The impact of natural gas price control in China: A computable general equilibrium approach

This paper depicts the natural gas price control behavior of the Chinese government in an imperfect competition market structure using a static CGE model. It simulates the effect of changes in natural gas price control policy on carbon emission, and the economic effects in view of demand side and supply side. Based on the above, we also analyze the carbon emission mechanism from economic and energy structure perspective. The results show that: an increase in natural gas price can reduce carbon emission, or tends to cause a long-term decline in the surplus profit rate of the natural gas industry. Moreover, the increase in natural gas price may raise the CPI, and reduce actual GDP and residents’ welfare. On the contrary, a decrease in natural gas price may reduce CPI and enhance resident welfare. However, the long-term actual GDP will not increase, but carbon emission will increase and the surplus profit rate of the natural gas industry may reduce in the short term and increase in the long term. On the other hand, Both increase and decrease in natural gas prices may result in a decrease of the actual GDP level in the long term. The elimination of price control in natural gas supply may increase actual GDP and residents’ welfare and reduce CPI. Meanwhile, it may increase carbon emissions and improve the profitability of the natural gas industry.