China pressures mines to produce "as much coal as possible"

China increases coal production due to energy crisis 0:57

Atlanta (CNN Business) -

China's government has ordered the country's coal mines to "produce as much coal as possible," as it seeks to increase production as winter approaches and alleviate the current energy crisis.

The announcement by the National Development and Reform Commission of China (NDRC) comes after weeks of power shortages in many provinces, forcing the government to ration electricity during peak hours and some factories. to suspend production.

The problem affected economic growth, as industrial production declined.

Beijing pressured the coal mines to cut their output at the beginning of the year as the country pursued ambitious targets to cut carbon emissions.

But the demand for projects that require fossil fuels has increased, and there has not been enough energy for everyone.

To combat the problem, China began ordering coal mines to increase production, and authorities in Inner Mongolia, the country's second largest coal-producing province, ordered dozens of mines to increase production earlier this month.

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Now, the NDRC requires mines across the country to increase production as much as they can by the last quarter of 2021. The closure of coal mines is prohibited.

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Sustained Increase in China's Coal Inventories

Coal inventories have risen steadily since late September, according to the commission.

Northeast provinces, where acute shortages led to electricity rationing, have stored enough coal to support 24 days of electricity use, an 11-day increase from early October.

The government took other measures to alleviate the crisis.

It increased the price of electricity by 20% in the provinces with the highest demand to close the price gap between coal and energy.

China's power plants were unwilling to increase production because of the high cost of coal.

And since Beijing controls the cost of energy, producers could not raise prices without the go-ahead from the government.

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The authorities also support other forms of energy to alleviate the problems.

The CNDR has called on companies that generate nuclear, solar, hydro and wind power to avoid blackouts in residential areas.

Energy shortages in the world's second largest economy continue to threaten global supply chains.

Suppliers to major US companies, such as Apple (AAPL), have reduced their production levels to cooperate with electricity restrictions imposed by local governments.

Energy problems do not only occur in China.

The Indian authorities have warned that key regions could face an "energy crisis" as the cost of electricity rises.

The cost of natural gas has also skyrocketed in Europe.

Laura He contributed to this article.

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