Game changer

 

Abundant shale gas reserves augur well for China's clean energy dreams

Like many others, Chen Weidong believes that shale gas will create hundreds of thousands of jobs and solve the problems of energy-intensive industries in China.

Pointing to the amazing shale gas run in the United States that saw the country sitting on huge surplus stocks of natural gas, Chen, the chief energy economist of China National Offshore Oil Corp, says the real gains are the massive reductions in carbon emissions or greenhouse gases that the US has achieved in the last five years.

China, the world's biggest energy user, is also one of the nations with the largest reserves of shale gas. According to government estimates, China has explorable shale gas reserves of about 25.1 trillion cubic meters, which on paper means that based on current gas consumption, there are enough gas stocks to last for the next two centuries.

Shale gas is seen as an attractive proposition for nations as it offers abundant clean energy or energy with lower carbon intensity, an important aspect when it comes to fixing national goals. From a consumer perspective, it is worth pursuing as the long-term prospects make it an extremely viable proposition.

But till date, China has not started commercial production of shale gas, unlike the US where it has become a major and plentiful energy source and made the nation more or less self-sufficient in its energy requirements.

There is now a growing urgency in Beijing to further encourage the development of unconventional energy sources as it believes such steps are essential to help reduce carbon emissions and costly gas imports.

Shale gas remains an integral part of the overall energy strategy and the government has outlined a plan that will see China producing 60 to 100 billion cubic meters of natural gas annually by 2020 from shale sources.

To further encourage the key players within the shale gas industry, China has also announced its intentions to open up some shale gas blocks for private companies. That in itself is a major policy change as the 50 trillion yuan ($7.8 trillion, 6.4 trillion euros) industry was till now mostly restricted to State-owned enterprises.

Experts agree that there is no doubt that the industry is set to blossom in China, considering that it has a treasure trove of resources.

"I have great expectations of China's shale gas prospects. We have the resources and the market. Shale gas certainly has the potential to be something big in China. But I am also not overtly optimistic about future development of the sector," says Chen, one of China's foremost experts on unconventional energy .

He says that the industry has been evolving in an indecisive pattern and has still not got the rightful priority it needs. Chen says that such an attitude is surprising, considering that China will face more challenges to meet energy requirements in the wake of rapid urbanization and development.

Future in gas

Though China has the largest installed capacity in wind turbines and is the largest maker of solar panels in the world, it is not safe for the energy-hungry nation to solely focus on renewable energies, experts say.

Energy demand is expected to jump sharply by 2030, when China becomes the largest economy in the world, experts say. According to the BP Energy Outlook 2030 released in January, China's energy consumption in 2030 will be more than the combined demand of the US and Europe.

During the same period the energy deficit between China's own production and consumption is expected to jump six-fold over that of 2010, according to the report. China already imports more than 55 percent of its oil requirements and 20 percent of its natural gas requirements. The over-reliance on costly fuel imports will impact long-term growth and development prospects, experts say.

Though coal will continue to be the major source of fuel in China, there is now a growing demand to shift away from the carbon intensive fuel. Beijing, for instance, plans to replace all of its coal-fired power plants in the central areas of the city with natural gas power plants this year to cut down the emissions and many other cities are expected to follow suit.

Experts from across the world agree that natural gas is the transitional energy that the world will largely use as it seeks to move away from old and costly fossil fuels to cheaper and environmentally-friendly renewable energy.

According to estimates provided by the International Energy Agency, natural gas will overtake coal to become the second-largest primary fuel in the world by 2035, second only to oil.

China has already set a goal of doubling its share of natural gas in the overall energy consumption to 8 percent by 2015. However, the growth in production has not been in tandem with the growth in consumption.