Surging demand for cleaner fuel affects household heating and pushes up market prices
Every day, before starting his shift, taxi driver Zhong Guishun heads to a gas station to fill his tank. Usually, the process only takes a few minutes, but last week it took more than two hours.
Like most cabs in Shijiazhuang, capital of Hebei province, Zhong's car runs on liquefied natural gas, which was in short supply.
"Only a few stations had the fuel. Some of my peers, who have been driving cabs for more than a decade, said the situation is the worst they've ever known," he said, adding that the line of vehicles stretched more than a kilometer.
Although supplies at gas stations have returned to normal, the provincial government has yet to lift the orange alert－the second-highest level, signaling a shortfall of as much as 20 percent－it sent out about gas supplies last month.
Hebei is one of the areas hardest hit by the winter gas shortage, a chronic problem that officials and industry insiders say has been exacerbated by a reduction in imports and a surge in demand resulting from efforts to get millions of rural homes to switch from coal－a major source of winter air pollution－to clean energy.
Authorities have been building new industrial-sized central heating generators and converting existing facilities to burn cleaner fuels, as well as promoting the use of natural gas in the countryside, where residents traditionally use coal for cooking and heating.
The massive project, coupled with a range of pollution-control measures and strong winds brought by cold fronts, has resulted in a string of blue-sky days in many northern cities so far this winter.
However, some generator projects were still not ready when temperatures began to fall, while attempts to get villagers to replace coal burners with gas units have arguably gone too well, resulting in a surge in demand for the cleaner fuel.
Jiao Shiqing, a housing and urban-rural development official in Hebei, said the province set a target of converting 1.8 million homes to clean energy by the end of October. However, the rapid uptake means that more than 2.1 million homes have already switched to gas, while a further 219,000 are now using electricity.
Liang Yike, an official with the Hebei Development and Reform Commission, said, "Even without the shift toward clean energy, demand for LNG has risen steadily in recent years."
However, he acknowledged that introducing the fuel in so many homes at such a rapid rate had resulted in an "unprecedented surge in demand".
During the "heating season"－which runs from Nov 15 to March 15 annually－demand in Hebei was 3.5 billion cubic meters last year, according to Liang. This year, the figure is forecast to be 8.2 billion cu m.
Lu Yanan, a resident of Xihuanghe village in Baoding, Hebei, said a gas boiler was installed in her home after Nov 15, but the promised heat failed to arrive.
"I have children and seniors at home, so I had to keep the air conditioners running at all times to keep warm," she said.
"Even now, the gas supply is unstable and we experience frequent outages. Before, we could fire up our coal boiler any time we wanted. But with an unstable gas supply, we're just not sure if the new boiler can keep the house warm every day."
On Dec 5, China Youth Daily reported that rural primary schools in Hebei had also been affected, such as those in Quyang county where photos showed students attempting to keep warm by sitting in the winter sunshine.
With even colder weather approaching, Liang said his department is working with other provincial authorities and gas companies to coordinate supplies.
Areas that met their home-conversion targets by installing central heating boilers on schedule have been ordered not to expand their programs, while people in areas where work is unfinished are being given replacement conventional boilers and clean coal to heat their homes, Liang said.
On Dec 4, the Ministry of Environmental Protection sent an urgent notice to authorities in northern China telling them to use coal to provide heating in areas where energy transfer projects have not been completed.
On Wednesday, the Ministry of Housing and Urban-Rural Development, which oversees heating systems, urged officials in North China to visit homes to ensure that everyone is receiving heat.
Smog reduction
The government has been working for years to replace coal with natural gas to reduce pollution, particularly during winter, when levels of airborne pollutants are on average 30 percent higher than during other seasons as a result of the use of coal-fired generators, according to the Ministry of Environmental Protection.
However, large-scale industrial emissions and rampant coal use in the countryside are the major causes of the chronic seasonal smog in the northern regions.
"China consumes about 200 million metric tons of coal every year through small-scale users such as rural households, 20 percent of which are in the Beijing-Tianjin-Hebei cluster," Chen Jining, the former environment minister, said in January, after several cities saw pollution levels rise off the charts.
The gas-for-coal strategy has already had an effect, according to official monitoring data. Between Oct 1 and Dec 9, the average concentration of PM2.5－fine particulate matter that is hazardous to human health－in Shijiazhuang was 82 micrograms per cu m, a decline of about 47 percent from the same period last year.
Meanwhile, in Beijing, the average level between Jan 1 to Nov 30 was 58 mcg/cu m, a year-on-year decline of 13.4 percent.
Rural residents whose new gas boilers are up and running have been quick to notice the benefits.
"Our coal boiler often filled the house with choking smoke and stained my clothes with soot," said Lyu Yafeng, a 30-year-old villager in Baoding's Zhengding county. "Plus, the gas unit means I don't have to get up on cold winter nights to put more coal on the fire."
Qi Si'nyu, 55, who lives in a nearby village, echoed Qi's words: "I had to fetch black coal from outside at least three times a day, and also had to remove the ash at least twice a day, which often left my home dirty."
The Hebei government has offered three years of subsidies to help families who switch to clean energy boilers.
Those who opt to use electricity will be refunded for 85 percent of the total cost of equipment and installation－up to 7,400 yuan ($1,119)－and 0.2 yuan per kilowatt-hour providing they don't use more than 10,000 kWh during the heating season.
For gas boilers, the government will refund 70 percent of the equipment and installation costs－up to 2,700 yuan－and 1 yuan per cu m for residents who consume no more than 1,200 cu m during the same period.
However, Lyu complained that natural gas is more costly, even with the subsidies.
Lyu said it used to cost 2,000 to 3,000 yuan to heat his home throughout the winter. Now, he estimates the figure will be about 7,200 yuan, roughly 60 yuan a day, including the subsidy.
"I keep the boiler on 24 hours a day, but it doesn't heat all the rooms. On the second floor, I only have heat in two bedrooms to save as much money as possible," he said.
"Some of my neighbors say the cost is even higher than in the city. They joke that they may sell their farmland and rent an apartment downtown because they can't afford the heating bill."
Xiao Tongxiang, a resident of Guozhuang village, said the price difference means many of the 200 or so families in his community would rather use their coal boilers this year, despite already having new gas units and a steady supply of fuel.
Energy mix
With annual consumption of natural gas only reaching about 230 billion cu m, China has a long way to go to reach the government's target of gas accounting for 10 percent of the energy mix by the end of 2020. Experts say it will require at least 18 percent growth per year to achieve the goal.
In the first half of the year, China consumed 116 billion cu m, a year-on-year rise of 13.5 percent, according to figures presented by Xu Bo, a senior economist at the CNPC Economics and Technology Research Institute, at an industrial conference on Nov 29. Output hit 74 billion cu m, while 42 billion cu m was imported, he said.
Analysts said gas shortages will remain a long-term problem.
Liang said the situation in northern China this year has been compounded by a fall in imports. Last week, 21st Century Business Herald reported that pipeline gas exports from Central Asian countries, including Turkmenistan and Uzbekistan, had fallen to 110 million cu m a day from 130 million cu m. The reason was not immediately clear.
Liu Guangbin, an analyst for commodities consultancy Sublime China Information, said about 30 to 40 tankers carrying liquefied natural gas are en route to China, which will help ease the current shortage, but he predicted that the problem will last at least another five years.
Pipeline supplies
"LNG accounts for only 10 percent of China's entire gas supply, which means pipeline gas from energy companies is still the main source. It is the key to solving shortages," he said, but noted that issues exist not only in supply, but also in pipeline construction.
"Pipeline coverage in China lags far behind other nations, based on the size of the country. The shortage is a complicated issue; fixing it will require time and industrial reform. It won't be solved all at once."
In the meantime, energy companies are attempting to plug the gap.
On Saturday, China National Petroleum Corp, the nation's largest natural gas producer and importer, said the National Development and Reform Commission had ordered it to launch an emergency plan to raise output of natural gas. The company has pledged to prioritize homes over industrial users.
A source close to the issue, who did not want to be identified, said CNPC has placed the Beijing-Tianjin-Hebei region at the top of its list of priorities and plans to supply 20.6 billion cu m this winter, a rise of 19.3 percent year-on-year.
Sinopec, a State-owned oil and gas giant, has said it expects to supply 15.1 billion cu m nationwide over the same period, a rise of 13 percent from last year.
A document provided by the company said its oil and gas fields are now running at full production to boost output. Meanwhile, it has also accelerated shale gas exploration with the aim of raising the production capacity at its operation at Fuling, near the southwestern metropolis of Chongqing, to 10 billion cu m by the end of the year.
（Source：China Daily）
