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Subsidy analysis and development trend forecast of China's unconventional natural gas under the new unconventional gas subsidy policy

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  • Liu, Jianye
  • Li, Zuxin
  • Duan, Xuqiang
  • Luo, Dongkun
  • Zhao, Xu
  • Liu, Ruolei

Abstract

In June 2019, China significantly changed its unconventional natural gas subsidy policy, changing the subsidy mode from a comprehensive quota standard mode to a competitive mode, aiming to reduce its subsidy pressure and channel subsidies to specific projects that are needed to increase annual and winter electricity production. Through a brief introduction of China's cleaner energy goals and a comparative analysis of the new and old subsidy policies, the orientations and impacts of the new policy are interpreted. By comparing the changes in subsidy quota, production and price of three kinds of unconventional natural gas (shale gas, tight gas and CBM) over the past ten years, in combination with the generalized Weng model, the impact of subsidy on unconventional natural gas production is quantified. The development trend of unconventional natural gas under the new policy is forecasted on the premise that the total amount of subsidy and sales price remain unchanged.. The sensitivity of three kinds of unconventional natural gas to different subsidies is analyzed. The impact of the new policy on the change in gas production curve is illustrated after comparing the optimal production plans for typical shale gas wells under the new and old policies. The results show that shale gas and CBM may be negatively affected, while the development of tight gas may be promoted; in the future, tight gas and shale gas will dominate, while the development of CBM will be tough. The new policy will stimulate the production enterprises to adopt the plan of high initial production and high decline rate, which may lead to a reduction in total gas production and resources utilization efficiency.

Suggested Citation

  • Liu, Jianye & Li, Zuxin & Duan, Xuqiang & Luo, Dongkun & Zhao, Xu & Liu, Ruolei, 2021. "Subsidy analysis and development trend forecast of China's unconventional natural gas under the new unconventional gas subsidy policy," Energy Policy, Elsevier, vol. 153(C).
    • Handle: RePEc:eee:enepol:v:153:y:2021:i:c:s0301421521001221
    DOI: 10.1016/j.enpol.2021.112253
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    References listed on IDEAS

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    Cited by:

    1. Fan, Lurong & Wang, Binyu & Song, Xiaoling, 2023. "An authority-enterprise equilibrium differentiated subsidy mechanism for promoting coalbed methane extraction in multiple coal seams," Energy, Elsevier, vol. 263(PA).

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