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Benny Peiser: Europe ‘Dithering’ Over Joining Shale Revolution

The blockage of shale gas exploration has led to a new rush to coal and could leave Europe even more reliant on Russia for its energy needs – but there are signs that the anti-shale campaign is losing momentum, says Benny Peiser

European countries may soon have to import shale gas from Russia if the green energy lobby has its way. The prospect of even deeper reliance on Russian gas together with a new rush to coal burning may be the unintended yet inevitable consequence of the ongoing opposition by green campaigners and policy-makers to domestic European shale development. Just as the German phase-out of nuclear energy production has resulted in Germany’s increased imports of French and Czech nuclear energy, Europe’s blockage of shale exploration is providing Russia with the perfect reason to intensify its own shale extraction.

While European governments are dithering, the shale boom is spreading to Russia, where the exploitation of huge deposits is speeding up. Russian companies are joining the shale revolution to secure the country’s export market, not least its gas exports to Europe. The Kremlin hopes to unlock what may be the world’s richest shale plays in western Siberia by using tax incentives to coax international companies to invest in the new energy game.

In sharp contrast to developments in Russia and much of the rest of the world, environmental campaigners and green policy-makers are blocking shale developments in most European countries. European Union nations have barely scratched the surface on shale gas. There are two dozen test drills around Europe, compared to an estimated 35,000 fracturing sites in the United States. As a result, Europe has failed to join the shale revolution that has swept the US. Instead of benefiting from cheap shale gas, lower CO2 emissions, new industries and hundreds of thousands of new jobs, Europe is constraining itself with self-imposed green limits to growth.

As gas is displacing coal for electricity generation in the US, the shale revolution has led to a dramatic reduction in CO2 emissions – down to 1992 levels. According to government officials, the main reason is that cheap and abundant shale gas has led power plant operators to switch from coal to natural gas. The shale boom has caused the price of gas to plummet from $12 per unit about five years ago to less than $3, making natural gas much cheaper to burn than coal.

Shale Gas Extraction Infographic

In order to replicate the US energy revolution which has led to both the rapid drop in CO2 emissions and the collapse of natural gas prices, Europe would need to exit coal and switch to natural gas. Yet the green lobby’s shale gas blockade together with its opposition to nuclear energy is causing the exact opposite: it has led to a renaissance of coal. Germany’s green energy transition was supposed to produce environmentally friendly electricity. As it turns out, the power gap, created by the shutdown of eight nuclear power stations, will be largely filled by coal. However, coal is experiencing a new renaissance not just in Germany. Indeed, CO2 emissions in the EU as a whole are likely to rise 43 million metric tons this year because of increased coal burning at power stations, according to Barclays analysts.

More than Europe’s new coal boom, green energy campaigners fear that the switch to cheap and abundant shale gas would threaten the renewable energy sector and its multi-billion subsidies. It is this economic concern rather than environmental considerations that is driving much of the organised opposition to shale development in Europe. “We don’t need such a huge amount of gas and certainly not cheap gas, because that would kick out not just coal, but also renewables,” Greenpeace renewable energy director Sven Teske fears.

There are some strong signs, however, that the anti-shale campaign in Europe is losing momentum, not least in France where hydraulic fracturing was banned a year ago for party-political concerns. The new socialist government, facing a deepening economic and financial crisis, has announced that it is considering whether to give shale gas extraction the green light. In recent days, Prime Minister Jean-Marc Ayrault said the debate about shale gas drilling “was not settled” and that new and safe methods of hydraulic fracturing could overcome environmental concerns. His diplomatic language echoes President Francois Hollande who told reporters that he “remains open to shale gas extraction if they come up with a ‘safe and clean’ technique”. I think most observers fully understand that France means business after all.

Benny Peiser is the director of the Global Warming Policy Foundation, a London-based think-tank

Public Service Europe, 29 August 2012