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

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

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.

Suggested Citation

  • Liu, Jianye & Li, Zuxin & Luo, Dongkun & Duan, Xuqiang & Liu, Ruolei, 2020. "Shale gas production in China: A regional analysis of subsidies and suggestions for policy," Utilities Policy, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:juipol:v:67:y:2020:i:c:s0957178720301296
    DOI: 10.1016/j.jup.2020.101135
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    Cited by:

    1. Xi Yang & Alun Gu & Fujie Jiang & Wenli Xie & Qi Wu, 2020. "Integrated Assessment Modeling of China’s Shale Gas Resource: Energy System Optimization, Environmental Cobenefits, and Methane Risk," Energies, MDPI, vol. 14(1), pages 1-24, December.
    2. Liu, Haomin & Zhang, Zaixu & Zhang, Tao, 2022. "Shale gas investment decision-making: Green and efficient development under market, technology and environment uncertainties," Applied Energy, Elsevier, vol. 306(PA).

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