Hedegaard: Forget US-style shale gas revolution

Connie Hedegaard. Brussels, January 2012. [Shutterstock]

This article is part of our special report European Business Summit.

Closer cooperation between European countries and an emphasis on energy efficiency would be more effective at lowering prices in Europe than dreams about an American-style shale gas boom, the EU's climate chief said on Thursday (16 May).

Speaking at the European Business Summit, EU Climate Commissioner Connie Hedegaard called for “clever regulation” to drive innovation and for a liberalised EU energy market to lower prices, saying renationalisation would be more costly than European-wide climate policies.

“We need efficient and also cost-efficient energy systems. We need to liberalise the energy market, a Europeanised market. It is wrong that renationalisation will be cheaper. Of course you cannot have climate policies that cost nothing,” she said.

Hedegaard was attempting to allay business concerns that the cost of EU climate policies was stunting their growth compared to other countries such as China and the United States, which have less stringent environmental regulation.

Adrian van den Hoven, deputy director general of the BusinessEurope employers' association, blamed green taxes for putting European companies at a disadvantage against global competitors.

“Looking at the 2020 to 2030 period, European Commission climate directives are creating some big costs. It would be manageable if the rest of the world also faced the same cost factors. That is not the case,” he said, adding that the EU could learn from the US’s shale gas boom, which has slashed energy costs.

“The investments going to [shale] plants are huge in terms of job creation. We need to reduce the EU-US differential.”

But Hedegaard dismissed the BusinessEurope argument as “yes [to climate action] but not now”. “Even without the climate policies we would still have a US shale gas problem," she said.

“In the European Commission we don’t mind shale gas. If the member states want to do shale gas, they can do it. Their energy mix is up to the member states," she said.

And "even if they decide to do shale gas, experts will tell you that the EU won’t get its prices down to US levels,” she added.

Different terrain

Hedegaard stressed that the geological and geographical factors of Europe shale did not make its large-scale exploitation as cost-effective as in North America. Imports of fossil fuels are no longer the answer, she said. “€1 billion of oil every day was imported [to the EU] last year. Efficiency can do our economy very well."

“Working together, that is one thing we are not good enough at,” she said, calling for greater pooling of resources.

The Paris-based International Energy Agency (IEA) also has doubts about shale gas, saying increased production would only make sense if it replaces highly-polluting coal. “The optimum path would be to see more renewables, more efficiency and more low carbon technologies,” the IEA's chief economist, Fatih Birol, told EURACTIV last year.

MEP Reihnard Bütikofer (Green/EFA group/Germany) said at the European Business summit that shale gas in Europe was a mirage, or ‘fata morgana’.

Bütikofer, who is also co-spokesperson for the European Green party, said that shale gas could not be a game changer in Europe as it had been in the United States. He added that according to research, cheap gas in Europe would cost three times as much as in the US.

Speaking to EURACTIV, Bütikofer said that in Poland, the EU country most enthusiastic about shale gas, private sector investors who wanted to do big business by developing shale gas, had taken investment decisions that this was not a profitable business and were moving out of the country.

Asked about Ukraine, a country which has plans to develop shale gas to reduce its gas imports dependence from Russia, Bütikofer said: “I don’t think that we should focus on fossil strategies to find our way ahead with regard to energy policies. If you compare energy efficiencies between Germany and Ukraine, the factor is 1 to 17. So the biggest resource of energy to live by and to make profits from is to save energy, by implementing better energy technologies.”

Shale gas is an 'unconventional' fossil fuel that is found within natural fissures and fractures underground. Until recently, no method of safely transporting it to the surface existed.

It is mined via hydraulic fracturing, or ‘fracking’, the process of breaking apart layers of shale by pumping liquids and a number of chemical additives under high pressure thereby releasing trapped gas reserves.

To proponents, shale gas represents an untapped and welcome alternative energy source to traditional fossil fuels. At the moment the continent depends on gas imported from Russia, and disputes between that country and Ukraine have disrupted winter supplies in recent years.

In the US, shale gas already accounts for 16% of the world's largest economy natural gas production and some analysts predict that could rise to 50% within 20 years.

  • 2013: European Commission to unveil results of public consultation on unconventional fossil fuels, including shale gas.

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