Abstract
Shale gas has been defined as a revolution in the global energy landscape. This is even more true in China, whose large shale gas reserves are likely to have a crucial effect on the regional gas market and on China’s energy mix. The country is endeavoring to minimize reliance on imported fossil fuels, while it strives to address mounting energy demand and gain greater negotiating power on determining gas prices. Nonetheless, this advance does not come without risks, as shale gas exploitation poses a number of legal, regulatory and environmental challenges, which could negatively impact on future exploitation and commercialization, not only in China. This study carries out an in-depth analysis of the current shale gas regulatory framework, moving from previous experiences of unconventional gas exploitation in the United States to evaluating their possible application to China, where regulatory and enforcement hurdles are exacerbated by an energy sector characterized by technological deficiencies, barriers to market access hindering access to resource extraction for private investors, and a limited liberalization of gas prices. These questions are analyzed in light of problems related to water pollution originating from mismanaged drilling and fracturing, and the absence of adequate regulatory measures and industry standards regarding predictive evaluation. The paper goes on to explore the institutional situation of fragmentation, and clashes and overlapping of competences, emphasizing how these processes impact on outcomes. The study concludes by proposing possible ways forward, involving cooperation and regulatory reforms.
Full PaperPaolo Davide Farah
Founder, President and Director
Professor Paolo Davide Farah is Founder, President and Director of gLAWcal – Global Law Initiatives forSustainable Development, Full Professor(with tenure) at West Virginia University, Eberly College of Arts and Sciences,John D. Rockefeller IV School of Policy and Politics, Department of Public Administration and “Internationally Renowned Professor/Distinguished Professor of Law” (Full Professor level) at Beijing Foreign Studies University (BFSU), Law School, Beijing, China.
Riccardo Tremolada
Research Associate
Since March 2013, Riccardo has been a Research Associate at gLAWcal – Global Law Initiatives for Sustainable Development. Riccardo works as an Associate at Cleary Gottlieb Steen & Hamilton LLP. He joined the firm in Rome in 2013 and was resident in the Milan office in 2017 and in the Washington D.C. office in 2018.
Summary
Shale gas has been defined as a revolution in the global energy landscape. This is even more true in China, whose large shale gas reserves are likely to have a crucial effect on the regional gas market and on China’s energy mix. The country is endeavoring to minimize reliance on imported fossil fuels, while it strives to address mounting energy demand and gain greater negotiating power on determining gas prices. Nonetheless, this advance does not come without risks, as shale gas exploitation poses a number of legal, regulatory and environmental challenges, which could negatively impact on future exploitation and commercialization, not only in China. This study carries out an in-depth analysis of the current shale gas regulatory framework, moving from previous experiences of unconventional gas exploitation in the United States to evaluating their possible application to China, where regulatory and enforcement hurdles are exacerbated by an energy sector characterized by technological deficiencies, barriers to market access hindering access to resource extraction for private investors, and a limited liberalization of gas prices. These questions are analyzed in light of problems related to water pollution originating from mismanaged drilling and fracturing, and the absence of adequate regulatory measures and industry standards regarding predictive evaluation. The paper goes on to explore the institutional situation of fragmentation, and clashes and overlapping of competences, emphasizing how these processes impact on outcomes. The study concludes by proposing possible ways forward, involving cooperation and regulatory reforms.