IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v152y2021ics0301421521000902.html
   My bibliography  Save this article

Optimal scale of natural gas reserves in China under increasing and fluctuating demand: A quantitative analysis

Author

Listed:
  • Li, Tianxiao
  • Liu, Pei
  • Li, Zheng

Abstract

Reducing carbon emissions in China is critical to global low-carbon transition. Switching coal to natural gas in end-use sectors is a key mitigation strategy in China, whilst insufficient natural gas reserve capacity hinders the growth of natural gas consumption. Besides strategic reserves, peak-shaving reserves are vital to tackle seasonal demand fluctuation. Identifying an appropriate scale of natural gas reserves can significantly reduce costs, whilst current studies focus on strategic reserves. In this paper, a multi-scale method is proposed to quantify the optimal scale of natural gas reserves in China, which combines three sub-models with matched temporal-spatial resolutions tackling daily, monthly peak-shaving reserves and strategic reserves respectively. Results show that the optimal scale of natural gas reserves is 14.2 percent of annual demand, higher than the level of 5.2 percent in 2017, and lower than policy targets of 15.6 percent. Results reflect the serious shortage of reserve capacity and the need of fast expansion, whilst pointing out that a small reduction in policy targets can support natural gas growth at lower costs. The optimal scale of daily, monthly peak-shaving reserves and strategic reserves is pointed out, which is 0.6, 8 and 5.6 percent of annual demand respectively.

Suggested Citation

  • Li, Tianxiao & Liu, Pei & Li, Zheng, 2021. "Optimal scale of natural gas reserves in China under increasing and fluctuating demand: A quantitative analysis," Energy Policy, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:enepol:v:152:y:2021:i:c:s0301421521000902
    DOI: 10.1016/j.enpol.2021.112221
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421521000902
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2021.112221?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wu, Gang & Wei, Yi-Ming & Nielsen, Chris & Lu, Xi & McElroy, Michael B., 2012. "A dynamic programming model of China's strategic petroleum reserve: General strategy and the effect of emergencies," Energy Economics, Elsevier, vol. 34(4), pages 1234-1243.
    2. Stefanos G. Baratsas & Alexander M. Niziolek & Onur Onel & Logan R. Matthews & Christodoulos A. Floudas & Detlef R. Hallermann & Sorin M. Sorescu & Efstratios N. Pistikopoulos, 2021. "A framework to predict the price of energy for the end-users with applications to monetary and energy policies," Nature Communications, Nature, vol. 12(1), pages 1-12, December.
    3. Zhang, Qi & Li, Zhan & Wang, Ge & Li, Hailong, 2016. "Study on the impacts of natural gas supply cost on gas flow and infrastructure deployment in China," Applied Energy, Elsevier, vol. 162(C), pages 1385-1398.
    4. Lin, Boqiang & Wang, Ting, 2012. "Forecasting natural gas supply in China: Production peak and import trends," Energy Policy, Elsevier, vol. 49(C), pages 225-233.
    5. Kumar Biswajit Debnath & Monjur Mourshed, 2018. "Challenges and gaps for energy planning models in the developing-world context," Nature Energy, Nature, vol. 3(3), pages 172-184, March.
    6. Kruyt, Bert & van Vuuren, D.P. & de Vries, H.J.M. & Groenenberg, H., 2009. "Indicators for energy security," Energy Policy, Elsevier, vol. 37(6), pages 2166-2181, June.
    7. Zhang, Xiao-Bing & Fan, Ying & Wei, Yi-Ming, 2009. "A model based on stochastic dynamic programming for determining China's optimal strategic petroleum reserve policy," Energy Policy, Elsevier, vol. 37(11), pages 4397-4406, November.
    8. Liao, Shujie & Wang, Fengxia & Wu, Ting & Pan, Wei, 2016. "Crude oil price decision under considering emergency and release of strategic petroleum reserves," Energy, Elsevier, vol. 102(C), pages 436-443.
    9. Bai, Yang & Dahl, Carol, 2018. "Evaluating the management of U.S. Strategic Petroleum Reserve during oil disruptions," Energy Policy, Elsevier, vol. 117(C), pages 25-38.
    10. Almansoori, A. & Betancourt-Torcat, A., 2016. "Design of optimization model for a hydrogen supply chain under emission constraints - A case study of Germany," Energy, Elsevier, vol. 111(C), pages 414-429.
    11. Guo, Zheng & Ma, Linwei & Liu, Pei & Jones, Ian & Li, Zheng, 2016. "A multi-regional modelling and optimization approach to China's power generation and transmission planning," Energy, Elsevier, vol. 116(P2), pages 1348-1359.
    12. Ma, Linwei & Geng, Jia & Li, Weqi & Liu, Pei & Li, Zheng, 2013. "The development of natural gas as an automotive fuel in China," Energy Policy, Elsevier, vol. 62(C), pages 531-539.
    13. Wei, Yi-Ming & Wu, Gang & Fan, Ying & Liu, Lan-Cui, 2008. "Empirical analysis of optimal strategic petroleum reserve in China," Energy Economics, Elsevier, vol. 30(2), pages 290-302, March.
    14. Hu, Junfeng & Kwok, Gabe & Xuan, Wang & Williams, James H. & Kahrl, Fredrich, 2013. "Using natural gas generation to improve power system efficiency in China," Energy Policy, Elsevier, vol. 60(C), pages 116-121.
    15. He, Yongda & Lin, Boqiang, 2017. "The impact of natural gas price control in China: A computable general equilibrium approach," Energy Policy, Elsevier, vol. 107(C), pages 524-531.
    16. Paltsev, Sergey & Zhang, Danwei, 2015. "Natural gas pricing reform in China: Getting closer to a market system?," Energy Policy, Elsevier, vol. 86(C), pages 43-56.
    17. Bai, Y. & Dahl, C.A. & Zhou, D.Q. & Zhou, P., 2014. "Stockpile strategy for China׳s emergency oil reserve: A dynamic programming approach," Energy Policy, Elsevier, vol. 73(C), pages 12-20.
    18. Gao, Dan & Li, Zheng & Liu, Pei & Zhao, Jiazhu & Zhang, Yuning & Li, Canbing, 2018. "A coordinated energy security model taking strategic petroleum reserve and alternative fuels into consideration," Energy, Elsevier, vol. 145(C), pages 171-181.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xie, Minghua & Wei, Xiaonan & Chen, Chuanglian & Sun, Chuanwang, 2022. "China's natural gas production peak and energy return on investment (EROI): From the perspective of energy security," Energy Policy, Elsevier, vol. 164(C).
    2. Chen, Chen & Yuan, Haoyu & Bi, Rongshan & Wang, Na & Li, Yujiao & He, Yan & Wang, Fei, 2022. "A novel conceptual design of LNG-sourced natural gas peak-shaving with gas hydrates as the medium," Energy, Elsevier, vol. 253(C).
    3. Jia, Weidong & Gong, Chengzhu & Pan, Kai & Yu, Shiwei, 2023. "Potential changes of regional natural gas market in China amidst liberalization: A mixed complementarity equilibrium simulation in 2030," Energy, Elsevier, vol. 284(C).
    4. Xin Li & Jie Zhang & Rongxin Li & Qi Qi & Yundong Zheng & Cuinan Li & Ben Li & Changjun Wu & Tianyu Hong & Yao Wang & Xiaoxiao Du & Zaipeng Zhao & Xu Liu, 2021. "Numerical Simulation Research on Improvement Effect of Ultrasonic Waves on Seepage Characteristics of Coalbed Methane Reservoir," Energies, MDPI, vol. 14(15), pages 1-15, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Zhen & Tang, Yuk Ming & Chau, Ka Yin & Chien, Fengsheng & Iqbal, Wasim & Sadiq, Muhammad, 2021. "Incorporating strategic petroleum reserve and welfare losses: A way forward for the policy development of crude oil resources in South Asia," Resources Policy, Elsevier, vol. 74(C).
    2. Sun, Xiaolei & Liu, Chang & Chen, Xiuwen & Li, Jianping, 2017. "Modeling systemic risk of crude oil imports: Case of China’s global oil supply chain," Energy, Elsevier, vol. 121(C), pages 449-465.
    3. Bai, Y. & Dahl, C.A. & Zhou, D.Q. & Zhou, P., 2014. "Stockpile strategy for China׳s emergency oil reserve: A dynamic programming approach," Energy Policy, Elsevier, vol. 73(C), pages 12-20.
    4. Rioux, Bertrand & Galkin, Philipp & Murphy, Frederic & Feijoo, Felipe & Pierru, Axel & Malov, Artem & Li, Yan & Wu, Kang, 2019. "The economic impact of price controls on China's natural gas supply chain," Energy Economics, Elsevier, vol. 80(C), pages 394-410.
    5. Jiao, Jian-Ling & Han, Kuang-Yi & Wu, Gang & Li, Lan-Lan & Wei, Yi-Ming, 2014. "The effect of an SPR on the oil price in China: A system dynamics approach," Applied Energy, Elsevier, vol. 133(C), pages 363-373.
    6. Bai, Yang & Zhou, Peng & Tian, Lixin & Meng, Fanyi, 2016. "Desirable Strategic Petroleum Reserves policies in response to supply uncertainty: A stochastic analysis," Applied Energy, Elsevier, vol. 162(C), pages 1523-1529.
    7. Chen, Xin & Mu, Hailin & Li, Huanan & Gui, Shusen, 2014. "Using stockpile delegation to improve China׳s strategic oil policy: A multi-dimension stochastic dynamic programming approach," Energy Policy, Elsevier, vol. 69(C), pages 28-42.
    8. Xie, Nan & Yan, Zhijun & Zhou, Yi & Huang, Wenjun, 2017. "China's optimal stockpiling policies in the context of new oil price trend," Energy Policy, Elsevier, vol. 105(C), pages 332-340.
    9. Zhao, Chunfu & Chen, Bin, 2014. "China’s oil security from the supply chain perspective: A review," Applied Energy, Elsevier, vol. 136(C), pages 269-279.
    10. Gong, Chengzhu & Wu, Desheng & Gong, Nianjiao & Qi, Rui, 2020. "Multi-agent mixed complementary simulation of natural gas upstream market liberalization in China," Energy, Elsevier, vol. 200(C).
    11. Zhang, Xiao-Bing & Qin, Ping & Chen, Xiaolan, 2017. "Strategic oil stockpiling for energy security: The case of China and India," Energy Economics, Elsevier, vol. 61(C), pages 253-260.
    12. Feijoo, Felipe & Iyer, Gokul C. & Avraam, Charalampos & Siddiqui, Sauleh A. & Clarke, Leon E. & Sankaranarayanan, Sriram & Binsted, Matthew T. & Patel, Pralit L. & Prates, Nathalia C. & Torres-Alfaro,, 2018. "The future of natural gas infrastructure development in the United states," Applied Energy, Elsevier, vol. 228(C), pages 149-166.
    13. Girma T. Chala & Abd Rashid Abd Aziz & Ftwi Y. Hagos, 2018. "Natural Gas Engine Technologies: Challenges and Energy Sustainability Issue," Energies, MDPI, vol. 11(11), pages 1-44, October.
    14. Gao, Dan & Li, Zheng & Liu, Pei & Zhao, Jiazhu & Zhang, Yuning & Li, Canbing, 2018. "A coordinated energy security model taking strategic petroleum reserve and alternative fuels into consideration," Energy, Elsevier, vol. 145(C), pages 171-181.
    15. Zhang, Xiao-Bing & Zheng, Xinye & Qin, Ping & Xie, Lunyu, 2018. "Oil import tariff game for energy security: The case of China and India," Energy Economics, Elsevier, vol. 72(C), pages 255-262.
    16. Zhang, Xiao-Bing, 2014. "Optimal strategic oil stockpiling and import tariffs: The case of China," Energy Economics, Elsevier, vol. 45(C), pages 463-474.
    17. Zhang, Yi & Ji, Qiang & Fan, Ying, 2018. "The price and income elasticity of China's natural gas demand: A multi-sectoral perspective," Energy Policy, Elsevier, vol. 113(C), pages 332-341.
    18. Zhou, Zhongbing & Qin, Quande, 2020. "Decoding China's natural gas development: A critical discourse analysis of the five-year plans," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    19. Li, Lanlan & Luo, Xuan & Zhou, Kaile & Xu, Tingting, 2018. "Evaluation of increasing block pricing for households' natural gas: A case study of Beijing, China," Energy, Elsevier, vol. 157(C), pages 162-172.
    20. Matsumoto, Ken’ichi & Shiraki, Hiroto, 2018. "Energy security performance in Japan under different socioeconomic and energy conditions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 391-401.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:152:y:2021:i:c:s0301421521000902. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.