Regulating China’s Shale Gas Development: Challenges, Principles and Approaches

Abstract

The shale gas development is an important aspect of China's discourse of energy revolution. Compared with the practice of the United States, China's shale gas development is faced with many different situations. Regulating the shale gas development would be a key concern of the Chinese government. There are four challenges that should be addressed by the Chinese policy makers for the regulation. The first is to ensure the public safety, which focuses on the possible adverse impact of the shale gas development especially from the application of the techniques of hydraulic fracturing and horizontal drilling. The second is to prevent the ecological damage and environmental pollution, which gives attention to the negative externalities of the shale gas development. The third is to protect the rights and interests of the local people, which centers on the claims of the local people. The fourth is to promote the efficiency of the shale gas development, which emphasizes the strategic value of the shale gas. For better regulating the shale gas development, four principles should be upheld. Building a rules system and reforming the pattern are two critical points of improving the regulation.

Keywords: Ecological damage, Environmental pollutions, Gas development, Negative externalities

JEL Classification: K32