Authority-enterprise Equilibrium Based Subsidy Policy for Natural Gas Hydrate Transportation Technology

Business school of Sichuan University, Chengdu, 610065, People’s Republic of China

^* e-mail: lizongmin@scu.edu.cn

Abstract

The continued rise in oil prices and environmental concerns have made natural gas (NG) one of the world’s most important energy sources. As populations and economies grow, the demand for natural gas is increasing due to the expansion of the industrial and commercial sectors, as well as increased household incomes. The potential for significant increases in natural gas supply to meet growing demand makes decisions at all strategic, tactical and operational levels necessary in building new or restructuring existing natural gas transportation systems. In this paper, the multi-objective optimization of natural gas hydrate (NGH) transportation is proposed as a tool for supporting regulatory decisions. Three objective functions are involved in the formulation of the problem: minimization of subsidy costs, maximization of energy utilization, and maximization of profit for each NGH plant. As part of the design parameters for the NGH project, the regulatory agency must consider the entrepreneur’s return on investment and the needs of current and future consumers. In the absence of an optimization tool, this problem may result in unfair gas prices or a lack of investor interest. With a continuous increase in natural gas consumption, the proposed analysis examines growing markets. The mixed subsidy mechanism was applied to a typical example in order to demonstrate the performance of the proposed approach.