China Is Changing Its Coal Use, and It Affects the Whole World
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 31 January 2022
⏱️ 45 minutes
🧾️ Download transcript
Summary
Over the last several months, Europe has seen its power costs soar. There are many drivers of it, but one factor has been a shift in Chinese energy consumption. While China has plenty of domestic coal resources, from time to time it imports quite a bit, depending on transportation costs. This can have major ramifications for prices outside of its borders. Meanwhile, China is undergoing a meaningful change to move off of coal and rely more on renewables and nuclear power. To help us understand what it means, we speak with Alex Turnbull, the author of a new paper on Chinese goal use, to break down what happened, and where it's going.
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| 0:30.4 | Hello and welcome to another episode of the Adlots podcast. I'm Tracy Alloway. |
| 0:59.4 | And I'm Joe, why isn't all? So, Joe, we've been talking quite a bit about supply chains. |
| 1:06.0 | That's correct. For now, like pretty much well over a year, but yes, absolutely. |
| 1:10.5 | It's not going away. Yeah, that's probably an understatement. So, one of the things we have |
| 1:16.4 | definitely learned over the past year or so is that when one part of the global supply chain, |
| 1:22.2 | I guess flaps its wings or experiences a disruption or whatever, it tends to ripple through a bunch |
| 1:28.8 | of other things. And I think that's arguably what we've seen with energy prices and with the big |
| 1:34.5 | surge in prices over the past few months. Yeah, I think like commodities and of course, commodities |
| 1:40.6 | are very sort of hard. You can't delink them from global industrial processes and supply |
| 1:46.0 | chains in general. Like it feels like when we talk commodities that it's like, A, there is a very |
| 1:51.6 | high level of demand. The GDP around the world growing very fast, particularly as economies return |
| 1:58.0 | to trend or in some cases maybe even overshoot the previous trend. And then there is also these |
| 2:04.3 | sort of idiosyncratic factors that pop up that are not really macro. Maybe it's related to weather. |
| 2:10.7 | Maybe it's related to environmental changes that inhibit production. Maybe it's for something |
| 2:14.8 | else. And it's like that policy. So, it's like that combination of very tight, very strong demand. |
| 2:21.6 | And then any ripple or any speed bump anywhere or any change on the supply side really gets magnified. |
| 2:27.3 | Yeah, so this was something that Jeff Curry at Goldman Sachs brought up on one of our episodes |
| 2:33.6 | last year when we were discussing high energy prices and the commodities rally. I think he said that |
| 2:41.2 | actually what was happening in European gas actually began with a coal shortage in China. So, |
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