Seeking clear air, Chinese villagers are cooking with (Australian) gas – The Sydney Morning Herald

The family of five gathered in one heated room during their first gas winter last year, to save money. She scrutinises the wok: “The strength of the fire is not enough.”

Down the road, Mr Zhang, 61, flicks on his new gas stove for Fairfax Media and complains the gas supply has been on and off. He is explaining why steam is rising from the buns being cooked on the traditional brick oven, fuelled with wood, instead. There is an “emergency” stack of coal outside the kitchen. He asks that we don’t photograph it.

These village gas stoves are making waves around the world.

In its war on pollution, the Chinese government directed that 4 million households in northern China stop using coal and switch to clean energy for heating and cooking last year. Overzealous local officials converted 5 million households.

But as the freezing winter hit, the gas supplies ran short. Chinese media reported on schools in Hebei province where children developed frostbite in the classroom.

Behind the lion is Beijing Huaneng Thermal Power Plant. The plant shut down the city’s last coal-fired power generation units early in 2017, but due to a shortage of natural gas during the 2017-2018 heating season, it was asked to restart the units.

Behind the lion is Beijing Huaneng Thermal Power Plant. The plant shut down the city’s last coal-fired power generation units early in 2017, but due to a shortage of natural gas during the 2017-2018 heating season, it was asked to restart the units.

Photo: Sanghee Liu

Beijing’s massive Huaneng Thermal Power Plant was hurriedly switched back onto coal in December to reduce the demand on natural gas in the city. The coal power at the plant had been shut off with much fanfare months earlier, as Beijing was declared China’s first coal-free city.

As another winter approaches, the Chinese government doesn’t want a repeat of last winter’s village backlash against the clean energy policy. And it is determined to reduce the use of coal – city residents demand blue skies. So imported gas has been stockpiled by China at an unprecedented rate.

Securing gas supplies has become such a priority that China is forecast to overtake Japan as the world’s largest importer of LNG by 2019.

China’s LNG imports in the first eight months of 2018 leapt 47.8 per cent, to 32.63 million tonnes, already outstripping Japan.

The impact in Australia, the world’s second biggest LNG exporter, is that LNG is forecast to overtake the coal used in steel production to become our second biggest export, earning $42.4 billion, this year.

The growing trade gives Australia’s economy an important stake in China’s changing energy needs – polluting thermal coal power plants are being phased out in China’s planned economy, as gas is relentlessly phased in.

Australia’s gas production will expand further this year as three new LNG projects are completed. The projects include Woodside’s Pluto and Wheatstone projects in Western Australia and the expansion of Santos’s Gladstone LNG and the Australia Pacific LNG projects in Queensland. Shell’s floating LNG mega-ship Prelude, anchored off the coast of Western Australia is also nearing gas production.

This was almost certainly what China’s top US trade negotiator, vice commerce minister Wang Shouwen, had in mind this week as he described the “great potential” to increase LNG trade with Australia at the expense of the United States.

Langdong villager Wang, 73, is heating his food on a gas stove.

Langdong villager Wang, 73, is heating his food on a gas stove.

Photo: Sanghee Liu

China had been the second-biggest buyer of American LNG until June, when the brewing trade war saw Chinese purchases plummet, according to energy research firm Wood Mackenzie. Last week, American LNG was stung with a 10 per cent Chinese tariff.

“With the tariff on the US, Australian LNG will probably be the most important for spot volumes,” says Wood Mackenzie’s senior gas consultant in Beijing, Wen Wang.

She says “there isn’t enough LNG in the Asia Pacific region to meet China’s demand” for spot volumes – gas that is bought to meet immediate needs and outside of long-term contracts.

A new LNG terminal in the port of Tianjin opened in February to accept shipments from the Australia Pacific LNG project in Gladstone in Queensland.

Sinopec has a 25 per cent stake in the Queensland project, and built the Tianjin terminal and storage facility with the capacity to supply 10 million households in the Beijing, Hebei, Tianjin and Shandong areas.

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Australia’s industry department reported in June that trade negotiations between the Trump administration and China as a threat to Australian gas export growth – China put a deal on the table that would offer long-term LNG supply contracts to American companies to reduce the infamous trade deficit.

Trump rejected the deal, and called a trade war instead.

Australia supplied 45 per cent of China’s LNG last year. But there are other competitors. A Russian gas pipeline is due to be completed at the end of 2019. At China’s premier business conference, the Boao Forum, this year, Russia’s Gazprom boasted of its plans to be the biggest supplier of gas to Asia.

The world’s biggest LNG supplier, Qatar, this month signed a contract doubling the volumes it will sell to PetroChina in a 20-year deal.

The need to secure LNG may also be a motivation behind China’s Belt and Road Initiative moving into the Pacific. Papua New Guinea – being showered with BRI financing from Beijing – has a massive $19 billion ExxonMobil gas project which has contracts to deliver LNG by ship from Port Moresby to two major Chinese energy companies, Sinopec and PetroChina.

“The Chinese are talking to all LNG projects that have been proposed. Price is still the most important factor when they talk to new people,” says Wen.

In Landong village, Mr Zhang complains the price of gas has risen 35 cents a cubic metre since last year.

The government offers a gas subsidy of 137 cubic metres a year for each family. Bur Mr Zhang says it isn’t enough to provide the same heat as the old coal stove that warmed the floor and multiple rooms for a family with a baby and two elderly grandparents with ailments.

Greenpeace gobal air pollution analyst Lauri Myllyvirta says China’s latest target to reduce PM2.5 pollution by another 5 per cent compared with last winter is “very ambitious”.

“The biggest question on both household coal bans and industry measures is enforcement… the pressure on local governments to enforce was tremendous last winter because of the high level air quality target that had to be met,” he says.

This led to the winter gas surge taking industry by surprise.

According to Wen, Chinese gas companies are better prepared to avoid gas shortages this winter.

“Last year the shortages were down to provincial governments over-achieving quotas for converting households from coal to gas,” she says.

A villager in Langdong in the Tongzhou district of eastern Beijing trying to catch construction material. Langdong is one of 106 villages in Tongzhou that underwent coal-to-gas transformation in 2017.

A villager in Langdong in the Tongzhou district of eastern Beijing trying to catch construction material. Langdong is one of 106 villages in Tongzhou that underwent coal-to-gas transformation in 2017.

Photo: Sanghee Liu

“There are new policies from the provincial governments that say supply needs to be in place before homes are converted. The target is less aggressive … This year the quota for switching is 2 million.”

Still, China’s LNG terminals will need to work at 120 per cent capacity to meet the “very ambitious demand for LNG” as the heating season kicks in.

Gas supply to China will increase after 2020, when the Russian gas pipeline is completed, and more LNG terminals are built, she says. By then, the price may also ease for villagers.

Carpenters are building a new house in Landong in the traditional peak-roof style. It will have gas piped into the rooms, so the walls and ceiling will remain free from the tell-tale black stains of coal fire that also seeped into so many villagers’ lungs.

“After the gas meters were installed, the air was remarkably clear and the living environment was cleaner too,” says construction worker, Mr Zhang, 67.

Kirsty Needham is China Correspondent for The Sydney Morning Herald and The Age

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