Analysis As Beijing fights air pollution, natural gas producers stay warm and happy despite shortages
Analyst says exchange set up to trade natural gas has yet to realise full potential
A natural gas shortage this winter – fuelled by Beijing’s war on air pollution – has left some villages in northern China out in the cold, even as gas producers benefit from higher charges made possible by a loosening of the government’s grip on prices they had been longing for years.
The measures include an edict for 28 cities in northern China to suspend some energy-intensive production lines and convert industrial coal boilers and home coal burners into gas-fired units.
Together with higher prices of more pollution prone alternative fuel, it has helped to lift the nation’s gas consumption by 18.7 per cent in the year’s first 10 months from the same period last year.
Surging winter demand – which amounts to six to eight times that in the summer – has resulted in shortages, especially in regions neighbouring the prime air pollution war targets of Beijing, Tianjin and Hebei province.
But the prices still do not fully reflect supply and demand, despite partial liberalisation, resulting in winter shortages.