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China Issues Measures to Regulate the Utilization of Domestically Produced and Imported Natural Gas

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3 June 2024 - Today China’s National Development and Reform Commission (NDRC) issued the Administrative Measures on Natural Gas Utilization (see English reference translation) to regulate the utilization of domestically produced and imported natural gas in China.[1] The Measures provide that the NDRC and the National Energy Administration are responsible for the nationwide administration of natural gas utilization.

The Measures divide natural gas uses into prioritized, restricted, prohibited, and permitted categories. This regulatory categorization enables the Chinese government to promote natural gas uses that China deems part of its transition to green and low-carbon energy system development.

The “prioritized” category of natural gas utilization includes, for example, urban-resident gas consumption for cooking and heating water. This category also includes using natural gas for peak power-plant projects, where the Chinese government determines that the identified sources of natural gas are economically sustainable. Prioritized natural gas utilization projects may receive government support through favorable policies for planning, land use, financing, and taxation.

The “restricted” category of natural gas utilization includes, for instance, facilities that use natural gas as a raw material to produce methanol (CH₃OH) and projects that use natural gas as a replacement for coal in methanol production. New facility construction and expansion of existing production capacity are not permissible for projects in this restricted category.

The “prohibited” natural gas utilization category includes only synthetic ammonia (NH3) production through a natural gas conversion process at atmospheric pressure. China has issued additional policy document to accelerate the phaseout of such projects.

The “permitted” natural gas utilization category covers projects that are not listed in the aforementioned prioritized, restricted, or prohibited categories and that are consistent with relevant national Chinese laws, regulations, and policies. Permitted projects may continue to develop but will not receive government promotion through supportive policies. The permitted category includes, for example, coal-to-natural gas projects that the government views as having environmental and economic benefits in the construction material, electromechanical, textile, petrochemical, metallurgy, etc.,[2] sectors, as well as oil or liquefied petroleum gas (LPG)-to-natural-gas (regasification) projects and new projects which use natural gas as fuel in the aforementioned sectors.

It is also noteworthy that the Measures require enhancing industrial-gas emissions recovery and strictly controlling venting. The Measures further provide that natural gas with carbon dioxide (CO₂) content of 20% or more may be comprehensively utilized.

The Measures will enter into effect 1 August 2024. See IGSD’s annotated, English reference translation of the Administrative Measures on Natural Gas Utilization.

Additional IGSD resources:


[1] Many working on preventing devastating climate change are shifting from “natural gas” to “fossil gas” or “methane gas.” We use natural gas here, as the Chinese title of the Measures uses this term (天然气).

[2] The original Chinese measures use “etc.” at the end of the industry-sector list. The use of “etc.” (等) is common in such measures, providing regulatory authorities with interpretive flexibility.

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