Exploring the uncertainty around potential shale gas development – A global energy system analysis based on TIAM (TIMES Integrated Assessment Model)

Abstract

This paper aims to quantitatively explore the uncertainty around the global potential of shale gas development and its possible impacts, using a multi-regional energy system model, TIAM (TIMES Integrated Assessment Model). Starting from the premise that shale gas resource size and production cost are two key preconditions for its development, our scenario analysis reveals the way these and other variables interact with the global energy system, impacting on the regional distribution of gas production, interregional gas trade, demand and prices. The analysis shows how the reciprocal effects of substitutions on both the supply and demand-side play an important role in constraining or enabling the penetration of shale gas into the energy mix. Moreover, we systematically demonstrate that the global potential for shale gas development is contingent on a large number of intervening variables that manifest themselves in different ways across regionally-distinct energy systems. A simple theoretical model is derived from the results of the scenario analysis.Its purpose is to simplify and explain the complex behaviour of the system, by illustrating the chain of actions and feedbacks induced by different shale gas economics, their magnitude, their relative importance, and the necessary conditions for the global potential to be realised.