China: As unresolved issues like climate change are expected to have an impact on the country's long-term development of sustainable energy, companies have been prompted by the ongoing power crisis in China's Sichuan province to reconsider their energy sourcing strategy and consider turning back to the reliable supply of fossil fuel, according to analysts.
Around 80% of the electricity in the southwestern region is produced by dams, and analysts believe that the recent high summer temperatures have demonstrated the severe impact that climate change can have on hydropower, which is crucial for other regions of China, including Yunnan province.

According to Yuan Jiahai, a professor at the School of Economics and Management at North China Electric Power University, climate change is making the hydropower depletion in Sichuan province into a long-term issue that will also have an impact on the supply of other renewable energy sources, like wind and photovoltaics.
Other industrial hubs along the nation's east coast, such as Jiangsu and Zhejiang, as well as Shanghai, Chongqing, and Hunan, receive electricity from Sichuan's hydropower projects.

However, the Yangtze River's water flow has been constrained by the ongoing high temperatures, and this month, water flows into hydropower reservoirs have decreased by as much as 50%.
"This is a significant, ongoing issue. According to Norman Waite, an energy finance analyst at the Ohio-based Institute for Energy Economics and Financial Analysis, the majority of China's hydropower is located in the southwest of the country, including Sichuan. The energy generated there is transmitted to important population and industrial centres throughout the nation.

Unfortunately, China will have to make up for power generation shortfalls with coal power, which will only worsen global warming if dams are losing energy output as water levels drop. It currently has no other option.
China will work to reach its peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060, according to President Xi Jinping, who spoke at a United Nations summit in September.

Climate change is posing more and more difficulties for the Chinese government's efforts to achieve decarbonization, according to Alfredo Montufar-Helu, director of insights for Asia at The Conference Board research association.

This occurred last year when floods swept through several Chinese provinces, which led to power outages in the nation's northeast. And this is what is happening in Sichuan right now, he said.
"Companies are definitely paying close attention to this, and I think it will force them to reconsider their approaches to sourcing energy."
Fossil fuels are still a possibility because, despite pressure to switch to renewable energy, what really matters to a business is finding a reliable energy source to prevent a disruption of operations.

Sichuan produced 4% of China's total value-added manufacturing output, second only to Shanghai, according to Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, who called Sichuan "clearly important."
Sichuan typically exports power to other provinces, but the central government determines how much goes where. Does it stay the same and rationing only affect Sichuan? Is it given out fairly? If so, should nearby provinces soon experience rationing as well? ", she asked.
According to Chinese media, the municipality of Chongqing, which is next to Sichuan, has also been adversely affected by drought and extreme heat, and has issues with its water supply that have a negative impact on farms and livestock.

According to Chinese media, the city's water conservation projects are only storing 63.3% of their standard level and 66 of the city's rivers have been cut off, and 25 of its reservoirs have dried up.

The report stated that as of Thursday, the city had experienced 11 straight days with high temperatures above 40 degrees Celsius (104 degrees Fahrenheit), and it is predicted that this will continue until Tuesday.
High energy-consuming businesses in the country's west, according to Lin Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University, are still not in a "unendurable situation."
Although Lin disagreed with the notion that climate change will fundamentally alter China's established hydropower infrastructure, he did admit that "extreme situations" like those in Sichuan might become "more frequent."

Lin claims that hydropower in China accounts for 17% of all national consumption.

In addition, these coastal provinces have nuclear power, said Yuan, a member of the Chinese Society of Electrical Engineering. "Provinces in the east have built more power sources on their own.
According to the China Electricity Council, the nation's significant hydropower investments totaled 22.2 billion yuan (US$3.27 billion) from January to April, a decrease of 27.2% compared to the same period last year.

Locally, only Sichuan and Yunnan will experience a significant impact, as will areas such as Guangdong that are heavily dependent on electricity from these two provinces," Lin continued.
According to a report by Chinese media outlet Caixin on Wednesday, Guangdong will add 6.7 million kilowatts of coal power projects, with the intention that they start generating electricity before 2024.

Due to higher capacity and carbon emissions targets, China has drastically reduced its coal power projects. However, in response to the severe national energy crisis in 2021, there has been an increase in coal-fired thermal power projects as a means of securing China's energy supply.
Data from Chinese financial firm Essence Securities showed that thermal power investments grew 88.4% year-on-year to 22.5 billion yuan (US$3.32 billion) in the second quarter of 2022.

Beijing has recently insisted that the power crisis that shook the country last year would not happen again. According to details of a speech published in the official QiXi magazine in May, Xi vowed that China would "never allow a massive power outage to happen again."
According to Shuang Ding, head of Greater China Economic Research at Standard Chartered, China's electricity shortage issue ranks "quite a low rank" among all the issues affecting its economy.
According to Shuang, unlike last year, China has opted to increase coal production to guarantee electricity supply.

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