Without question, there’s one city on the planet cloaked in thicker, dirtier smog than any other…
The air quality in Beijing has become so poor that passing satellites can no longer get a clear picture. (I imagine the entire area being one gigantic gray blob from orbit.)
The situation has become so dire, in fact, that government ministers are taking some rather drastic measures.
The city now issues a warning called a “haze alert” when smog levels get particularly nasty, and just a few weeks ago, a blue-coded alert for haze was given (for the first time in history, mind you) as the air quality in Beijing was rated as “severe contamination.”
Of course, this kind of situation warrants more than simply wearing masks and keeping young children and the elderly indoors…
When the haze alert is in effect, you can expect factories to shut down, and roughly half of the city’s five million automobiles are forced off the road.
This is all well and good in the short term — but what’s China’s serious long-term solution for pollution?
For starters, the Chinese must cut off the most egregious sources of this pollution.
I’m talking about coal.
The statistics are downright outrageous: Although China only holds roughly 13% of the world’s proven reserves of coal, more than 80% of its electricity is coal-generated.
Not only was the Middle Kingdom the world’s largest coal producer last year, but it was easily the highest coal importer as well.
Trust me, this love affair isn’t going to end any time soon…
China has almost 400 coal-fired power plants on the books slated for construction. If you think their electrical generation is heavily geared towards coal, imagine how things will look when these plants are up and running, and China’s coal-fired power generation jumps 75%.
But let’s get back to Beijing’s smog woes…
Fortunately, there is something being done to amend the degrading air quality.
In order to combat the smog invasion, the city is turning to natural gas.
Compared to coal, natural gas is the lesser of two evils when it comes to fossil fuels.
The government is planning to replace four of Beijing’s coal-fired plants with plants fueled by natural gas. This $8 billion project is expected to replace the nearly ten million metric tons of coal that are burned by those four plants. For those of you keeping count, that’s 40% of the coal the city burns each year.
Now, it’s important to understand that this switch to natural gas isn’t some new phenomenal epiphany for the Asian nation…
China’s unrelenting demand for natural gas has been growing since the 1990s. Take a look:
But feeding this natural gas beast is easier said than done…
Feeding the Beast
Have you ever wondered to what lengths some companies will go to tap into the burgeoning Asian LNG market?
To get a good idea, all you need to do is take note of what’s happening in Alaska right now…
Three of the world’s largest publicly traded oil and gas companies are making a radical decision in Alaska that will change the state’s future in America’s energy industry.
In short, the three companies are about to spend $65 billion over the next ten years building LNG facilities in the Frontier State.
Exxon and its partners in the project just announced the site of the new export terminal will be located on the Kenai Peninsula, roughly 60 miles southwest of Anchorage. The project includes an 800-mile pipeline that will ship future natural gas production from the North Slope all the way down to the terminal.
When all is said and done, these companies are expecting about 3.5 billion cubic feet of natural gas per day will be shipped across the Pacific in the form of LNG.
There’s just one little hitch in their plans…
Alaska has to actually produce that much natural gas.
Personally, I’m playing this North American LNG race to win.
That said, I’m betting the supermajors (who are once again late to the party) aren’t a strong option for individual investors. And I have a feeling another set of LNG exports will hit Asian ports long before Exxon’s ground breaking ceremony at its new Alaska terminal.
Until next time,
A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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