China’s Energy Crisis Affects Plastics Manufacturing

From August 2020 to August 2021, China produced and exported nearly 90 million metric tons of plastic products. That might not seem like much; but as a point of reference, the Great Wall of China weighs only 58 million tons.

China has developed an exceptional economic interest in plastics manufacturing, exporting nearly $50 billion worth of products annually. Chinese plastics manufacturing provides approximately one-third of the plastic used in the world today.  

That’s about to be put on hold.

The Chinese response to climate change may significantly damage their economy and the global market. It’s also likely to tank any hope that the worldwide supply chain will become less congested.

How the crisis affects plastics

The crisis affects plastics because manufacturing requires energy. In China, that energy comes mainly from coal. Thanks to Chinese President Xi Jinping’s decarbonization goals, China is cutting back its energy consumption and carbon emissions.

Shutting down some of the less cost-effective coal plants has caused a price increase in coal. In China, price caps have prevented suppliers from passing increased production costs on to the consumers. The suppliers could not operate at a loss, so they quit. Shutting down their plants created a coal shortage.

When hydroelectricity capacity decreases

Limited coal production points logically to other energy sources, like hydroelectricity, for energy needs. In the past, China has used this two-pronged solution to meet energy demands.

However, this year, a drought reduced hydroelectricity capacity in China.

With less available energy, China rationed electricity for many of its provinces. The capacity to provide power for residential, commercial, and industrial energy consumption does not exist.

The overall effect in China 

Worth nearly $580B in 2020, the global plastic market size depends on production and transport capabilities. China, which has the second-largest economy globally, has become one of the largest plastics manufacturers in the world. Importing and exporting plastic is an economic staple. Consumers rely on plastic products daily.

Continued energy rationing, rolling blackouts, and closed factories are choking China’s hopes for economic growth.

Global impact

The impact on the rest of the world cannot go unnoticed. Already consumers are concerned about product availability as 2021 winds down because container ships anchor in wait outside ports.

These container ships carry the manufactured plastic exports that the world depends on such as technology, food packaging containers, clothing, furnishings, toys, and even medical equipment and disease protection devices like latex gloves.

Unless China can figure out how to balance its commitment to decarbonization with its need for energy, it and many other nations worldwide will continue to feel the impact.