China's textbook approach to regulatory reform of the natural gas market

Anatole Boute and Mandy Meng Fang

Utilities Policy, 2022, vol. 76, issue C

Abstract: Natural gas, as a transition fuel, is considered essential for China's decarbonization and local air protection policy, yet the regulatory structure China relies on to promote gas use remains under-researched. China's central government recognizes the need for market-based reforms of the gas sector, but what regulatory and policy adjustments are necessary to reorganize gas supply on a market basis? The textbook approach to energy market reform, and its implementation in the European Union, provides important guidance on how to create a regulatory basis to support competition in gas supply, provided national institutional characteristics are taken into account. This article engages in a comparative analysis of China's gas market reform policies and their implementation at the provincial level, focusing on Guangdong, a laboratory of economic reforms in China. The analysis demonstrates that reforms in 2019–2021 integrated key aspects of the textbook model in China's gas regulations, including third-party access, price deregulation and ownership unbundling. However, the textbook is of limited use to address remaining institutional barriers to reform, including resistance of distribution monopolies to competition from state-owned enterprises. Guangdong's experience shows that reform is possible, but only if accompanied by institutional and pricing adjustments reconciling vested interests with competition.

Keywords: China gas Market reform; Energy law; Textbook approach; Price deregulation; Third-party access; Unbundling (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:76:y:2022:i:c:s0957178722000340

DOI: 10.1016/j.jup.2022.101369

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