Partner Country Series - Gas Pricing: China’s Challenges and IEA Experience

In line with its aim to meet growing energy demand while shifting away from coal, the People's Republic of China set an ambitious goal of doubling its use of natural gas from 2011 levels by 2015. Prospects as of 2012 were good for significant new supplies – both domestic and imported, conventional and unconventional – to come online in the medium term, but notable challenges remained, particularly concerning gas pricing and the institutional and regulatory landscape. While China’s circumstances are, in many respects unique, some current issues are similar to those a number of IEA countries have faced. This report highlights some key challenges for China in its transition to greater reliance on natural gas, then explores in detail relevant experiences from IEA countries, particularly the United Kingdom, the Netherlands and the United States as well as the European Union. Preliminary suggestions about how lessons learned in other countries could be applied to China’s situation are offered as well.