Surge in Demand for Electricity Causes China to Ramp Up Coal Production

China is poised to ramp up coal production amid a significant surge in electricity demand. With central and northern China experiencing a historic heat wave, millions of Chinese residents in Hubei, Henan and Shandong provinces have been turning to their air conditioners to keep the heat at bay.

Last week, numerous cities in Shandong warned residents to stay inside as heat levels soared past 40oC. Since the region is home to more than 100 million people, its electrical grid saw an upsurge in electricity consumption as people stayed indoors and turned on their air conditioners.

In the neighboring Hubei province, temperatures got so high that cement roads cracked under the sweltering heat, leading to two days of record power consumption. During a visit to a thermal plant in Hubei province, Chinese Premier Li Keqiang stated that the Asian country must ramp up its coal production capacity to keep up with the increasing demand and prevent power outages.

Down in South China, millions of Chinese citizens are dealing with record rainfall and floods that have caused losses worth $1.86 billion (12.48 billion yuan) so far.

It’s not particularly surprising that these extreme weather events are hitting China. It is currently the largest producer of coal in the world and, as a result, emits more greenhouse gases yearly than any other country.

China has been trying to combat the effects of dumping millions of tons of greenhouse gases into the atmosphere by investing in renewable energy. The Asian country has spent a great deal on developing wind turbines, hydroelectric dams and solar panels, adding nearly 72 gigawatts of wind power, 13 gigawatts of hydropower and 47 gigawatts of solar power in 2020. The government has also invested in beefing up the country’s network of EVs and helped to increase EV adoption through generous electric vehicle subsidies.

However, despite these efforts, China still relies a great deal on coal. More than 50% of the country’s power capacity is generated through coal, and the country was forced to up its coal production during the coronavirus pandemic to weather an energy crisis.

In just the first six months of 2022, China has managed to add new coal power capacity that is triple what the rest of the world can generate. With global warming now in the mix, it looks like China is being forced to rely on coal for energy production even as it strives to move away from coal to clean, renewable energy.

It isn’t only in China where the use of coal is ramping up; even North American-based companies such as Arch Resources Inc. (NYSE: ARCH) are enjoying a period of rising demand for the coal they extract.

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