The future natural gas consumption in China: Based on the LMDI-STIRPAT-PLSR framework and scenario analysis

Abstract Due to the growing pollution concerns in China, there have been major efforts to design interrelated environmental protection policies. As the policy of reducing coal consumption is implemented, China's natural gas consumption is expected to commensurately rise. Such a trend may lead to the significant impacts on China's energy security and the global gas market. This paper empirically investigates the relationship between the natural gas consumption and influencing factors in a comprehensive LMDI-STIRPAT-PLSR framework. It is found that fossil energy structure and non-clean energy structure are the most important factors followed by urbanization, per capita GDP, industrialization, and industrial energy intensity. And then, these factors from LMDI decomposition are innovatively divided into economic development and cleaning indicators when using scenario analysis to forecast China's natural gas consumption. The prediction results suggest that economic development with high clean energy system would make a significant increase in gas consumption, a commensurate increase in demand even the system of economic-energy under scenario of low economic development and low clean. As China would depend on gas imports to meet this demand, there may be a serious supply shortage by 2020. Therefore, the government should consider the future energy security issue in making economic and environmental policies.