China unveils natural gas policy covering entire transport sector

In an effort to rein in its consumption of crude oil, China launched a natural gas policy which is intended to motivate the transport sector to use cleaner-burning fuel, particularly liquefied natural gas (LNG). China is the world’s second-largest user of fuel and this is the first time the government has targeted the entire transport sector. Coverage of the new natural gas policy extends to buses, taxis, trucks and vessels. The policy has already taken effect for homes, utilities and factories.
China’s goal is to triple its natural gas use to meet about 10% of total energy demand by the end of this decade and to cut emissions from coal use, as well as dependence on oil imports. The policy push would make China’s fleet the biggest LNG-fuel user in the world. Experts said using LNG would be both cheaper and more efficient than conventional gasoline and diesel fuel.
To supply the fuel, leading energy firms CNOOC Ltd., PetroChina and Sinopec Corp. are building a series of facilities along China’s eastern shore to import LNG, where gas would be super-cooled to liquid form for shipping in tankers. Others are building smaller plants inland to liquefy natural gas from gas fields which are far from the main pipeline networks. LNG tankers would then truck them across the country to end-users.
In a statement made by the National Development and Reform Commission (NDRC), the use of natural gas as feedstock for making ethanol is banned. The base-load gas-fuelled power generations in coal-rich regions have also been banned; China also prohibits the use of natural gas to produce fertilizer. The NDRC, which is China’s top economic planning agency, said it would also propose gas price reforms. The agency also plans to establish a better link between prices of natural gas and alternative fuels, and push for a pricing link between gas production and consumption and a seasonal gas pricing system. (October 31, 2012)