China can save 5t yuan using more natural gas

By Zhao Qian Source:Global Times Published: 2013-10-21 23:28:01

China will lead global gas demand and its increased usage of natural gas will save the nation around 5 trillion yuan ($820 billion) in its environmental costs by 2025, US firm General Electric Corp (GE) said in a white paper released in Beijing Monday.

Industry watchers generally believe that the outlook for the country's natural gas exploitation is optimistic but both power and electronic enterprises as well as the government will confront many challenges during the exploration and development of natural gas in China.

"If the share of gas in primary energy consumption of China doubles from 4 percent in 2012 to 8 percent in 2025, the reduction of coal consumption would average 380 billion yuan each year from 2013 to 2025, which accounts for 0.5 percent of the country's annual GDP," GE said in its white paper.

Despite the market's prospective confidence in China's natural gas development, "challenges including high costs for gas-fired power generation remain," Zhang Guobao, former vice chairman of the National Development and Reform Commission (NDRC), said at a forum about the release of the white paper Monday.

"On the one hand, the power generation enterprises found it difficult to make profits due to high natural gas cost and low power prices fixed by the NDRC; on the other hand, the government is hesitant to raise power prices in consideration of the pressures of inflation," Zhang noted.

Zhou Dadi, a research fellow at the Energy Research Institute under the NDRC, said at the forum that a lack of a comprehensive nationwide gas pipe network and a financing mechanism are the other challenges for the development of natural gas in China.

Companies are also hesitant to push forward gas exploration "too fast" due to financial risks.

State-owned power generator China Huadian Corporation won five projects in the auction of the country's shale gas blocks exploration rights in December 2012.

However, the electricity giant "did not dare invest a lot in gas exploration for these projects so far, in consideration of the capital risks," Deng ­Jianling, deputy general manager of Huadian, said at the forum Monday.

"It is too difficult to assess the return and ­losses in shale gas exploration under current conditions," Deng noted.

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