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Natural Gas Pricing Mechanism Reform and its Impacts on Future Energy Options in China

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  • Mingye Gao
  • Zhen Wang
  • Qianyu Wu
  • Yang Yang

Abstract

Natural gas is the cleanest fossil fuel. In recent years, its demand in China has been increasing at a rapid pace, but its pricing mechanism is still based on the planned economy system and is not keeping up pace with that of its consumption. Therefore, reforming the existing pricing system is of great significance. This paper first reviews the evolution of the pricing mechanism of natural gas in China, and then examines with model predictions the feasibility of a nationwide implementation of the reform programs currently carried out in Guangdong and Guangxi and its possible impacts. The results show that the reform can: (a) benefit Chinese natural gas producers and importers by increasing their profits, (b) increase the production of natural gas and accelerate the development of the industry, (c) reduce the use of natural gas in the chemical industry and optimize the energy consumption structure in China, (d) change the current energy portfolio in China and achieve the goal of sustainable development, and (e) help Chinese companies enhance their ability of adapting to high prices and promote their international competitiveness.

Suggested Citation

  • Mingye Gao & Zhen Wang & Qianyu Wu & Yang Yang, 2013. "Natural Gas Pricing Mechanism Reform and its Impacts on Future Energy Options in China," Energy & Environment, , vol. 24(7-8), pages 1209-1227, December.
    • Handle: RePEc:sae:engenv:v:24:y:2013:i:7-8:p:1209-1227
    DOI: 10.1260/0958-305X.24.7-8.1209
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    References listed on IDEAS

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    1. G. Campbell Watkins & Leonard Waverman, 1993. "How Might North American Oil and Gas Markets Have Performed with a Free Trade Agreement in 1970?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 119-152.
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    Cited by:

    1. Zhang, ZhongXiang, 2014. "Programs, Prices and Policies Towards Energy Conservation and Environmental Quality in China," Working Papers 249427, Australian National University, Centre for Climate Economics & Policy.
    2. Zhang, ZhongXiang, "undated". "Making China the transition to a low-carbon economy: Key challenges and responses," Working Papers 249516, Australian National University, Centre for Climate Economics & Policy.
    3. ZhongXiang Zhang, 2014. "Energy Prices, Subsidies and Resource Tax Reform in China," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(3), pages 439-454, September.
    4. ZhongXiang Zhang, 2016. "Making the Transition to a Low-Carbon Economy: The Key Challenges for China," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 3(2), pages 187-202, May.

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