Analysis of Driving Factors of Natural Gas Consumption in China: Based on Regional Integration and LMDI Method

Abstract

In recent years, China has developed rapidly in terms of natural gas. Driven by regional economic integration, a regional natural gas market composed of neighboring provinces and cities has taken shape gradually, and it tends to grow toward the same direction in policy formulation, resource coordination, facility construction and market expansion. Based on the factors such as geographical location, economic conditions and natural gas consumption, this thesis tends to conduct a horizontal comparative analysis on the economic development conditions, natural gas consumption characteristics and natural gas pipeline network density of the three regions with obvious regional integration feature in China. Then according to LMDI, four core indicators, namely economic growth effect, energy intensity effect, energy structure effect, and substitution effect are selected. The thesis is expected to explore the contribution of different indicators to the growth of natural gas consumption in these three different regions. According to the results, it can be concluded that the driving factors of natural gas consumption differ greatly among regions. Specifically speaking, the more developed the economy is, the greater the contribution of the energy substitution effect to natural gas consumption will be, and the contribution of the economic growth effect to natural gas consumption will be smaller. Despite that the contribution of energy intensity in different regions shows slight difference, the energy structure contributes the least effect, which further explains the current differences in China’s natural gas consumption characteristics and the reasons behind.