Will China's Shale Gas Industry Achieve Its Production Goals with Subsidy Removal?

With the expectation of growing gas demand, a desire to improve environmental impact, the high resource potential of shale gas in China, and the success of the shale gas revolution in the U.S., the Chinese government has implemented incentive policies for shale gas development, such as quantity subsidy and taxes relief. These policy-incentives cover the time frame till 2021 and the government hasn't announced their intention to continue any supportive action thereafter. After introducing current policy environment, this paper is devoted to analyse the influence of the policy removal on shale gas industry by identifying and measuring the potential impact of key variables on shale gas development through system dynamics methodology. Our findings show that the persistently phasing out incentive policies will dampen investors and negatively impact future production. More precisely, the investment solely funded by shale gas enterprise profit is insufficient in meeting the medium-term objective of China's shale gas production. These findings are sustained by the sensitivity analysis we have performed. [ABSTRACT FROM AUTHOR]