Optimal scale of natural gas reserves in China under increasing and fluctuating demand: A quantitative analysis

Tianxiao Li, Pei Liu and Zheng Li

Energy Policy, 2021, vol. 152, issue C

Abstract: Reducing carbon emissions in China is critical to global low-carbon transition. Switching coal to natural gas in end-use sectors is a key mitigation strategy in China, whilst insufficient natural gas reserve capacity hinders the growth of natural gas consumption. Besides strategic reserves, peak-shaving reserves are vital to tackle seasonal demand fluctuation. Identifying an appropriate scale of natural gas reserves can significantly reduce costs, whilst current studies focus on strategic reserves. In this paper, a multi-scale method is proposed to quantify the optimal scale of natural gas reserves in China, which combines three sub-models with matched temporal-spatial resolutions tackling daily, monthly peak-shaving reserves and strategic reserves respectively. Results show that the optimal scale of natural gas reserves is 14.2 percent of annual demand, higher than the level of 5.2 percent in 2017, and lower than policy targets of 15.6 percent. Results reflect the serious shortage of reserve capacity and the need of fast expansion, whilst pointing out that a small reduction in policy targets can support natural gas growth at lower costs. The optimal scale of daily, monthly peak-shaving reserves and strategic reserves is pointed out, which is 0.6, 8 and 5.6 percent of annual demand respectively.

Keywords: Natural gas reserve; Optimal scale; Strategic reserves; Peak-shaving reserves (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:152:y:2021:i:c:s0301421521000902

DOI: 10.1016/j.enpol.2021.112221

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