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The Future Of Natural Gas In China: Effects Of Pricing Reform And Climate Policy

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  • DANWEI ZHANG

    (MIT Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, Cambridge, MA, USA)

  • SERGEY PALTSEV

    (MIT Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, Cambridge, MA, USA)

Abstract

China is currently attempting to reduce greenhouse gas emissions and increase natural gas consumption as a part of broader national strategies to reduce the air pollution impacts of the nation’s energy system. To assess the scenarios of natural gas development up to 2050, we employ a global energy-economic model — the MIT Economic Projection and Policy Analysis (EPPA) model. The results show that a cap-and-trade policy will enable China to achieve its climate mitigation goals, but will also reduce natural gas consumption. An integrated policy that uses a part of the carbon revenue obtained from the cap-and-trade system to subsidize natural gas use promotes natural gas consumption, resulting in a further reduction in coal use relative to the cap-and-trade policy case. The integrated policy has a very moderate welfare cost; however, it reduces air pollution and allows China to achieve both the climate objective and the natural gas promotion objective.

Suggested Citation

  • Danwei Zhang & Sergey Paltsev, 2016. "The Future Of Natural Gas In China: Effects Of Pricing Reform And Climate Policy," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 7(04), pages 1-32, November.
    • Handle: RePEc:wsi:ccexxx:v:07:y:2016:i:04:n:s2010007816500123
    DOI: 10.1142/S2010007816500123
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    References listed on IDEAS

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    1. Chai, Qimin & Zhang, Xiliang, 2010. "Technologies and policies for the transition to a sustainable energy system in china," Energy, Elsevier, vol. 35(10), pages 3995-4002.
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    4. Sergey Paltsev & Pantelis Capros, 2013. "Cost Concepts For Climate Change Mitigation," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 4(supp0), pages 1-26.
    5. Zhang, Xiliang & Karplus, Valerie J. & Qi, Tianyu & Zhang, Da & He, Jiankun, 2016. "Carbon emissions in China: How far can new efforts bend the curve?," Energy Economics, Elsevier, vol. 54(C), pages 388-395.
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    Cited by:

    1. Renchu Guan & Aoqing Wang & Yanchun Liang & Jiasheng Fu & Xiaosong Han, 2022. "International Natural Gas Price Trends Prediction with Historical Prices and Related News," Energies, MDPI, vol. 15(10), pages 1-14, May.
    2. Shangfeng Han & Baosheng Zhang & Xiaoyang Sun & Song Han & Mikael Höök, 2017. "China’s Energy Transition in the Power and Transport Sectors from a Substitution Perspective," Energies, MDPI, vol. 10(5), pages 1-25, April.
    3. Paolo Sospiro & Leonardo Nibbi & Marco Ciro Liscio & Maurizio De Lucia, 2021. "Cost–Benefit Analysis of Pumped Hydroelectricity Storage Investment in China," Energies, MDPI, vol. 14(24), pages 1-20, December.

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