Unconventional Gas and the European Union (EU): Prospects and Challenges for Competitiveness

First of all, there is little evidence of a prosperous unconventional gas development in Europe. Second, the US boom already has a strong impact on both global and European energy markets. In particular, lower US gas and coal prices have changed relative energy prices, both in the United States and abroad.

Finally, the competitiveness impacts in some (sub)sectors will be considerable. These impacts are not restricted to gas use but also strongly relate to the production of ‘by-products’ such as ethylene, propane and butane, which are transformed into products competing with similar but oil-based products from the EU. These indirect impacts may even be more important in the long run, although several general equilibrium impacts may soften the adverse competitiveness impact in the EU.