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Policy recommendations to promote shale gas development in China based on a technical and economic evaluation

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  • Yuan, Jiehui
  • Luo, Dongkun
  • Xia, Liangyu
  • Feng, Lianyong

Abstract

Because of its resource potential and clean burning advantages, the development of shale gas can significantly increase the supply of cleaner energy while offering the associated benefits. To foster shale gas development, many policy incentives have been introduced in China. However, the current incentives have not been sufficiently aggressive, and the shale gas industry has been slow to develop. Existing policies thus need to be further improved. To provide effective support for decision makers in China, a technical and economic evaluation is performed in this study to explore the profitability of shale gas production in pilot zones. The results show that shale gas production is subeconomic under the current technical and economic conditions. Based on this evaluation, a policy analysis is conducted to investigate the profitability improvement offered by the major policies available in China to elucidate a path toward improving incentive policies. The results indicate that policy instruments related to gas prices, financial subsidies, corporate income taxes or combinations thereof could be used as priority options to improve policy incentives. Based on these results, recommendations are presented to improve the current incentive polices aimed at accelerating shale gas development.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:enepol:v:85:y:2015:i:c:p:194-206
    DOI: 10.1016/j.enpol.2015.06.006
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    3. Niu, Wente & Lu, Jialiang & Sun, Yuping & Zhang, Xiaowei & Li, Qiaojing & Cao, Xu & Liang, Pingping & Zhan, Hongming, 2024. "Techno-economic integration evaluation in shale gas development based on ensemble learning," Applied Energy, Elsevier, vol. 357(C).
    4. Li, Wandi & Luo, Dongkun & Yuan, Jiehui, 2017. "A new approach for the comprehensive grading of petroleum reserves in China: Two natural gas examples," Energy, Elsevier, vol. 118(C), pages 914-926.
    5. Liu, Haomin & Zhang, Zaixu & Zhang, Tao, 2022. "Shale gas investment decision-making: Green and efficient development under market, technology and environment uncertainties," Applied Energy, Elsevier, vol. 306(PA).
    6. Wang, Jianliang & Liu, Mingming & McLellan, Benjamin C. & Tang, Xu & Feng, Lianyong, 2017. "Environmental impacts of shale gas development in China: A hybrid life cycle analysis," Resources, Conservation & Recycling, Elsevier, vol. 120(C), pages 38-45.
    7. Calderón, Andrés J. & Guerra, Omar J. & Papageorgiou, Lazaros G. & Reklaitis, Gintaras V., 2018. "Disclosing water-energy-economics nexus in shale gas development," Applied Energy, Elsevier, vol. 225(C), pages 710-731.
    8. Grecu, Eugenia & Aceleanu, Mirela Ionela & Albulescu, Claudiu Tiberiu, 2018. "The economic, social and environmental impact of shale gas exploitation in Romania: A cost-benefit analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 93(C), pages 691-700.
    9. 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.
    10. Chen, Yizhong & Li, Jing & Lu, Hongwei & Yang, Yiyang, 2020. "Impact of unconventional natural gas development on regional water resources and market supply in China from the perspective of game analysis," Energy Policy, Elsevier, vol. 145(C).
    11. Zhong Wang & Yuyan Luo & Pengchong Li & Xiaoqian Cai, 2018. "Problem Orientated Analysis on China’s Shale Gas Policy," Energies, MDPI, vol. 11(11), pages 1-17, October.
    12. You, Xu-Tao & Liu, Jian-Yi & Jia, Chun-Sheng & Li, Jun & Liao, Xin-Yi & Zheng, Ai-Wei, 2019. "Production data analysis of shale gas using fractal model and fuzzy theory: Evaluating fracturing heterogeneity," Applied Energy, Elsevier, vol. 250(C), pages 1246-1259.
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    14. Xiaoqian Guo & Qiang Yan & Anjian Wang, 2017. "Assessment of Methods for Forecasting Shale Gas Supply in China Based on Economic Considerations," Energies, MDPI, vol. 10(11), pages 1-14, October.

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