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

Jiehui Yuan, Dongkun Luo, Liangyu Xia and Lianyong Feng

Energy Policy, 2015, vol. 85, issue C, 194-206

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.

Keywords: Shale gas development; Technical and economic evaluation; Discounted cash flow analysis; Incentive policies; China (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:85:y:2015:i:c:p:194-206

DOI: 10.1016/j.enpol.2015.06.006

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