Improving air quality and combatting climate change have been on the top of China’s agenda. To achieve this, the Government of China has taken strategic actions to create a favorable policy environment for promoting the use of clean energy and reducing energy reliance on coal. In this context, natural gas has been identified as an important substitute for coal. Coal-to-gas replacement has therefore been encouraged by the Government of China to be implemented nationwide. Natural gas subsector in China has been developing rapidly in recent years.
In Beijing, for example, natural gas consumption accounted for about one-third of the total energy mix in 2019, representing a significant increase from less than 15% in 2010. The rapid implementation of coal-to-gas replacement policy has led to significant growth in consumption of natural gas, resulting in considerable gaps between demand and supply, especially during the peak seasons. This challenge is particularly pronounced in Beijing-Tianjin-Hebei region, where natural gas supply for the peak consumption seasons such as the winter period cannot be ensured. Further, due to insufficient emergency gas reserve capacity, the local natural gas suppliers cannot respond in time to accommodate the demand fluctuations.