IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v76y2022ics0957178722000340.html
   My bibliography  Save this article

China's textbook approach to regulatory reform of the natural gas market

Author

Listed:
  • Boute, Anatole
  • Fang, Mandy Meng

Abstract

Natural gas, as a transition fuel, is considered essential for China's decarbonization and local air protection policy, yet the regulatory structure China relies on to promote gas use remains under-researched. China's central government recognizes the need for market-based reforms of the gas sector, but what regulatory and policy adjustments are necessary to reorganize gas supply on a market basis? The textbook approach to energy market reform, and its implementation in the European Union, provides important guidance on how to create a regulatory basis to support competition in gas supply, provided national institutional characteristics are taken into account. This article engages in a comparative analysis of China's gas market reform policies and their implementation at the provincial level, focusing on Guangdong, a laboratory of economic reforms in China. The analysis demonstrates that reforms in 2019–2021 integrated key aspects of the textbook model in China's gas regulations, including third-party access, price deregulation and ownership unbundling. However, the textbook is of limited use to address remaining institutional barriers to reform, including resistance of distribution monopolies to competition from state-owned enterprises. Guangdong's experience shows that reform is possible, but only if accompanied by institutional and pricing adjustments reconciling vested interests with competition.

Suggested Citation

  • Boute, Anatole & Fang, Mandy Meng, 2022. "China's textbook approach to regulatory reform of the natural gas market," Utilities Policy, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:juipol:v:76:y:2022:i:c:s0957178722000340
    DOI: 10.1016/j.jup.2022.101369
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0957178722000340
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jup.2022.101369?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. Pollitt, M. & Yang, C-H. & Chen, H., 2017. "Reforming the Chinese Electricity Supply Sector: Lessons from International Experience," Cambridge Working Papers in Economics 1713, Faculty of Economics, University of Cambridge.
    2. Jing Xu & Michelle Hallack & Miguel Vazquez, 2017. "Applying a third party access model for China’s gas pipeline network: an independent pipeline operator and congestion rent transfer," Journal of Regulatory Economics, Springer, vol. 51(1), pages 72-97, February.
    3. Brousseau,Éric & Glachant,Jean-Michel (ed.), 2008. "New Institutional Economics," Cambridge Books, Cambridge University Press, number 9780521876605.
    4. Michael G. Pollitt, 2020. "Reforming the Chinese Electricity Supply Sector," Springer Books, Springer, number 978-3-030-39462-2, November.
    5. Pollitt, Michael G., 2012. "The role of policy in energy transitions: Lessons from the energy liberalisation era," Energy Policy, Elsevier, vol. 50(C), pages 128-137.
    6. Boqiang Lin & Chang Liu & Lei Lin, 2015. "The Effect of China’s Natural Gas Pricing Reform," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(4), pages 812-825, July.
    7. Lydia Jones & Michael J. Bloomfield, 2020. "PPPs in China: Does the Growth in Chinese PPPs Signal a Liberalising Economy?," New Political Economy, Taylor & Francis Journals, vol. 25(5), pages 829-847, July.
    8. Zheng, Lei & Cheng, Shikun & Han, Yanzhao & Wang, Min & Xiang, Yue & Guo, Jiali & Cai, Di & Mang, Heinz-Peter & Dong, Taili & Li, Zifu & Yan, Zhengxu & Men, Yu, 2020. "Bio-natural gas industry in China: Current status and development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 128(C).
    9. Ma, Jinlong, 2011. "On-grid electricity tariffs in China: Development, reform and prospects," Energy Policy, Elsevier, vol. 39(5), pages 2633-2645, May.
    10. ., 2007. "Introduction and overview," Chapters, in: International Economic Law and the Digital Divide, chapter 1, Edward Elgar Publishing.
    11. Shi, Xunpeng & Padinjare Variam, Hari Malamakkavu, 2016. "Gas and LNG trading hubs, hub indexation and destination flexibility in East Asia," Energy Policy, Elsevier, vol. 96(C), pages 587-596.
    12. Wang, Tiantian & Zhang, Dayong & Ji, Qiang & Shi, Xunpeng, 2020. "Market reforms and determinants of import natural gas prices in China," Energy, Elsevier, vol. 196(C).
    13. 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.
    14. Dong, Xiucheng & Pi, Guanglin & Ma, Zhengwei & Dong, Cong, 2017. "The reform of the natural gas industry in the PR of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 582-593.
    15. Jamasb, T. & Mota, R. & Newbery, D. & Pollitt, M., 2004. "‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’," Cambridge Working Papers in Economics 0439, Faculty of Economics, University of Cambridge.
    16. Brousseau,Éric & Glachant,Jean-Michel (ed.), 2008. "New Institutional Economics," Cambridge Books, Cambridge University Press, number 9780521700160.
    17. Qin, Yue & Tong, Fan & Yang, Guang & Mauzerall, Denise L., 2018. "Challenges of using natural gas as a carbon mitigation option in China," Energy Policy, Elsevier, vol. 117(C), pages 457-462.
    18. 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.
    Full references (including those not matched with items on IDEAS)

    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. 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).
    2. Michael Pollitt, 2021. "Measuring the Impact of Electricity Market Reform in a Chinese Context," Working Papers EPRG2111, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. Wei, Qi & Zhou, Peng & Shi, Xunpeng, 2023. "The congestion cost of pipeline networks under third-party access in China's natural gas market," Energy, Elsevier, vol. 284(C).
    4. Gao, Yanyan & Zheng, Jianghuai, 2022. "Clearing the air through pipes? An evaluation of the air pollution reduction effect of China's natural gas pipeline projects," Energy Policy, Elsevier, vol. 160(C).
    5. Lin, Boqiang & Li, Zhensheng, 2021. "Does natural gas pricing reform establish an effective mechanism in China: A policy evaluation perspective," Applied Energy, Elsevier, vol. 282(PA).
    6. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    7. Zhou, Zhongbing & Qin, Quande, 2020. "Epistemological dominance and ignorance of the comparative advantages of China's shale gas: Evidence from international scientific journals," Energy Policy, Elsevier, vol. 138(C).
    8. Jamasb,Tooraj & Nepal,Rabindra & Timilsina,Govinda R., 2015. "A quarter century effort yet to come of age : a survey of power sector reforms in developing countries," Policy Research Working Paper Series 7330, The World Bank.
    9. 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.
    10. Tooraj Jamasb & Rabindra Nepal & Govinda R. Timilsina, 2017. "A Quarter Century Effort Yet to Come of Age: A Survey of Electricity Sector Reform in Developing Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    11. Wang, Peng & Yang, Muyi & Mamaril, Kristy & Shi, Xunpeng & Cheng, Beibei & Zhao, Daiqing, 2021. "Explaining the slow progress of coal phase-out: The case of Guangdong-Hong Kong-Macao Greater Bay Region," Energy Policy, Elsevier, vol. 155(C).
    12. Wang, Zuyi & Kim, Man-Keun, 2022. "Price bubbles in oil & gas markets and their transfer," Resources Policy, Elsevier, vol. 79(C).
    13. 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).
    14. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.
    15. Liu, Chang & Lin, Boqiang, 2018. "Analysis of the changes in the scale of natural gas subsidy in China and its decomposition factors," Energy Economics, Elsevier, vol. 70(C), pages 37-44.
    16. Chai, Jian & Wei, Zhaohao & Hu, Yi & Su, Siping & Zhang, Zhe George, 2019. "Is China's natural gas market globally connected?," Energy Policy, Elsevier, vol. 132(C), pages 940-949.
    17. Wang, Xiaolin & Qiu, Yangyang & Chen, Jun & Hu, Xiangping, 2022. "Evaluating natural gas supply security in China: An exhaustible resource market equilibrium model," Resources Policy, Elsevier, vol. 76(C).
    18. Li, Fengyun & Li, Xingmei, 2022. "An empirical analysis on regional natural gas market of China from a spatial pattern and social network perspective," Energy, Elsevier, vol. 244(PA).
    19. 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.
    20. Catherine Locatelli & Sylvain Rossiaud, 2011. "A neoinstitutionalist interpretation of the changes in the Russian oil model," Post-Print halshs-00631115, HAL.

    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:juipol:v:76:y:2022:i:c:s0957178722000340. 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: https://www.sciencedirect.com/journal/utilities-policy .

    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.