China and India face a growing energy crisis

China increases coal production due to energy crisis 0:57

(CNN) -

Two of the largest economies in Asia and the world are rushing to contain an energy crisis that worsens by the day.

China is trying to quell concerns about rising prices as its main coal mining centers face heavy rains and deadly accidents, problems that are hampering efforts to cope with power shortages.

For their part, some Indian leaders warn that some key regions, including the capital New Delhi, could suffer an "energy crisis" due to the increase in the cost of electricity, although the central government says the country has sufficient supplies. of coal to meet demand.

• China orders coal mines to increase production due to power shortage

Demand for energy is skyrocketing around the world as the global economy reopens.

But the offer is not keeping up.

A power plant in China that uses coal.

Torrential rains and fatal accidents worry China

In China, power shortages are the result of a combination of factors, from the post-pandemic construction boom to the nationwide government push to cut carbon emissions, which led to hundreds of coal mines being cut off. shutting down or reducing production early this year.

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Restrictions on coal from a key supplier, Australia, and weather problems have compounded the problem, which has been exacerbated this week by heavy rains that hit Shanxi and Shaanxi provinces, two key mining centers accounting for nearly half of the country's coal production.

An incident related to the collapse of the roof of a coal mine in Xianyang city, Shaanxi, has worsened the situation.

The incident, in which four miners were killed and four others seriously injured, according to the state-run Xinhua news agency, came days after the provincial government warned all mines to tighten security checks.

Xinhua said the local government is still investigating the cause of the collapse.

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The price of coal goes up

The price of thermal coal, which is used mainly to generate energy, has continued to rise.

Futures rose 11% on Tuesday on the Zhengzhou Commodity Exchange to hit a new record of nearly 1,508 yuan (US $ 234) per metric ton.

This rise came after an 8% increase on Monday.

"We expect China's coal and power supply crisis to persist into winter," Citi analysts wrote in an investigative report on Tuesday, adding that the problem "would increase risks of stagflation and growth pressures on the economy. Chinese and global economy this coming winter, [pushing] energy prices higher. "

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The "extremely abnormal" weather forced the closure of 60 coal mines in Shanxi earlier this month, according to an article published Monday on the website of the Ministry of Emergency Management.

Since then, almost all of them have resumed production, the Shanxi government said on Tuesday, although four remain idle.

The National Reform and Development Commission - China's top economic planner - has tried to defuse concern over the growing problem, reiterating Tuesday that the government will allow coal-fired power producers to charge more for power.

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Starting Friday, all industrial and commercial power users will have to buy electricity at "market-oriented" prices, the agency said.

Beijing has already made it clear that energy prices may rise as much as 20% from current base levels, or reference prices set by the government.

Currently, the limit is 10%.

Residents and the agricultural industry will not be affected, the agency said.

Indian leaders warn of possible "energy crisis"

In India, meanwhile, state leaders are warning the central government about the risks of a coal shortage.

Over the weekend, Delhi's Chief Minister Arvind Kejriwal tweeted that the capital "may face an electricity crisis," adding that he had recently written to Prime Minister Narendra Modi to warn him of the power shortage.

Kejriwal called on the government to divert the supply of coal and gas to the utilities that supply the capital, saying it was "essential to maintain uninterrupted power in Delhi, which supplies strategic and essential facilities of national importance."

Andhra Pradesh's chief minister for southern Andhra Pradesh, Jagan Mohan Reddy, also recently told Modi that the situation was "alarming".

Coal stocks in most of India's power plants have fallen to critically low levels.

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As many as 61 of the 135 coal-fired power plants in Asia's third largest economy have two days - or less - of coal supplies, India's Central Electricity Authority (CEA) reported on Sunday.

Coal stocks at 16 of these plants have been reduced to zero, he added.

Sufficient supplies, says government

But the Indian government assured that it has enough supplies to meet the demand.

Total fuel stocks at coal plants stand at about 7.2 million metric tons, which is enough for four days, the Coal Ministry said in a statement Sunday.

The agency added that the government-owned mining giant Coal India has stocks of more than 40 million metric tons of coal.

"Any fear of power supply disruption is totally out of the question," the ministry said.

However, the situation in India "remains precarious," analysts at ANZ Research wrote on Tuesday.

Although Coal India claims that its daily supplies have increased, analysts noted that some provinces "are receiving less than half of their contracted volumes" and that power shortages in Punjab and Jharkhand states are worsening.

With information from Diksha Madhok.

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