A challenge to the UK shale gas industry

If the UK's shale industry wants to be part of the green economy, why isn't it vocally lobbying for a decarbonisation target, higher carbon prices, and CCS investment?

13 Jan 2014, 13:22

With a crushing predictability the Prime Minister's confirmation the UK is "going all out for shale gas" has sparked a fiercely divided reaction, as battle lines have once again been drawn between whose who wish to see a moratorium on all fracking everywhere and those who insist onshore oil and gas offers a panacea to our myriad economic, energy, and environmental woes. Meanwhile, those who argue that it is still too early to determine whether shale gas is either hero, villain, distraction or non-event have once again struggled to make their voices heard.

This more nuanced analysis is centred on two arguments, both of which make the shale gas industry cheerleading currently being undertaken by the Prime Minister and the industry look both premature and irresponsible.

The first is that the UK's shale gas potential is being over-hyped to a ridiculous degree. As numerous commentators, including former BP boss and Cuadrilla chairman Lord Browne have pointed out the UK's embryonic shale gas industry will have to deliver a "gigantic amount of gas" if it is to have a "material impact on price". The industry will have to overcome rapid well decline rates, local opposition to developments, and other technical challenges if it is to make good on government ministers' hugely optimistic predictions. Many critics maintain shale gas is more likely to provide a marginal addition to the UK's energy mix - which doesn't necessarily mean we shouldn't explore its potential, but certainly means we should resist the temptation for it to distract us from the pressing task of delivering a new low carbon energy infrastructure. As the CBI's Nicola Walker declared this morning, "it will not be the silver bullet that solves all our energy needs".

The second, and in many ways more important argument, is that if the industry's optimistic projections prove well-founded and the UK can deliver a "gigantic amount" of domestic gas then it runs straight into serious debate about the scale of both its local environmental and global climate change impacts. The government's most recent report on the UK fracking industry may have been seized upon by Ministers as further evidence that the sector presents an "exciting prospect" for the UK, but it also detailed how under a "high activity" scenario the industry would have to wrestle with "significant negative effects", including "an increase in traffic congestion, emissions and more pressure on water resources".

Today's announcements on business rates, community benefits, and Michael Fallon's erroneous assertion that a "robust" regulatory framework will only allow fracking to go ahead if it is "absolutely safe" (as I've argued before, no energy technology is "absolutely safe", the risks might be deemed acceptable, but it is misleading to suggest they don't exist) has to be seen in this context. The shale gas industry can only deliver on the scale that Conservative Ministers hope if people can be convinced that its "significant negative effects" are both minimised and not that bad after all. The promise of "community benefits" or "bribes", depending on your point of view, is clearly designed to tilt the scales of public opinion in favour of fracking.

Despite intense local and national protests against fracking, this political decontamination strategy may just work. The scale of the community benefits on offer, coupled with the promise of tough environmental regulations and safeguards could be enough to allow some projects to proceed in the next few years. If they then prove successful, it will prove extremely difficult for a cash-strapped government to resist the urge to expand the industry.

However, as the shale gas sector today attempts to reinvigorate its attempts to win over the communities, politicians, and business leaders who will ultimately determine whether it can establish itself as a large scale industry it is still failing to address legitimate concerns about its climate impacts.

As a climate hawk, I'd argue it is these climate impacts that should ultimately determine the future of the UK's shale gas industry. Yes, local environmental impacts are important and projects should only more forward at appropriate locations where these impacts are minimised. But all forms of energy generation have local impacts, be it the visual impact of wind farms, the air pollution impact of coal and gas plants, or the water impact of gas wells on the Russian Steppes or the American plains. If the UK is going to continue to use gas for the foreseeable future, and like it or not we are, there will be local environmental impacts somewhere. It is nimbyism to argue they should not be here.

However, if the UK shale gas industry can mount a strong argument that local environmental impacts can and will be minimised, the argument it can aid decarbonisation and is definitely compatible with UK, EU, and global climate change goals is far more questionable. This argument was neatly summarised today by shale gas developer Igas' Andrew Austin, who told The Guardian, "the enemy in this agenda is coal. Shale gas is the same as any other form of natural gas. If you use that locally you're supporting decarbonising, you're displacing coal and you're supporting renewables". It is an argument that has been trotted out time and again by shale gas industry supporters. Gas is less carbon intensive than coal, they argue, it can cut emissions by replacing coal while providing back-up for intermittent renewable energy sources, and can then be decarbonised further in the future through carbon capture and storage technology. The problem is, as far as I can see, the industry is doing next to nothing to make sure this environmentally responsible emissions reduction scenario comes about.

Far from replacing coal, the government's most recent report warned there were no guarantees UK shale gas would reduce greenhouse gas emissions and there was a very real chance it would lead to a net increase. It concluded that any increase in domestic shale gas production would most likely "result in substitution for Liquefied Natural Gas (LNG), with a negligible effect on overall emissions". Moreover, if this LNG is then shipped elsewhere, as it almost certainly would be, then global emissions would increase. It is depressing that this still needs pointing out, but if you extract and burn more fossil fuels you tend to get more greenhouse gas emissions.

The key point is that if the UK shale gas industry wants to be taken seriously as a player in the transition to a genuine low carbon economy - and there are people inside both the industry and government who sincerely claim they want this to be the case - then it has to offer much firmer assurances that it will indeed enable a sharp net reduction in greenhouse gas emissions.

On the policy front that means explicit and unequivocal support for a power sector decarbonisation target for 2030, a clear endorsement of the current fourth carbon budget and its stretching target for the mid-2020s, public backing for the UK's push for a more demanding EU emissions reduction target and reform of the emissions trading scheme that would push up the carbon price, even stronger regulations governing methane leakage and flaring, and the launch of a community benefit style fund to ensure the UK shale gas industry provides support for CCS demonstration projects.

The fact that the UK shale gas industry has failed to take an overtly public stance on any of these issues tells you all you need to know about its commitment to aiding the UK's decarbonisation efforts. Compare the industry's promotion of its community benefits pilot and its lobbying for a supportive tax and planning regime with its near complete silence on climate change policy and it is clear that shale gas' promised emissions reductions need to be taken with the proverbial truck load of salt.

As I've argued before there may be a case for some fracking in the UK, but if we are really to go "all out" for shale gas then the industry and government need to demonstrate much more convincingly how a large scale domestic gas industry makes sense at a time when the UK has less than 20 years to decarbonise much of its economy. We need stronger safeguards to ensure UK shale gas helps rather than hinders decarbonisation, and until we have them it will remain all but impossible for green businesses and NGOs to support UK fracking.

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Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray

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