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China scales back northern gas push to avert heating crisis

China scales back northern gas push to avert heating crisis
From Reuters - December 7, 2017

BEIJING (Reuters) - Beijing scaled back its plan to convert northern cities to cleaner fuel this winter after provinces warned of gas shortages, residents struggled to keep warm and reports of freezing classrooms deepened concerns about a heating crisis.

The deceleration is the first admission from the central government that its effort to switch households and factories in the countrys smoggiest cities away from coal to gas or electric heating may have been implemented too quickly, and without the critical infrastructure and domestic output to meet the resulting surge in demand.

Chinas Ministry of Environment has told northern regions that have not converted to gas or electric heating they may burn coal or other fuels instead, financial magazine Caixin reported.

Caixin cited regulatory sources who confirmed to the publication that official orders were issued in a document.

It is not wrong for Beijing to push the coal-to-gas switch, but the process was a bit too fast and outpaced the markets capacity, said Xu Bo, a researcher with CNPCs Research Institute of Economics and Technology.

Suspending the project that stretches across 28 northern cities may have a limited impact as more than 4 million homes have already installed gas-fired radiators, while tens of thousands of factories have ripped out coal-fuelled boilers.

The extra consumption since the winter heating season started in mid-November has already triggered a surge in domestic gas prices to record highs and forced companies to take unprecedented, costly steps to ensure supplies.

Chinese LNG prices have surged over the past month, hitting record highs last week above 8,000 yuan ($1,210) per tonne, according to market.yeslng.com, an unregulated online exchange for domestic supplies of the fuel.

The governments retreat is a blow to a years-long push to wean China from coal, its favorite fuel, to help clear the nations smoggy skies, which have become a hot-button issue.

Beijing is under increasing social and economic pressure to deal with the chronic hazardous air that blankets the north and threatens peoples health.

RESORTING TO COAL

For now, concerns about keeping the worlds most populous nation from freezing have taken precedence.

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