Shale gas: Will it become a new type of clean energy in China? — A perspective of development potential

Abstract

Shale gas, with its low carbon and green characteristics, has attracted a considerable amount of attention in the development of global clean energy. Analyzing the development potential and prospects of shale gas has great significance for strengthening energy security while reducing carbon emissions in China. Based on the current development status, this paper explores the exploitation potential of shale gas development in China from the five main aspects of Porter’s diamond model and proposes a future development strategy. After careful analysis, several discoveries are made. First, the recoverable reserves of shale gas in favorable areas in China have reached 2.18 × 104 billion cubic meters (bcm), but the current proved rate of shale gas is only 4.79%, which indicates its vast development potential. Second, approximately 65% of China’s shale gas is deeper than 3500 m, while the current technology and equipment of exploration and development are not adapted to exploration and development schemes that target shale gas in deep horizons. Third, the urgent demand of China’s natural gas market (estimated to be 600 bcm by 2030) and the high degree of external dependence (45.3% in 2018) provide a reasonable situation for the development of shale gas. Fourth, the development of supporting industries is relatively mature, and major related enterprises have clear strategic goals and obvious market competitive advantages. Fifth, the government’s incentives for the shale gas industry are insufficient, especially in terms of the intensity of financial subsidies and tax relief and the subsidy cycle. Sixth, corresponding strategies need to be implemented to strengthen all the factors in the diamond model and seize the current development chances to gain a positive interaction among them. After effective development, shale gas could become a crucial hub for balancing future economic growth and eco-environmental protection in China. Our study provides guidance for the government, policy makers, investors, and other stakeholders to better understand China’s shale gas industry and formulate corresponding development strategies.