Unconventional Sources of Fossil Fuel in the European Union and China: Perspectives on Trade, Climate Change and Energy Security

Abstract

Whereas oil can be easily transported, gas needs to be liquefied or transported through pipelines. Therefore, the technological and political challenges are higher for gas than they are for oil. Shale gas is an unconventional natural gas that is located within shale rock formations that include quartz, clay and other minerals. These formations are found both on-shore and off-shore. This chapter concludes that the European Union (EU) will have to adapt to the likely changes in energy politics and economics that derive from the unconventional gas and oil revolution. In my view, the environmental risks that clearly exist should not lead to a complete discarding of the new extraction technology. On the contrary, the energy revolution will take place with or without the EU. It is therefore in the interest of the EU to not only benefit from enhanced energy security through the exploration of new and relatively clean fossil energy resources, in particular gas, but, moreover, to be able to influence the discussion about which technologies and regulatory environments shall be applied for the exploration of these newly accessible resources. As for China, while it could aim at trying to tap into the future worldwide shale gas supply, its geographical and political position in the world might render this endeavour less fruitful. On the one hand, its domestic gas and oil industry so far lacks the technology to exploit shale gas basins abroad in places such as South America or South Africa, not to speak of the political and technical feasibility of exploiting the potential shale gas resources in Russian Siberia.

Keywords: unconventional sources of fossil fuel, natural gas, geopolitics, energy security, climate change, international trade