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Stimulating shale gas development in China: A comparison with the US experience

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  • Tian, Lei
  • Wang, Zhongmin
  • Krupnick, Alan
  • Liu, Xiaoli

Abstract

In this paper, we use the US shale gas experience to shed light on how China might overcome the innovation problem inherent in exploring and developing shale gas plays with complex geology. We separate shale gas development into two stages, an innovation stage and a scaling-up stage, with the first presenting a much bigger challenge than the latter. Our analysis suggests that China׳s national oil companies offer the best hope for overcoming the innovation problem. China׳s policy of opening shale gas development to new entrants is a market-oriented reform that can be justified on various grounds, but the new entrants will not play a major role in overcoming the innovation problem even though they may help scale up production later on.

Suggested Citation

  • Tian, Lei & Wang, Zhongmin & Krupnick, Alan & Liu, Xiaoli, 2014. "Stimulating shale gas development in China: A comparison with the US experience," Energy Policy, Elsevier, vol. 75(C), pages 109-116.
    • Handle: RePEc:eee:enepol:v:75:y:2014:i:c:p:109-116
    DOI: 10.1016/j.enpol.2014.07.025
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    1. Krupnick, Alan & Wang, Zhongmin & Wang, Yushuang, 2014. "Environmental risks of shale gas development in China," Energy Policy, Elsevier, vol. 75(C), pages 117-125.
    2. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
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    5. Wang, Zhongmin & Krupnick, Alan, 2013. "A Retrospective Review of Shale Gas Development in the United States: What Led to the Boom?," RFF Working Paper Series dp-13-12, Resources for the Future.
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    Cited by:

    1. Krupnick, Alan & Wang, Zhongmin & Wang, Yushuang, 2014. "Environmental risks of shale gas development in China," Energy Policy, Elsevier, vol. 75(C), pages 117-125.
    2. Yu, Chin-Hsien & Huang, Shih-Kai & Qin, Ping & Chen, Xiaolan, 2018. "Local residents' risk perceptions in response to shale gas exploitation: Evidence from China," Energy Policy, Elsevier, vol. 113(C), pages 123-134.
    3. Hui Li & Renjin Sun & Wei-Jen Lee & Kangyin Dong & Rui Guo, 2016. "Assessing Risk in Chinese Shale Gas Investments Abroad: Modelling and Policy Recommendations," Sustainability, MDPI, vol. 8(8), pages 1-17, July.
    4. Yuan, Jiehui & Luo, Dongkun & Xia, Liangyu & Feng, Lianyong, 2015. "Policy recommendations to promote shale gas development in China based on a technical and economic evaluation," Energy Policy, Elsevier, vol. 85(C), pages 194-206.
    5. Shangfeng Han & Baosheng Zhang & Xiaoyang Sun & Song Han & Mikael Höök, 2017. "China’s Energy Transition in the Power and Transport Sectors from a Substitution Perspective," Energies, MDPI, vol. 10(5), pages 1-25, April.
    6. Xunpeng, Shi & Variam, Hari Malamakkavu Padinjare & Tao, Jacqueline, 2017. "Global impact of uncertainties in China’s gas market," Energy Policy, Elsevier, vol. 104(C), pages 382-394.
    7. Li, Yanbin & Li, Yun & Wang, Bingqian & Chen, Zhuoer & Nie, Dan, 2016. "The status quo review and suggested policies for shale gas development in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 420-428.
    8. Yang, Yan & Wang, Limao & Fang, Yebing & Mou, Chufu, 2017. "Integrated value of shale gas development: A comparative analysis in the United States and China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 1465-1478.
    9. Dundon, Leah A. & Abkowitz, Mark & Camp, Janey, 2015. "The real value of FracFocus as a regulatory tool: A national survey of state regulators," Energy Policy, Elsevier, vol. 87(C), pages 496-504.
    10. Chi Kong Chyong and David M. Reiner, 2015. "Economics and Politics of Shale Gas in Europe," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    11. Qin, Yue & Tong, Fan & Yang, Guang & Mauzerall, Denise L., 2018. "Challenges of using natural gas as a carbon mitigation option in China," Energy Policy, Elsevier, vol. 117(C), pages 457-462.
    12. Wang, Jianliang & Mohr, Steve & Feng, Lianyong & Liu, Huihui & Tverberg, Gail E., 2016. "Analysis of resource potential for China’s unconventional gas and forecast for its long-term production growth," Energy Policy, Elsevier, vol. 88(C), pages 389-401.
    13. Guanglin Pi & Xiucheng Dong & Cong Dong & Jie Guo & Zhengwei Ma, 2015. "The Status, Obstacles and Policy Recommendations of Shale Gas Development in China," Sustainability, MDPI, vol. 7(3), pages 1-20, February.
    14. Dong, Kangyin & Sun, Renjin & Wu, Jin & Hochman, Gal, 2018. "The growth and development of natural gas supply chains: The case of China and the US," Energy Policy, Elsevier, vol. 123(C), pages 64-71.
    15. Auping, Willem L. & Pruyt, Erik & de Jong, Sijbren & Kwakkel, Jan H., 2016. "The geopolitical impact of the shale revolution: Exploring consequences on energy prices and rentier states," Energy Policy, Elsevier, vol. 98(C), pages 390-399.

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    Keywords

    Shale gas; Innovation; China;
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