The thick smog that blankets many Chinese cities represents a vast commercial opportunity for emerging market suppliers of gas, a clean-burning fuel.

As pollution levels approached choking point this winter, China’s imports of liquefied natural gas (LNG) surged 38 per cent – partly because of a deepening environmental consciousness and partly because temperatures plumbed 28-year lows, analysts said.

This rate of increase exceeded even the strong 25 per cent average annual increase in LNG imports seen over the past four years, suggesting a potential inflection point in Chinese demand, according to Point Carbon, a consultancy. Over the next four years, China could see as much as a quadrupling in LNG import volumes, it added. Last year, China imported 24.7bn cubic metres of gas in the form of LNG, 15 per cent of its total gas imports.

Most of China’s electricity is generated from coal but the pollution it causes has become a potentially incendiary social issue. Pollution levels have risen to as much as 40 times the maximum safe limit laid down by the World Health Organisation. A recent survey conducted by WPP, the international advertising giant, found that 85 per cent of Chinese were worried about the environment. The pressure on Beijing to restructure its energy mix is intense.“By 2020, China could easily be the world’s largest LNG importer,” says Bjorn Brochmann, head of gas research and forecasts at Point Carbon.

New liquefecation terminals in Algeria, Papua New Guinea and Australia are all scheduled to open this year, adding supply to the market. China has already secured a portion of this under long term contracts. Qatar is China’s largest source of LNG, supplying a third of its total imports, followed by Australia, Indonesia and Malaysia.

Over the next five years, more LNG terminals are scheduled to be commissioned in Malaysia, Australia, Indonesia, Algeria, Colombia, the US and Russia. While developers of the new projects are unlikely to struggle to find buyers, China’s increased thirst for gas is good news for exporters keen to see the LNG price stay high.

Becoming one of the world’s largest gas buyers puts China in an influential position, particularly if it can join forces with other major LNG buyers in Asia in a bid to manage prices. However, it also ties China to the global LNG market, leaving a large portion of its energy supply at the mercy of price fluctuations.

The price of LNG has changed significantly over time. LNG from Malaysia costs China $3 – $4 per million British thermal units, on supply agreements signed several years ago. China’s more recent deal with Qatar is priced at $18 per mmbtu.

In addition, liquefecation projects are expensive and prone to delay, leaving China potentially vulnerable to a shortfall in supply.

China has opted to take that risk. “For many years the Chinese government has talked about increasing the role of natural gas in China’s energy mix,” says Erica Downs, a Brookings Institution fellow. Tackling China’s power sector first makes sense. Around 47 per cent of China’s sulphur dioxide emissions and 69 per cent of nitric oxide and nitrogen dioxide emissions come from power generation.

But while China has increased its LNG imports significantly, they still meet only 15 per cent of the country’s gas needs. China pipes in a significant amount of gas from Turkmenistan and is negotiating with Gazprom for Russian gas supplies from 2018.

China is also producing a lot more of its own gas. Its gas production is now roughly the same as that of Norway, western Europe’s largest gas producer, and meets around 60 per cent of its gas needs. If hopes of a shale gas revolution are realised, China may produce even more gas.

LNG imports will nevertheless continue to be crucial to ensuring that China has enough gas to meet growing electricity demand and reduce its coal-burning capacity. “We have seen rates of 15 per cent of annual growth in electricity demand,” says Brochmann. “Even if you import a lot of gas, coal usage is so huge that it continues to go up.”

While it’s a big task, it is necessary for China to tackle its “airpocalypse.”

“When Beijing closes its existing coal-fired plants, the most reliable way is to replace coal with gas,” says Hongliang Chai, analyst at Point Carbon. “We estimate that 3.69 bcm of gas will be needed by 2015 – and 5.35 bcm by 2018 – to replace coal in the city’s power and gas sectors.”

Importing more LNG will make China more dependent on other emerging markets as it will need to secure new sources of supply. China has just become the world’s largest net importer of oil, tying its fortunes more tightly to international energy markets. Surpassing Japan as the world’s largest LNG buyer will be China’s next significant energy milestone.