The reform of the natural gas industry in the PR of China

How did the price and income elasticities of natural gas demand in China evolve from 1999 to 2015? The role of natural gas price reform

“…The effect of price reform on the price elasticity has appeared gradually in recent years, implying that the lack of a negative price elasticity in natural gas demand in China is improving. This finding coincides with the existing studies, such as Dong et al (2017c). The regions in which the price elasticity decreases are predominantly concentrated in Central and Eastern China; conversely, natural gas demand is becoming more price inelastic in Western China (i.e., Southwest China and Northwest China).…”

“…Therefore, to achieve a substantial increase in natural gas demand, China has sought to reform its natural gas pricing mechanism since the 1960s (Dong et al 2018a, b). From 1965 to 2015, China's pricing reform has generally experienced three periods (Dong et al 2017c): sole government pricing period , mix of government pricing and government guidance pricing period (1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005), and government guidance pricing period (2006-present) (Fig. 1).…”

Energy price reform in China

“…Moreover, various types of investors should be encouraged to participate in the construction of pipeline networks, liquefied natural gas (LNG) terminals, gas storage facilities and other related facilities. By ownership unbundling, setting up an independent system operator and building an independent transmission operator, China could gradually separate natural gas pipeline transport and production and marketing, eventually leading to the independence of the pipeline network (Dong et al 2017). …”

The impacts of market reform on the market penetration of natural gas-fired electricity and renewable energy in China

“…The NG price reforms in China have attracted a great deal of attention recently (Hu and Dong 2015;Paltsev and Zhang 2015;Dong et al 2017). NG prices in China have been set on a highly regulated cost-plus approach to protect consumers.…”

“…However, there is still a long way to go before the price is ultimately determined based on the interaction of supply and demand. Moreover, the existing pricing system leads to a higher NG prices in industry and power sectors than in the residential sector (Dong et al 2017), which restrains the gas demand of the industry and power sectors. Fan et al (2015) demonstrated that after the NG price reform, the fuel cost of NGFE increased by 26%-44%, and the ratio of fuel costs between NGFE and CFE in China is almost around 2-2.5.…”