Energy reduction policies causes unexpected diesel shortage in China

10:49, November 07, 2010      

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An unprecedented diesel shortage is sweeping through Chinese cities, as numerous enterprises have to resort to diesel fuel to generate electricity to continue operation during periods of forced power outages.

Some local governments are rushing to switch off electricity as part of their commitment to the central government on energy conservation and emissions reductions.

However, the blackouts have apparently led to the linking effect of the diesel shortage. Long queues of cars and even "Sold-out" signs at gas stations are increasingly common scenes in many cities.

Additionally, the market monitoring of the China Chamber of Commerce for the Petroleum Industry has acknowledged that more than 2,000 privately-owned gas stations in southern China had shut down due to their not having diesel fuel to sell.

In the industrial-centralized and developed regions, such as the Pearl River Delta and the Yangtze River Delta, hundreds of gas stations are awaiting diesel deliveries.

"I have been to dozens of stations around the city today. This is the only one with diesel for sale, but only a half-tank for each truck," a long haul truck driver, surnamed Huang, said in Ningbo, east China's Zhejiang province.

In spite of the critical limitation, Huang had waited for hours in the queue extending some 500 meters.

"It is not strange to us, long queues or days-long waiting comes along on our journey across many provinces such as Zhejiang, Jiangsu and Hubei," Huang said, because of the use of diesel generators by local enterprises.

During the period of the 11th Five-Year Plan (2006-2010), China sought to reduce energy consumption per GDP unit by 20 percent.

In the first four years of the 11th five-year plan, a 15.6 percent reduction (compared to between year 2005 and year 2009) was reached. But energy consumption per unit of GDP increased 0.09 percent in the first half of 2010, year on year.

In a hurry to meet their regional targets assigned by the central government, many local governments chose the blackout method for enterprises in the remaining two months. This method quickly spread to many provinces around China.

In Wenzhou city of Zhejiang Province, with China's most prosperous private economy, power supplies for some enterprises will be cut for two to four days following one day with electricity.

"My company's electricity consumption is about 150,000 kw-hr, but the local government's allotment is only 60,000 kw-hr." said the owner of an export-oriented farm products deep-processing company, who only gave his surname, Ye.

Just as is being done by many of his peers, Ye had to purchase a diesel generator with 200,000 yuan (about 30,000 U.S. dollars). It will cost him an additional 10,000 yuan (about 1,500 U.S. dollars) to generate electricity, twice the normal cost for electricity.

"It nearly forced me to lose money if I carried on production. However, to keep my clients in this harsh economic time, I had to continue my business," Ye said.

"The irrational blackout policy by some local governments is contrary to the energy conservation and emissions reduction target as was set by China's 11th Five-Year Plan," said Dr.Zhang Jianyu, China Program manager of the U.S. Environmental Defense Fund.

Zhang further explained that the blackout might stall the economic growth. Also, more emissions and fuel consumption might be produced by the diesel generators.

"The blackout is not a wise choice. What the local governments need to do now is to pay attention to change the mode of economic growth with high efficiency and low energy consumption," said Zhong Yongsheng, deputy director of the Center for China's Urban-Rural Development Studies.

Source: Xinhua


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