China’s energy crunch a chance for power play

Coal accounts for about 80 per cent of China’s energy supply needs and coal prices have risen more than 150 per cent over the past 18 months as the Chinese government aggressively seeks out new sources of energy. Oil, nuclear and hydro are all helping alleviate the strain, but they’re not enough. China has also been attempting to increase its supply of liquefied natural gas (LNG). China’s only LNG facility announced this month that it could double purchases this year, but Mr. Brebner says the effort is too little, too late. “The infrastructure build on LNG is years behind schedule.”
Chinese authorities are also aggressively pursuing alternative energy sources such as wind and solar power, and attempting to supply the growing global alternative energy market. More than 20 plants have been built to produce polysilicon – a vital ingredient for solar panels. But polysilicon is extremely hazardous and a recent news report on China’s refusal to install costly protective technology caused a selloff in publicly traded solar power companies such as SunTech Power, China Sunergy and Markham, Ont.-based Canadian Solar.

Mr. Brebner holds out little hope for alternative energy as a short-term solution. “The magnitude requirements for energy within China are so vast I think it’s not really going to make a difference over the next five to 10 years” he says.

UBS expects power demand in China to rise 12.5 per cent in 2008 – prompting rationing and a continued push by the government to limit domestic aluminum and steel production. Either way, analysts say China will likely need to rely more on imports.

Globe and Mail