The world faces a chilly winter as energy prices climb
The gas crisis has revealed Europe’s dependence on imported gas, but the rest of the world is facing higher bills too.
Chinese thermal coal prices have hit a record high. Flooding in the country’s northern Shanxi province, a major coal producer, sent prices on the Zhengzhou Commodity Exchange to ¥1,408 (£161) a tonne on Monday, says Laura He for CNN. That was an all-time high and more than double where they started the year. “Energy shortages have spread to 20 Chinese provinces in recent weeks, forcing the government to ration electricity during peak hours”.
In Europe gas prices have retreated from record highs set earlier this month, but Dutch wholesale prices are still up more than fivefold compared with a year ago. The gas crisis has revealed Europe’s dependence on imported gas, says David Sheppard in the Financial Times. Gas demand is concentrated in the winter months: “About 40% of total gas consumption in the UK goes directly to heating homes, largely condensed into a period of five [or] six months”. Europe has historically relied on Russian imports and liquefied natural gas (LNG) shipments to top it up during winter. But LNG from the likes of Qatar is now heading east as Asian demand for gas has gone up 50% over the past decade.
Moscow has suggested that swift German regulatory approval of its Nord Stream 2 pipeline could ease Europe’s energy woes, says The Observer. The pipeline is still not expected to come online for months. There are claims that the Kremlin has been playing politics with gas, but Russia has little interest in “undermining its finances” and “speeding up Europe’s decarbonisation” by withholding supplies. In any case, Nord Stream 2 is not the solution to the current crisis: even if the pipeline is swiftly approved it won’t be able to deliver significant amounts of gas before the new year.