Exploiting our shale gas reserves should be an urgent national priority, argues Lord MacGregor, chairman of the House of Lords economic affairs committee
Impressed by the way in which the US has raced ahead with the development of shale gas and oil, the House of Lords’ economic affairs committee, which I chair, began an inquiry last October into the potential impact of developing a shale gas industry here in the UK. The current situation in Ukraine and the urgent need to strengthen Europe’s energy security have given our conclusions importance way beyond the economic alone.
The shale revolution in the US has already transformed America’s energy mix, cut energy prices, reduced coal use, paved the way for the US to become a major exporter of liquefied natural gas and strengthened energy security. The full effects on world energy markets are still to be felt, but will be multiplied as countries with large shale deposits develop their own resources.
We are convinced that development of the UK’s potentially substantial shale resources should now be an urgent national priority. We fully support the Government’s decision to “go all out for shale”, but we are greatly concerned that here in the UK we’ve not yet left the starting gate. We are persuaded by the weight of scientific evidence that, with proper regulation, including the improvements we advocate, exploration and production of shale gas would be at low risk to the environment and public health. Our own shale gas would also strengthen the UK’s energy security and be a bridge fuel towards a low-carbon future. It is now vital to get on with the necessary exploration and appraisal to assess the UK’s reserves.
For now, there are only tentative estimates of the UK’s economically recoverable reserves of shale gas. They cluster around 130 trillion cubic feet, or about 40 years’ consumption, based on British Geographical Survey studies and on experience in the US. If these estimates are proved right, the economic benefits could be substantial, including new jobs, the creation of an exportable skills base, a boost to energy-intensive and petrochemical industries, extra tax revenue and a stronger balance of payments.
The industry is keen to get on with exploration and the Government appears to be too; the Chancellor of the Exchequer is putting forward tax measures he calls “the most generous for shale in the world”. Little, however, is actually happening on the ground. We heard that, since a moratorium on fracking was lifted in 2012, not one permit for fracking has been requested or granted.
There are two main reasons for this delay: a vocal anti-fracking movement and a complex regulatory regime.
Since last summer’s protests at Balcombe, anti-fracking groups have made their presence felt at any site where exploratory drilling for shale gas is envisaged. The industry is unwilling to proceed without what it calls a “social licence to operate”.
Much of the opposition to shale gas is based on a belief that the only legitimate response to climate change is to move immediately to a decarbonised power sector. This is unrealistic. Existing sources of renewable energy are too expensive and intermittent to meet all our energy needs; new nuclear will take time to develop. If we are to continue our progress in reducing greenhouse gas emissions by 80 per cent of 1990 levels by 2050, a transition fuel is required to lessen our current dependence on coal.
Gas, as the cleanest fossil fuel, has to be the answer – and gas from domestic shale would produce fewer emissions than imported liquefied natural gas. The Committee on Climate Change agree that shale gas can be developed in the UK in a manner entirely consistent with our emissions targets.
Opponents of fracking also cite concerns over threats to the environment and public health. After carefully considering the scientific evidence from the UK and the US, we concluded that many of these are exaggerated.