Abstract
This chapter examines the case of unconventional fossil fuels in the European Union (EU) and China. Recent developments in the extraction of energy from unconventional fossil fuels will have consequences for the governance of global energy trade and European energy security. When it comes to trading energy, there is a clear difference between oil and gas, in that oil can be easily transported, whereas gas needs to be liquefied or transported through pipelines and, consequently, the technological and political challenges are higher for gas than they are for oil. The chapter’s main argument is that shale gas and shale oil will revolutionise world energy politics and economics. Irrespective of whether environmentally acceptable extraction technologies and political consensus for the extraction of unconventional fossil fuel sources in Europe can be found, the EU will be unable to avoid its impacts on global energy markets and will have to adapt EU internal and external energy policies accordingly. Since the entry into force of the Lisbon Treaty in 2009, the EU’s internal and external governance framework has evolved; however, EU energy policy is only partially ready for the unconventional energy revolution. The EU has taken remarkable steps towards addressing its Member States’ respective energy security in a more cohesive manner, although issues do exist in terms of the distinct energy interests of EU Member States that undermine cohesive EU action.
Rafael Leal-Arcas is the Jean Monnet Chaired Professor of European and International Economic Law at the Centre for Commercial Law Studies, Queen Mary University of London. He obtained his Ph.D. (European University Institute, Florence), J.S.M. (Stanford Law School), L.L.M. (Columbia Law School), M.Phil. (London School of Economics and Political Science), B.A. and L.L.B. (Granada University). He is the Member of the Madrid Bar and Author of the books Energy Security, Trade and the EU: Regional and International Perspectives (Edward Elgar Publishing, 2016); The European Energy Union: The quest for secure, affordable and sustainable energy (Claeys & Casteels Publishing, 2016); International Energy Governance: Selected Legal Issues (Edward Elgar Publishing, 2014); Climate Change And International Trade (Edward Elgar Publishing, 2013); International Trade And Investment Law: Multilateral, Regional And Bilateral Governance (Edward Elgar Publishing, 2010) and Theory And Practice of EC External Trade Law and Policy (Cameron May, 2008). He is the editor or co-editor of Commentary on the Energy Charter Treaty (Edward Elgar Publishing, 2018), University Initiatives in Climate Change Mitigation and Adaptation (Springer, 2018), and Research Handbook on EU Energy Law and Policy (Edward Elgar Publishing, 2017).
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Notes
- 1.
Unconventional sources of fossil fuel include tight gas, coal bed methane, unconventional oil and shale gas, among others. For the purposes of this chapter, we will focus on shale gas.
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As of 2013, the estimated technically recoverable shale gas of China was 1115 trillion cubic feet. See EIA (2013a).
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Russia and China signed in May 2014 the biggest natural gas deal in history: a $400 billion agreement for 30 years of gas supply. See Financial Times (2014). This new deal raises the following questions: Are we witnessing the unfolding of a new great game in Central Asia between Russia and China? If so, to what extent does this rivalry between them pose a threat to the fragile geopolitical equilibrium and energy security in the region? An ever-growing rivalry between China and Russia over energy resources in Central Asia has been unfolding since the demise of the USSR. The Sino-Russian rapprochement and their new ‘strategic partnership’ aim, among other things, at preventing the West (primarily the USA) from further meddling in Central Asia. Both Russia and the Central Asian republics are seeking to diversify their energy exports, hence China represents an ideal partner for them and vice versa. Soon after the collapse of the USSR, China immediately recognised the newborn Central Asian states and established diplomatic relations with them. In 1993, China’s domestic consumption of oil surpassed its domestic production and, therefore, it became of paramount importance for them to start importing energy from abroad. At the same time, the Central Asian republics’ economies lay in tatters and they were desperate for liquidity, which their former master, Russia, could not always guarantee them as its economy was also in a dire state. Thus, the Central Asian States started looking for alternative export routes. However, since all their existing export routes and pipelines belonged to Russia, they had to find new customers somewhere else. Hence, energy-thirsty China represented an ideal partner. In the 1990s, China began importing significant amounts of oil from the Middle East (still in 2009, 47% of its total oil imports originated from there) via shipping routes passing through the Strait of Malacca, on which China is still nowadays dependent for over 75% of its total crude imports. However, there is increasing concern in China regarding the country’s overwhelming reliance on the Strait of Malacca because of its vulnerability to terrorism and piracy. Thus, Beijing started looking for alternatives to diminish its reliance of the Strait of Malacca and diversify its imports from other sources, such as neighbouring Russia and Central Asia.
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Leal-Arcas, R. (2019). Unconventional Sources of Fossil Fuel in the European Union and China: Perspectives on Trade, Climate Change and Energy Security. In: Hefele, P., Palocz-Andresen, M., Rech, M., Kohler, JH. (eds) Climate and Energy Protection in the EU and China. Springer, Cham. https://doi.org/10.1007/978-3-319-99837-4_10
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