Environmental risks of shale gas development in China Alan Krupnick, Zhongmin Wang n , Yushuang Wang Resources for the Future,1616 P St, NW, Washington DC 20036, United States HIGHLIGHTS  We assess the environmental risks of shale gas development in China.  We use the US experience to identify the potential environmental burdens.  The effectiveness of environmental regulations in China is generally weak.  China lacks environmental regulations specific to the oil and gas sector.  We recommend China to adopt policies to reduce environmental risks. article info Article history: Received 30 April 2014 Received in revised form 24 July 2014 Accepted 29 July 2014 Keywords: Shale gas Environmental risks China abstract Shale gas development in China can generate great potential economic benefits, but also poses serious environmental risks. In this paper, we offer a macro assessment of the environmental risks of shale gas development in China. We use the US experience to identify the nature of shale gas development activities and the types of potential burdens these activities may create. We then review the baseline environmental conditions and the effectiveness of environmental regulations in China and discuss the implications of these China-specific factors for risk assessment. We recommend China to conduct a strategic environmental assessment and to consider sector-specific environmental regulations. & 2014 Published by Elsevier Ltd. 1. Introduction Rapid and low-cost development of shale gas resources in the United States and its concomitant effects on reducing natural gas prices, stimulating industrial activity from natural gas users and replacing coal with natural gas to generate electricity, have many countries in the world looking to the development of their own shale gas resources. Endowed with large shale gas resources, China has an ambitious plan for shale gas development, partly driven by growing energy demand and increasingly challenging environ- mental conditions. At the same time, the rapid development in the United States and the prospect of shale gas exploitation in China have many concerned that exploiting these resources will come at too high an environmental cost. Because of the low permeability of shale gas formations, it is typically necessary to use hydraulic fracturing to stimulate shale gas reservoirs. Since hydraulic frac- turing, which may not be necessary for producing natural gas from conventional gas reservoirs, requires the use of chemicals and large amounts of water, the environmental risks from shale gas development, in the absence of effective regulations, are generally higher than those from conventional natural gas development. In the United States, environmental concerns have led to new regulations, bans on fracking, and efforts within the oil and gas industry to develop better “best practices.” In this paper, we offer a macro-level assessment of the environmental risks of shale gas development in China. The environmental risks of shale gas development in a country depend on the nature and scale of shale gas development activities, the potential type and quantity of burdens (e.g., impact on ground- water or surface water, etc.) created by these activities, and the degree and likelihood of exposure of end points (e.g., human health, ecosystem, climate, etc.) to these burdens. The quantity of burdens created by shale gas activities depends not only on the scale of shale gas activities, but also on the environmental practices of the firms involved, which, in turn, depend crucially on the effectiveness of environmental and operational regulations. Environmental regulations also affect the extent to which end points might be exposed to the burdens created by shale gas activities. For example, if firms are prohibited from drilling shale gas wells in areas close to communities or water resources, exposure would be smaller. Exposures of human, ecosystem and other end points to burdens are highly site-specific: they depend on the locations of Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/enpol Energy Policy http://dx.doi.org/10.1016/j.enpol.2014.07.022 0301-4215/& 2014 Published by Elsevier Ltd. n Corresponding author. Tel.: þ1 202 328 5036. E-mail addresses: krupnick@rff.org (A. Krupnick), wang@rff.org (Z. Wang), ywang@rff.org (Y. Wang). Please cite this article as: Krupnick, A., et al., Environmental risks of shale gas development in China. Energy Policy (2014), http://dx.doi. org/10.1016/j.enpol.2014.07.022i Energy Policy ∎ (∎∎∎∎) ∎∎∎–∎∎∎