Development of Policy Impact Assessment Model for the Regulatory Reform Policy of Japan's Town Gas Market

Author Name KAINOU Kazunari (Fellow, RIETI)
Creation Date/NO. October 2016 16-J-058
Download / Links


After the Great East Japan Earthquake and the Fukushima Daiichi nuclear accident, the government of Japan has been promoting regulatory reform measures for the town gas market, such as complete deregulation of town gas retail sales scheduled to start in April 2017, as an important part of the current electric power and town gas regulatory reform policy

Town gas regulatory reform policy points out two major policy issues:
・Development and connection with high-pressure gas pipelines and
・Promotion of business competition through the entry of new gas supply.

It is very important to support the correct policy decision of the relevant bureaus and agencies by providing a holistic and quantitative policy impact assessment as well as the future outlook and an impact assessment of the external factors.

From such viewpoints, this research developed a new quantitative simulation model to access and evaluate the policy impact on high pressure gas pipeline network development and town gas demand and supply through quantitative analysis of past policy measures and real data from official statistics. This research also sought to ensure accuracy and precision through sensitivity analysis of liquefied nitrogen gas (LNG) price changes, town gas demand changes, and so on.

This research attempts a quantitative policy impact assessment and evaluation of town gas demand and supply and various policy indicators toward the development of a domestic methane hydrate resource policy and international gas pipeline investment promotion policy.