In the wake of the Ukraine crisis, the European Union should put an end to its dependence on Russian gas imports by being “less emotional” about shale gas exploration, says the head of BusinessEurope, the EU employers' association.
Markus Beyrer, the secretary general of BusinessEurope, is calling on EU leaders and stakeholders to be “less emotional” about the exploration and extraction of shale gas in Europe to ensure the continent’s energy independence.
“We think that we have to balance climate policy, but also cost competitiveness and security of supply. And of course, recently, the issue of security of supply has been added an extra element of external dependence,” he told EurActiv in an interview referring to the growing conflict between Moscow and Kyiv.
“Of course energy efficiency and renewables will play a role in this. But talking about the quantities, this will not be enough, so this means we will have to have a more rational, less emotional debate on other possibilities, starting with indigenous resources, including shale gas.”
In Beyrer’s view, there are not enough scientific facts to back up the almost “dogmatic” opposition to unconventional fuels, such as shale.
“I would say that 90% of the arguments you normally hear are far away from the reality,” he said, arguing that excluding the option a priori is not a solution. Rather, the chief of the European business organisation proposes to “control the risks”.
“This is the stop of any progress. It’s not about excluding all risks ex-ante, it’s about controlling risks and we think there is a clear possibility to control risks but in order to go forward we at least need to explore.”
“And we think lots of the debates we’re having starting with these things with methane coming from water taps - all this has nothing to do with reality. There are a number of questions you have to settle on water purification, on seals, but we have to go forward, to explore and then find solutions to the problems,” he added.
Beyrer's views about shale gas angered Antoine Simon, a shale gas campaigner at Friends of the Earth, who rebutted those arguments.
“It seems like BusinessEurope is the only one to find this problem minor. Even the European Commission published a report last year on the environmental impact assessing the underground and surface contamination risks at its highest level of dangerousness. There are countless numbers of studies, from Stanford University, Duke University, MIT,” Simon stressed, adding “we are talking about major risks and this can be done only if it develops on huge amounts of land”.
Cost of drilling
Green campaigners assure that the proportion of shale gas in the energy mix would be “marginal” and would “not change our energy security problems”.
Moreover, the cost of drilling wells should be taken into account.
“The shale gas industry is a constant treadmill,” Simon argues. “When you start producing it [...] the production so quickly depletes that it requires drilling more wells just to keep the production flat. In the US in 2012, they had to drill 30,000 new wells for shale oil and gas just to maintain the same level of production; it’s extremely expensive.”
While drilling in the United States costs some €4 million, in Europe the figure would be two to three times more than that due to its different geology, Friends of the Earth argues, citing a study by Deutsche Bank and the auditing and advisory firm KPMG.
BusinessEurope also warns against what happened in Ukraine, where the government “tried to diversify energy resources” before getting a rebate from Russia.
“Although there is no reason for panic, the situation is much better than it has been in previous years, because it’s warmer outside, the stocks are full and I think there is no big question mark for the time being. But it’s a clear sign in the medium and long run, that there are good reasons for working in the direction of less dependence,” Beyrer hopes.
For environmentalists, Europe should focus on other options, such as renewables and energy efficiency improvements.
They cite another study, “saying that an ambitious energy savings policy can lead to net savings of €250 billion per year by 2030, which is the cleanest, cheapest and most geopolitically secure way”. As for renewable energies, Simon put forward Spain, who “announced that in 2013 the biggest source they produced was wind energy”.
Business Europe does not see it the same way. The director general, who welcomed the European Commission’s “less ambitious” 2030 targets in the energy and climate package, supports energy efficiency and renewables, but says they cannot suffice.
“Of course we need energy efficiency, of course we need renewables, but we’ve seen that these three targets have been mutually distorting and producing the wrong results,” he assures.
“What we produced in Europe via these broken down targets is a very distortive system, a very costly system, and a system which is producing too little for too much money, and has been the main drive for high energy costs in Europe, which is heavily undermining our global competitiveness and industry,” Beyrer added.
64 CEOs of the European Steel Industry addressed an open letter to the Heads of State and Governments, a week ahead of their spring meeting in Brussels. The heads of state and governments have been called upon to restore balance between industrial, energy and climate policies in order to preserve the competitiveness of the industries which are at the core of the European economy.
The growing uncertainties in Ukraine show once again the strong correlation between security of supply and increasing energy prices in Europe. Russia's Gazprom supplied the European Union and Turkey in 2013 with a record 162 billion cubic metres of gas, of which 86 bcm was supplied through the Ukraine. Gazprom issued a warning that it could stop shipping gas to Ukraine over unpaid bills. Central Europeans fear, they could be under threat again due to an escalation of tensions between Russia and the West over Russia's seizure of Crimea. And there are media reports of analysts, e.g. in euractiv, that US natural gas would not reach European markets before 2016, and thus could not provide an alternative in the current Ukrainian crisis.
Energy efficiency and renewables are part of the energy mix in Europe and part of the solution, but not enough. Steel Industry calls an open-mindedness with regards to alternative, domestic European resources, such as shale gas.
EUROFER Director General Gordon Moffat said: ”Energy extraction is always environmentally challenging and we don't under-estimate the concerns raised in shale gas development in Europe which has a population density and regulatory infrastructure very different from that of the USA. Nevertheless, given the absolute necessity for Europe to diversify its sources of supply of gas and to find solutions to the huge energy price differential with its main competitors we see no alternative but to proceed as rapidly as possible with shale gas exploitation as part of the energy mix in Europe while retaining all the precautions necessary in pursuing this approach.”
- March 2014: EU Energy ministers meeting