Experts Propose to Increase Subsidy for Coalbed Methane Mining    

In recent years China has issued some new policies to promote the development of the coalbed methane sector. For example, there is a subsidy of RMB0.2 for selling one m3 of coalbed methane. In his feasibility study report on the production of coalbed methane in China, Prof. Luo Dongkun points out that the government should offer a maximum subsidy of RMB0.28 per m3 to coalbed methane mining.
   According to the report, tax reduction and subsidy can greatly improve the economics of the coalbed methane development. The economic effect of subsidy on the promotion of the coalbed methane development is most prominent.
   It is proposed in the report that China should implement a differential subsidy system. A subsidy of RMB0.28 should be offered to coalbed methane target areas such as Fengfeng (Hebei province), Zhina, Liupanshui (Guizhou province) and Hongmao (Guangxi region) for selling one m3 of coalbed methane not used in power generation. The purpose is to promote the development of coalbed methane resources in these remote target areas.
   Prof. Luo points out that the clean development mechanism can be used as a lever to measure the effect of coalbed methane mining on environmental protection. Besides, coalbed methane mining can greatly help the safe production of coal and reduce accidents of gas explosion. The output increase of coalbed methane can also reduce the oil consumption and reserve cost.
   Coalbed methane resources with a depth of below 2000 meters in China are mainly distributed in North China and Northwest China. The coalbed methane geological resources in North China, Northwest China, south of China and Northeast China account respectively for 56.3%, 28.1%, 14.3% and 1.3% of the national total.
   The demand for natural gas in China will maintain a high growth in future. It is expected that the demand for natural gas will reach 200 billion m3 in 2020 and nearly 50% of the demand will have to be satisfied by imports.
   It is therefore proposed in the report that China should formulate favorable industrial policies in the early development stage of coalbed methane. For example, the government should encourage coalbed methane enterprises to use domestic and foreign financing, improve infrastructures and attract foreign capital.
   It is also proposed in the report that China should formulate rational natural gas pricing policies. Local governments should liberalize the natural gas price as soon as possible and ensure the price competitiveness of coalbed methane to natural gas, coal gas and liquefied petroleum gas.
   The local demand for coalbed methane can hardly meet the needs in large-scale development. The transmission of coalbed methane through pipeline is the major solution to the problem. Coalbed methane can be blended with natural gas in transmission and application.
   The report also points out that natural gas long-distance transmission pipelines to be constructed should be close to coalbed methane production bases and reserve sufficient volume. Coalbed methane (natural gas) long-distance pipeline networks should also be constructed in China.