Shale gas is not a cheap energy panacea, nor is it a harbinger of environmental catastrophe. The truth is somewhere in the middle, argues David Buchan.
David Buchan is a senior research fellow at the Oxford Institute for Energy Studies
Shale gas is hardly the first energy issue to split Europeans - think of nuclear power or to some extent carbon capture and storage (CCS).
But the division over shale gas – and the technique of hydraulic fracturing or fracking needed to release it from deep underground – is sharp between there are those who see it as economic salvation for Europe and others who see widespread use of fracking leading to environmental Armageddon.
The divisiveness of shale gas is exacerbated because it has become part of the wider current debate about the perceived conflict between Europe’s competitiveness and its unilateral climate policy – a debate cast in terms of “cheap shale gas versus expensive renewable energy”.
As I argue in my paper for the Centre for European Reform, both the hopes and fears surrounding shale gas are exaggerated. The most ardent proponents of shale gas see it is as a heaven-sent get-out-of-jail card for Europe, because it appears to press all three buttons of energy and climate policy – competitiveness, emissions reduction and security of supply.
But shale gas in Europe is expected to be at least twice as expensive to extract as in the US, because, compared to the US, Europe’s shale layers are deeper, its regulations are likely to be tougher and its oil and gas service sector is less competitive and more oligopolistic.
If shale gas in Europe is not as cheap as in the US, it will not have the same effect as it has had in the US of edging coal out of power generation, thereby reducing emissions. And if, for price reasons, shale gas does not win much of a market share it will do little to reduce import dependence and to increase energy security.
Equally, there is no reason why fracking should be not be safe, given good regulation strictly enforced. Contamination of water is a clear risk, but not from the shale gas leaking up through aquifers (because the former is usually far below the latter) but from water flowing back up the well that will contain chemicals and maybe toxic minerals from below.
This flow-back water must be very carefully treated. There is also a risk of gas bubbles encapsulated in the flow-back water escaping into the air as a powerful greenhouse gas, but this can dealt with by separators at the well-head. While these pollution risks are largely avoidable, a certain amount of environmental disruption is largely unavoidable.
Shale gas drilling is a far noisier and more intensive industrial process than conventional gas drilling. Public objections to this disruption will, I believe, be the main barrier to shale operations in densely populated parts of Europe.
So far the European Union has stayed on the touchline. Member states still retain sovereign control over their energy mix decisions. Those (such as Poland and the UK) that want to frack for shale gas are doing so, those (France and Bulgaria) that do not want to frack have banned it, and many are undecided. The European Commission is planning to propose, by end-2013, a pan-EU framework designed to give shale gas developers a positive signal, but also to close any gaps in the EU environmental legislation and its enforcement. This is the right balance.
EU law already covers almost all aspects and risks of shale gas, but new legislation could usefully set out responsibility for the long term environmental liability for old shale gas wells, as the CCS directive has done for carbon storage. Some EU focus on enforcement of rules on shale operators would also improve public confidence.
Overall, there is no reason why member states should not choose to exploit shale gas, provided they are clear-eyed about its limitations and difficulties. It might help individual countries. What it will not do, for the EU as a whole, is usher in either economic salvation or environmental Armageddon.