Shale Gas Could Ease China Energy Shortfall

China is maintaining its position as the world's 'green' technology leader despite continued global economic volatility and slowing domestic growth, according to a new industry report.

The China Greentech Initiative (CGTI), of which professional services firm PricewaterhouseCoopers (PwC) is the strategic advisor, offered those findings in its analysis The China Greentech Report 2012.

Officials say that while the sector faces macroeconomic challenges, China's overwhelming need for energy and environmental technology will continue to propel rapid growth in greentech markets.

The report cites China's "urgent" needs in energy and environment driving developments. The country now imports over half of its oil, in addition to its overreliance on coal, producing high emissions of carbon and other air and water pollutants.

China's domestic conventional gas production is described as "stretched to the limit".

However, vast unconventional domestic gas reserves, including shale gas and coal-bed methane, could ease China's gas shortfall, which is expected to grow nine-fold by 2015.

The industry would then need to overcome major pricing, regulatory, distribution and water challenges.

"The basic fact is that to ensure energy security and supply, China has no choice but to develop and use new forms of energy to meet the growing and seemingly insatiable demand," said Allan Zhang, director of sustainability and climate change for PwC and a specialist in environmental policy and economics in China.

"Technological advances over the years have made wider use of unconventional gases possible, and opened up new sources of energy supply, although many technical hurdles still exist," he continued.

"Companies with experience of advanced technologies, or management skills in exploring coalbed methane projects on a large commercial scale will be in a great position in the market.

"The lack of experience and know-how of the Chinese companies in dealing with unconventional energy such as shale gas offer the European and American companies the chance of riding on China's rapid development."