Shale gas production in China: A regional analysis of subsidies and suggestions for policy

Jianye Liu, Zuxin Li, Dongkun Luo, Xuqiang Duan and Ruolei Liu

Utilities Policy, 2020, vol. 67, issue C

Abstract: With the increasing dependence on imported natural gas, China has to develop unconventional natural gas resources, such as shale gas. However, the increasing shale gas production has brought about more pressure for governmental subsidies. We analyzed whether shale gas companies need subsidies by calculating the economic value of shale gas development in China from the perspective of enterprises, and estimated the maximum subsidy quota for shale gas development by measuring its economic, environmental, and social benefits from the country's perspective. Based on the principle of beneficiaries should pay, we clarified the sources of shale gas subsidy and calculated the required subsidy duration. The results indicate that some new development target areas and pre-invested target areas still need subsidies, which should be jointly provided by the central government, local finance departments, and other heavy-polluting enterprises. The subsidy duration and subsidy quota show a power function relation. On this basis, we put forward suggestions for shale gas subsidy policy.

Keywords: Shale gas exploitation; Subsidy policy; Economic value; Environmental and social benefits (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:67:y:2020:i:c:s0957178720301296

DOI: 10.1016/j.jup.2020.101135

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