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Benny Peiser: Shale Gas Is Britain’s Golden Opportunity

The discovery of 200 trillion cubic feet of shale gas in north-west England could revolutionise Britain’s energy market

Last week the drilling company Cuadrilla Resources announced that it had discovered an estimated 200 trillion cubic feet of shale gas under a small patch of land in the north-west of England. The find suggests that Britain has considerably more shale gas resources than earlier estimations predicted – possibly by an order of magnitude.

Despite the fact that typically only around 10-30 per cent of gas locked in shale formations is recoverable, the astoundingly large discovery may turn out to be one of the biggest gas finds in the past decade.

Next year Cuadrilla will submit its development plans for approval to Chris Huhne’s Department of Energy and Climate Change. If the government approves of the exploration plan, Cuadrilla hopes to bring the first gas to market in 2013. But whether or not the coalition government will give the green light to what appears to become a veritable energy revolution depends to a large extend on Huhne’s ill-famed objections against a new dash for cheap gas.

The reason for his opposition is not difficult to grasp. The discovery of vast unconventional gas reserves beneath Lancashire is likely to undermine Britain’s renewable energy sector. In sharp contrast to government targets or costly subsidies, the shale revolution could create a whole new energy industry that would generate billions of much needed revenue and thousands of real jobs.

Cuadrilla estimates that shale exploration could contribute £5bn to £6bn to the local economy over the next 30 years through job creation and business taxes. What is more, the new shale estimate only relates to the 440 square mile Bowland area between the cities of Blackpool and Preston. There are other large scale shale formations in other parts of the country that may be just as large if not larger than the Bowland play.

And then there’s the North Sea. According to the British Geological Survey, shale gas resources there could dwarf onshore supplies. Britain may be sitting on a huge gold mine of cheap, abundant and comparatively clean energy that could supply the UK’s energy needs for a century or more. No wonder then that a growing number of MPs want the North Sea to be at the heart of a new offshore shale gas industry.

The knock-on effects of a shale gas revolution could be just as staggering: cheap energy would make UK manufacturing more competitive, gas and electricity bills would fall significantly and the rising trend in fuel poverty could be reversed. If there ever was a potential silver bullet to tackle Britain’s economic and financial problems, shale gas has placed it on the government’s table.

But cheap and abundant shale gas is a competitive threat to all forms of renewable energy – and also to the coal and nuclear industry. Vested interests have turned against shale, using flawed and misleading environmental arguments to protect their market share. Chris Huhne in particular is renowned for his uninhibited antagonism towards natural gas. At the Liberal Democrat party conference in Birmingham last week he promised to halt a new “dash for gas” because it would undermine the UK’s unilateral climate targets.

Huhne’s main concern, however, is not CO2 targets that could be met quite adequately if Britain were to switch from coal-fired to gas-fired power generation. His real apprehension is that if a significant amount of cheap shale gas were to enter the UK market, it would almost certainly deter investment in expensive renewables.

In order to stifle the emergence of a cheap energy market and to shield expensive renewables, DECC’s energy bill would force UK families and businesses to subsidise renewable energy by approximately £120bn in the next 20 years. Electricity prices would likely double as a result.

There can be no doubt about it. If cheap shale gas were to displace expensive renewables and expensive imported energy, the price of electricity would fall significantly. If shale gas is more abundant than previously thought, the already high cost to households and businesses of subsidising nuclear and renewable energy would go through the roof.

Of course, this development is politically and economically unsustainable. It is no surprise that a recently leaked letter by David Cameron’s energy advisers described Huhne’s energy plans as “unconvincing” and warned that his green obsession will hit consumers hard. David Cameron would be well advised not to allow his green minister to squander Britain’s golden shale gas opportunity.

Dr Benny Peiser is the director of the Global Warming Policy Foundation

Public Service Europe, 27 September 2011