Improving air quality in large cities by substituting natural gas for coal in China: changing idea and incentive policy implications

Natural gas has long been used in China mainly as chemical raw material. With the increasing emphasis on urban air pollution prevention, the issue of natural gas substitution to coal has been raised in many large Chinese cities. This paper reviews the environmental-economic-technical rationality of dashing-for-gas in urban area, especially for civil use such as cooking and heating in China. Taking Beijing and Chongqing as study cases, a cost-benefit analysis of natural gas substitution is done and the ongoing economic and system barriers to natural gas penetration are analyzed. Indications of natural gas penetration incentive policy making are given finally.