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China’s Natural Gas Demand Projections and Supply Capacity Analysis in 2030

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Abstract:
This paper builds an econometric model to analyze the income elasticity and price elasticities of sectoral natural gas demand and forecasts China's natural gas demand up to 2030. The findings indicate that there is a long-term equilibrium relationship among sectoral natural gas demand, sectoral income and various fuel prices. The results also indicate that most price elasticities are smaller relative to developed countries; the effect of fuel prices on natural gas demand is partly offset by the government regulation. In the Business As Usual (BAU) scenario, China's natural gas demand will reach 340 bcm and 528 bcm and its foreign dependence will reach 27.9% and 43.2% in 2020 and 2030, respectively. The forecast and discussion in this paper provide important insights into China's energy policy design and pricing mechanism reform, and into the potential impact of China's growing natural gas demand on global energy market dynamics.

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Energy Specializations: Natural Gas – Markets and Prices; Energy Modeling – Sectoral Energy Demand & Technology; Energy Modeling – Forecasting and Market Analysis

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q42: Alternative Energy Sources, Q35: Hydrocarbon Resources, Q38: Nonrenewable Resources and Conservation: Government Policy

Keywords: Natural gas, Domestic production, Supply and demand, LNG and pipeline imports

DOI: 10.5547/01956574.39.6.qji

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Published in Volume 39, Number 6 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.