Shale gas, a technological innovation surrounding new gas extraction techniques, has been coined a ‘game changer’ for energy security. Having made the United States quasi-energy independent in gas, the shale gas industry experiences a hype, triggering an ongoing policy debate on the potential and pitfalls of shale gas in Europe. There, regulation remains by and large inappropriate, while geological prospects remain unclear and infrastructure and service industry is lacking. Still, regulators, politicians and the industry itself are being called on to make decisions on future shale gas production and extraction, based on public, economic and political considerations. European industry and society therefore face a high degree of uncertainty about the economic and ecological viability of a nascent energy sector. The article examines the emergence of shale gas in Europe through a risk governance framework that focuses on relevant contractual and political-economic risks in the energy sector. It poses one main question: how is risk governed for the case of a nascent sector? Providing an effective analysis of shale gas requires separating different risk elements of the industry as well as of other stakeholders. The paper will therefore differentiate between contractual risks and regimes risks. While the former exist in the regulation of private sector operations, the latter are focused on broader political, economic and social elements that are expressed through state institutions, such as ministries or regulators. Risk mitigation is likely to play out in the regulatory sphere, therefore understanding the role of national and EU level governance structure is essential. The European level notably comes in through EU legislation in the environmental sphere. As for the national level, this paper will focus on Poland and Bulgaria as two main focal points of the European shale gas debate. Whilst Poland continues pushing for shale gas, Bulgaria has put a memorandum on it. In addition, the contribution effective sectoral governance plays in utilizing – or not – shale gas for environmental reasons will be assessed. This will provide a deeper understanding of where the pitfalls may lie for the European shale gas industry, as well as the underlying political economy of entailed risks. The article contributes both to the scholarly debate surrounding risk governance in more general terms (Hood, Rothstein, and Baldwin 2001) and the sectoral governance of a risk prone industry in particular (Bulmer et al. 2007; Eberlein 2008; Walker 2000), as well as the policy debate on the regulation of a nascent sector in Europe (Wolf 2012; McKie 2012; McKinsey and Company 2009).
