The Shale Gas Revolution: Implications for Sustainable Development and International Trade

Study
Date period
10 March 2014

Summary As shale gas exploration and extraction ramps up in many parts of the world, its contribution to global climate change and effect on international trade are becoming increasingly complicated and indeterminate. Undoubtedly, shale gas is transforming energy prices, industrial competitiveness, and geopolitics in a number of countries. Further investigation and safeguards are therefore needed to ensure that the shale gas “revolution” fosters, rather than hinders, sustainable development.

This paper, authored by Thomas L. Brewer, a senior fellow of ICTSD, sheds light on these complex issues and calls on governments, industry and international agencies to evaluate the full effects of shale gas on the environment and climate change to determine how it can best fit into a sustainable development agenda.

ForewordShale gas has rapidly gained an important spot on domestic and international agendas. Some countries are experiencing a true shale gas ‘revolution,’ owing to the way in which shale gas is changing industrial competitiveness, relative energy prices, and geopolitics. Meanwhile, other countries have banned the exploration of shale gas (using ‘fracking’ technology), which is a sign of the continued controversy that shale gas brings with it. These bans are mostly related to concerns about health, safety, and the environment. Shale gas exploration can, in particular, affect water resources and greenhouse-gas emissions (in both positive and negative ways). While the impacts of fracking are not yet fully known, it is clear that we need to know more about shale gas in order to inform sound policymaking.

This paper, authored by Thomas Brewer, a senior fellow with the International Centre for Trade and Sustainable Development (ICTSD), offers improved knowledge of shale gas and its trade and sustainable development aspects, in particular. It offers an overview on the nature of shale gas. As the paper is not meant to provide a final judgment on the desirability of shale gas exploration, it argues that the actual impacts of shale gas will depend on how different stakeholders respond to the sustainable development issues that come along with it. These issues are directly relevant to ICTSD’s agenda, in particular, where they have linkages with trade. The paper places these concerns in a wider context, which takes the impacts of natural gas beyond shale gas into account.

The paper focuses on the sustainability aspects specific to shale gas: methane leakages that contribute to global climate change, increases in international trade in natural gas, increases in international trade in coal, and reductions in investment in renewable energy sources.

In response to these issues, different stakeholders are called upon to actively address both the opportunities and the challenges that shale gas represents. One important approach could be based on the goals of sustainable development and international cooperation. The findings of this paper can facilitate such an approach and contribute to the establishment of deeper research agendas, as it identifies major knowledge gaps.

This analysis is timely, as several countries are planning to explore shale gas in the midst of both public criticism and industrial enthusiasm.

As always, your comments and input on this paper are most welcome.

Ricardo Meléndez-Ortiz

Chief Executive, ICTSD