North Asia, straining LNG supplies, said Mikkal Herberg, energy security research director at the Seattle- based National Bureau of Asian Research.

“Now they are both having hot summers along with a huge surge in industrial activity with the easing of COVID constraints, especially China, which is putting further strain on supply and stock levels,” said Herberg.

“There is something of a perfect storm going on in the global gas market,” he said.

Rising demand for power and production has also lit a fire under the market for coal.

The break-even coal price for many of China’s power plants is 600-650 yuan (U.S. $92.50-100.21) per metric ton, according to Platts. But on July 30, benchmark thermal coal prices hit a record 1,080 yuan (U.S. $166.51) per ton, Reuters reported.

Consumer price controls have left generators with little incentive to boost output, while other problems have only added to their woes.

High demand for coal earlier this year due to COVID-19 recovery led to a wave of mining accidents, followed by state safety inspections and a sudden drop in coal production in the second quarter of the year.

The resulting squeeze on supplies has stretched inventories thin. On Aug. 6, Reuters reported that coal stocks held by mines dropped 26 percent from a year before. Inventories at major power plants were down by a similar margin, state television said.

All this is happening while the government promises to reduce reliance on high carbon-emitting coal, which still accounts for 56.8 percent of primary energy. Gas is seen as a cleaner transitional fuel until non-fossil sources take a dominant role.

But decarbonization plans appear to be on hold as the government tries to deal with the immediate problems of power shortages and spiraling prices by reopening previously closed coal mines for a year to add 44 million tons of production, Bloomberg News reported on Aug. 5.

Last month, the government’s top economic planning agency said it would open nearly 110 million tons of “advanced” coal production capacity in the second half of this year, Reuters reported separately.

“We are in the peak power consumption period and must guarantee coal supply to power plants … and will not allow the shutdown of power generation units due to a lack of coal,” the National Development and Reform Commission (NDRC) said on July 18.

The power problems have been further complicated by conditions in Europe that may keep China from increasing gas consumption as an alternative to coal.

LNG prices in Europe typically rise with winter demand and ease in warm weather months, giving consuming countries a chance to refill depleted storage facilities.

But the economic slump and partial recovery from the COVID-19 crisis disrupted the cycle while the effects of climate change have kept demand high.

European gas storage is at 50-60 percent of capacity this summer compared with 80 percent a year earlier, Reuters cited analysts as saying. Last August, European storage was over 88 percent full, according to records of the European Union’s Aggregated Gas Storage Inventory.

“There is a real risk of Europe entering the winter season with low inventory levels, suggesting that prices will remain well supported,” Amsterdam-based ING Group said.

Increased Demand

Heat waves in both Europe and Asia have kept energy demand high, suggesting that current prices may only be a base for increases to come.

Dutch natural gas prices have already surged 80 percent to record highs in the past three months, Reuters said.

Some analysts are warning that a harsh winter could tighten gas markets further in Europe and Asia at the same time.

“Storage levels are quite low in many places as a hot summer has meant that there has not been much chance to replenish stocks, so this could be bullish for winter, especially if it’s going to be freezing again,” a Singapore- based trader told Reuters.

Herberg also cited problems like China’s shortage of gas storage capacity that lead to surges and slowdowns in buying on the spot market.

“Chinese majors are trying to load up on gas inventories for the winter under pressure from the government to not have another damaging gas shortage like last winter,” he said.

Despite the winter warnings, little seems to have changed since Bloomberg News raised similar shortage concerns as a “desperate scenario” nearly two months ago.

In a July 9 commentary, RFA cited energy expert Edward Chow at the Center for Strategic and International Studies as saying that the LNG industry is typically cyclical and that the shortage scenario was little cause for alarm.

“Europe was always the market of last resort for spot LNG supplies, since it has access to imports of pipeline gas and more gas storage capacity, while other major LNG markets do not,” Chow said.

The major difference between the Bloomberg scenario then and the Reuters warning now is that the earlier analysis focused on the risk that Europe could be forced to burn more coal next winter if gas supplies run short, while the Reuters outlook highlights the possible pressures on Asian importers.

In the brief period between the two warnings, China has already put out the call for more coal.

The backsliding by the world’s leading coal producer and consumer is likely to be damaging for carbon emissions and the message it sends at a time when the United Nations Intergovernmental Panel on Climate Change has called for “strong, rapid and sustained reductions” to avoid the worst consequences of global warming.

Platts analyst James Huckstepp told Reuters that “Russia is now the only country with spare (gas) production, but in order to increase exports they would need to book additional capacity through Ukraine, and up to this point they have refrained.”

The reference is to the tangle of issues surrounding Russia’s gas exports to Europe through Ukraine and the pending completion of Gazprom’s Nord Stream 2 pipeline across the Baltic Sea to Germany that would draw volumes away from the Ukrainian route.

The project would allow Gazprom to dispense with Ukrainian transit entirely, potentially exposing Kiev to new security risks by ending the interdependent relationship between the two countries that has persisted since the Soviet collapse.

Despite European concerns about rising gas prices and dwindling stockpiles, Gazprom has declined to reserve additional transit capacity on either the Yamal-Europe pipeline through Belarus and Poland or the transit lines through Ukraine, Interfax reported on Aug. 2.

Price Increases

European gas importers may have gotten a taste of the rising energy security risks on Aug. 5 when a fire broke out at a Russian processing plant, causing Gazprom to reduce exports on the Yamal-Europe route and withdraw more gas from underground storage. Gas prices soared to over U.S. $540 (3,502 yuan) per thousand cubic meters, Interfax said.

On Tuesday, gas prices hit a new high as the September futures contract on the Dutch Title Transfer Facility (TTF) gas hub index traded in the range of U.S. $564-582 (3,657- 3,774 yuan) per thousand cubic meters, according to Interfax.

On Thursday, Gazprom issued a statement suggesting that gas could start flowing to Europe through the Nord STream 2 pipeline by the end of this year.

For Gazprom, the situation may help to fulfil a long-held ambition to create competition between Europe and Asia for its resources. But so far, low volumes from its 3,000- kilometer (1,864-mile) Power of Siberia pipeline to China suggest it still has a long way to go.

On Aug. 10, the official Xinhua news agency reported that China has imported over 10 billion cubic meters (353 billion cubic feet) of gas from the pipeline since it opened in December 2019.

The Power of Siberia project was designed to pump 38 billion cubic meters (bcm) of gas annually to China in 2025 with a possible increase of capacity to 44 bcm.

In June, Gazprom reported that the line had delivered 3.84 bcm in its first year of operation, indicating that it has supplied only about 6 bcm to China so far this year.

A secondary school student was sentenced for up to three years in a juvenile correction facility in Hong Kong on Friday for “illegal assembly” in connection with protests in and around Prince Edward MTR station on Aug. 31, 2019 on the night of a violent raid on trains and platforms by riot police.

The boy, who was just 13 at the time of the protests, had pleaded guilty to “possession of offensive weapons” after Molotov cocktails were found in his backpack.

He was brought to the District Court for sentencing on Friday by District Court Judge Frankie Yiu. He appeared calm in court, wearing a white shirt, and glancing at his family in the public gallery from time to time.

In mitigation, defense attorney Edward Chan said the boy had acted on impulse, and had received proper parental care. His school principal was willing to facilitate his return to study.

He called for a shorter-than-usual sentence in a youth rehabilitation center, to allow him to resume his studies as soon as possible.

Judge Yiu replied by commenting that the boy had taken an active part in the protest on the night in question, “even on the front line.”

He said youth wasn’t enough to plead mitigation, although noted the defense’s plea that the boy was kind, lively and cheerful, but immature, and had shown remorse to his family for his actions.

“Adults could receive sentences of three or four years, or longer,” Yiu said. “There is no doubt in my mind that the defendant took the initiative; he put styrofoam boxes and bricks on the road … which did cause a serious obstruction.”

“He also had in his backpack two home-made petrol bombs and two lighters.”

‘Hang in there’

Yiu said he hoped the boy would study hard while in the facility, and “stop committing crimes” after he got out.

He handed down a minimum sentence of six months and a maximum sentence of three years in a juvenile training center.

The boy’s supporters shouted “Hang in there!” after the sentence was passed, while the boy looked across at his family, appearing calm as he was escorted away.

His father told RFA that his son had always been very well-behaved.

“This was expected … we will continue to support him,” the father said.

Earlier, the defense had revealed that the boy was suffering from Attention Deficit and Hyperactivity Disorder (ADHD), and requested a report from social services. But this was denied by the judge on the grounds of the seriousness of the offense.

The boy had earlier pleaded guilty to taken part in an “illegal assembly” at the junction of Nathan Road and Nelson Street in Mong Kok on Aug. 31, 2019, and to the possession of two petrol bombs.

Hong Kong’s Correctional Services Department (CSD) assigns young offenders to correctional institutions according to age, gender and security ratings based on the severity of their offense.

Youngest convict from 2019

Young offenders have previously reported physical abuse at the hands of guards while in the juvenile correction system.

Former University of Hong Kong student union president Althea Suen said the boy was the eighth and youngest minor to be sentenced to a juvenile training center in connection with the 2019 protest movement.

“The most important thing we can do as adults to support children and young people is to support their growth and development, as well as respecting their rights,” Suen told RFA.

“Sadly, many young people from different social backgrounds and categories aren’t getting enough protection.”

Hong Kong courts have convicted 115 minors so far in connection with the 2019 protests, with 262 cases still going through the courts.

Seven were sent to prison, with sentences ranging from three weeks to three years and 10 months, while four were sentenced to training camp, 17 to a labor facility and 35 to a rehabilitation center. Thirty-one were handed probation orders, while 14 are in the care of social services.

The Department of Justice has applied to the trial magistrate or the Court of Appeal for a review of the sentence in at least 12 cases involving children. All appeals that have been processed so far have resulted in an increase in the sentence.

Pauline Sung-Chan of Project Change, an independent group providing psychological counseling and legal support to young people arrested in connection with the 2019 protest movement, said the courts are handing down harsher jail terms to minors than before the anti-extradition movement first escalated into a city-wide mass protest movement in June 2019.

“This means a lot of extra work,” Sung-Chan told RFA. “For example, if you want to be released on bail, you now have to prove why you deserve it.”

“We give very detailed reports in a lot of cases, so that the judge can gain a better understanding of the child,” she said. “I think the current climate in the legal system is harsher now.”

Translated and edited by Luisetta Mudie.

A growing trend for extra-large public portraits of ruling Chinese Communist Party (CCP) general secretary Xi Jinping is a further indicator that China’s leader will likely remain in office for a third term after the country’s rubber-stamp parliament removed term limits from the job in March 2018.

During a recent ceremony in the Tibetan capital, Lhasa, marking the 70th anniversary of CCP rule there, a single, large portrait of Xi was displayed alongside another image showing five past leaders, as regional CCP secretary Wang Yang made a speech.

The arrangement was in stark contrast to a similar ceremony 10 years earlier marking the 60th anniversary of the People’s Liberation Army (PLA)’s annexation of Tibet in 1951.

Xi, then vice-president, lauded the “wise decision-making and correct leadership” of his predecessors in a speech in Lhasa, mentioning late supreme leaders Mao Zedong and Deng Xiaoping, as well as former CCP general secretary and president Jiang Zemin. No portraits were displayed.

When Wang Yang stood up to speak on Aug. 19, 2021, however, he spoke only of Xi.

“We must adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and thoroughly study the spirit of General Secretary Xi Jinping’s important speech at the Seventh Central Tibet Work Forum and the spirit of important instructions during inspections in Tibet,” he told assembled dignitaries.

“Since the 18th CCP National Congress [when Xi took power], Tibet has entered its best new era,” Wang said.

Hu Ping, the U.S.-based editor-in-chief of “Beijing Spring” magazine, said the prominence afforded to Xi at the ceremony told a story about Xi’s grip on power within the party.

“The fact that Xi Jinping was given such fanfare and prominence … and the praises heaped upon him since he took office show he is strengthening his position,” Hu told RFA.

“This means that Xi Jinping will definitely be re-elected for [a third term in office] the 20th Party Congress next year,” Hu said. “That’s the message that’s being sent.”

‘Xi Jinping Thought’

Large portraits of Xi have begun popping up alongside Mao portraits around China, as well as being prominently displayed in places of worship, and on the front pages of state media, amid a nationwide drive to encourage the study of Xi’s personal brand of political ideology.

The CCP is working to bring “Xi Jinping Thought” into every aspect of public life, including as a research topic in universities, now that “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” has been enshrined in the party constitution.

The propaganda department of the northern city of Taiyuan recently lauded local resident Guo Yanyun as a “Xi expert” after he memorized huge swathes of Xi’s speeches.

Guo is said to have studied in her free time when not working for the Taiyuan Water Supply Co., and was at the top of the leaderboard on the Xi Jinping study app, Xuexi Qiangguo, scoring 41815 points as of June 15.

Current affairs commentator Guo Baosheng said the authorities had gamified political indoctrination, handing out badges to those who performed best.

“But it doesn’t change what is happening here, which is brainwashing,” Guo said. “Xi Jinping has set up a personality cult around him.”

Ironically, the titles of honor on the app’s leaderboard are originally from Japan, according to Yang Haiying, a professor at Japan’s Shizuoka University.

“The words used for master or expert are found in Japanese, but this vocabulary doesn’t exist in Chinese,” Yang said. “They used to call them models, as in Lei Feng, the model worker.”

Tibetans are disappointed with Xi

“If Xi is now setting up model learners or model anything … it is a throwback to the Cultural Revolution,” he said, in a reference to the the decade of political violence and social turmoil from 1966-1976 under late supreme leader Mao Zedong.

“Chinese culture and society south of the Great Wall … have been historically all too willing to accept dictatorship,” Yang said, citing strong resistance to Beijing’s rule in Tibet, Xinjiang and other areas claimed by the CCP.

Tsultrim Gyatso, Chinese Liaison Officer at the Dalai Lama’s Office of Tibet in Washington, said Tibetans were disappointed with Xi’s performance on Tibet.

“When he first became president of the country, the Tibetans had high hopes for him, because his father Xi Zhongxun was a Chinese official who understood Tibetan Buddhism,” Tsultrim Gyatso said.

“They didn’t think that Chinese policies in Tibet would become even more repressive over the next 10 years.”

He said Wang Yang also went out of his way to criticize the Dalai Lama at the ceremony, as well as “hostile foreign forces” for allegedly “engaging in separatist and sabotage activities.”

“The real separatists are the Chinese government,” Tsultrim Gyatso said. “If they hadn’t implemented such oppressive policies in Tibet, the Tibetans wouldn’t have protested time and again.”

Translated and edited by Luisetta Mudie.