As one of the environment policies in China, natural gas will take the place of coal as the major energy source for eastern cities. However, due to the high cost of natural gas, the change in energy structure cannot be done by simply replacing coal with gas. The energy application mode should also change to match the change in energy structure. This paper lists most of gas applications such as power generation, space heating, chemical industry, public transportation, etc. Analysis has then been carried on to each type of application from both technical point and economic point. The conclusions are：

(a) Energy application mode depends on the energy supply structure. Current application is based on the energy system that coal takes the major part. It does not suitable if gas takes the place of coal.

(b) Comparing with electricity, natural gas is more convenient to balance the difference in daily peak and vale demand. This should be one of the important factors in energy planning.

(c) One of the most suitable applications is combined heat and power generation (CHP). However, “electrical demand first” should be the rule in design and operation of the system rather than “heat demand first” in current CHP policy. Gas driven CHP should take the rule of balancing the daily difference in electrical demand. During vale demand period, gas engine should be switched off, heat demand can then be met by thermal storage system. Air-conditioning system using low temperature heat source should be encouraged so as to run the CHP and to meet the utility peak load during summer.

(d) Except CHP system, district heating may not be suitable for space heating due to the large loss in transportation and distribution. Individual family boilers may be a better solution for heating when heat is generated from direct gas burning.