Shale Gas and the Future of Energy
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Shale Gas and the Future of Energy

Law and Policy for Sustainability

Edited by John C. Dernbach and James R. May

The rapid growth of shale gas development has led to an intense and polarizing debate about its merit. At the 2012 United Nations Conference on Sustainable Development, countries around the world concluded that the transition to sustainability must be accelerated. This book asks and suggests answers to the question that has not yet been systematically analysed: what laws and policies are needed to ensure that shale gas development helps to accelerate the transition to sustainability?
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Chapter 3: Requiring full-cost accounting for environmental and social impacts

John H. Quigley


Unconventional shale gas development in the US is marked by a lack of public confidence and a frayed social license to operate, resulting in pressure for outright bans on the practice in the US and in other nations with shale gas resources. It is possible for shale gas development to achieve sustainable outcomes – and avoid, minimize, and mitigate its complex, interconnected risks, while allaying public fears. Sustainable development of shale gas production requires companies to internalize their costs and risks in making development decisions. The use of water and chemicals costs shale gas companies a considerable amount of money and also accounts for a great many external social and environmental risks. Yet shale gas companies, by and large, do not appear to be integrating their accounting concerning internal costs and external risks around the use of water and chemicals. This chapter argues that full cost accounting by industry of the various environmental and social risks of shale gas operations would likely lead to the elimination of the use of water and chemicals in the hydrofracturing process. That, in turn, would produce broad range of additional economic, social, and environmental benefits, making shale gas production more sustainable than it currently is. The chapter explains how companies could employ full cost accounting, examines four regulatory and nonregulatory means of implementing it, and recommends that full cost accounting be required.

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