A system dynamics analysis of technology, cost and policy that affect the market competition of shale gas in China

In order to ease environment pressure and alleviate the scarce problem of energy, Chinese government has begun to exploit and develop shale gas (SG) since 2009. However, the formation of competitive market is bristled with difficulties, due to its infancy, imperfect and lack of standardization. This paper firstly analyzes the status quo of technology, policy, cost, and competition of SG industry in China. Then a system dynamics (SD) model is built to show various trends of Chinese SG industry under different scenarios, which shows that technology, policy and cost all have effects on competitiveness. At last, the simulations reveal that the number of competitors in Chinese SG industry will arrive at its peak from 2019 to 2020. The corresponding recommendations have been presented: Chinese government should pay more attention on the perfection of laws and regulations of SG industry. And competitors should focus on increasing R&D investment.