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China’s Natural Gas Industry: Strategic Position and Policy Options(Special Issue No. 47, 2016)

2017-02-23

By Guo Jiaofeng, Gao Shiji, Han Jingkuan, Ma Yongsheng, Zhao Wenzhi, Kang Yuzhu, Tong Xiaoguang, Jin Zhijun, Hao Fang, Research Team on “Development of China Natural Gas Industry (2016)”, Research Institute of Resources and Environment Policies, DRC

Research Report Special Issue No. 47, 2016 (Total 1522) 2016-12-7

Abstract: The “shale revolution” initiated in the US in the early 21st century changed people’s pessimistic estimation of oil and gas reserve. In particular, the huge reserve of shale gas made it possible for people to use cleaner natural gas as substitute for coal and petroleum. Globally, natural gas has become the principal energy with the most development potential. However, in China, coal consisted of 64% of all primary energy consumption in 2015, while the share of natural gas was only 5.9%. For the next five years or a longer time, China will be under even more severe pressure of air pollution and tackling climate change. This makes it necessary for China to promote energy transformation in a big way and with an accelerated pace. To achieve this goal, natural gas should be cultivated to become the principal energy of China as soon as possible and efforts need to be made to break barriers restricting institutional mechanism and policy improvement. The government needs to make pilot practice to gain experience in advance so as to push forward reform across the board. In addition, horizontal overall plan of reform in the field of natural gas and vertical linkage of reform in the whole industrial chain need to be made to establish a unified and open market system for natural gas in China, forming a pricing mechanism that gives priority to market regulation for natural gas in China. Besides, the management and supervision of natural gas industry need to be intensified, and the policy system adaptable to the principal energy position of China’s natural gas needs to be fleshed out.

Key words: natural gas, China’s sustainable development, strategic position, principal energy