EU warms to shale gas in the wake of Crimea crisis

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Energy independence and the production of shale gas should top Europe’s political agenda, British Prime Minister David Cameron said, calling the Crimea crisis a “wake-up call” for states reliant on Russian gas. EU leaders are expected to ask US President Barack Obama today (26 March) to export more of the shale gas his country produces to Europe.

Escalating East-West tensions over Russia’s seizure of Crimea from Ukraine have endangered the energy security of some European states, including Germany, which are heavily dependent on Russian gas supplies.

“Some countries are almost 100% reliant on Russian gas, so I think it is something of a wake-up call,” Cameron told reporters yesterday (25 March) on the sidelines of a nuclear security summit.

Leaders agreed, during a hastily-convened meeting of the G7 major industrialised nations on Monday, to work together to reduce dependence on Russian oil and gas.

On Tuesday, Cameron pointed to reserves of shale gas, which can be extracted by a process known as fracking, in southeastern Europe, Poland and England as a means of boosting energy independence for the whole region.

“I think it’s a good opportunity,” he said. “Energy independence, using all these different sources of energy, should be a tier one political issue from now on, rather than tier five.”

In Britain, fracking has been held up by public protests over the environmental impact of the technique, which involves blasting underground rock with high pressure liquid to release trapped gas. It has been banned outright in France and Bulgaria.

Although Britain only buys a small amount of gas from Moscow, Russia provides around one third of the EU’s oil and gas and some 40% of the gas is shipped through Ukraine.

Environmental group Greenpeace criticised Cameron, calling his comments a cynical attempt to exploit the Ukraine crisis. Citing industry estimates, they said fracking would take at least a decade to reach a useful scale, and that even at that point it was likely to displace other gas sources rather than Russian imports.

Message to Obama

European Union leaders last week agreed to accelerate their quest for more secure energy supplies, by looking to import gas from the United States and pooling their purchasing power to empower the bloc in negotiations with Moscow [more].

EU leaders are in fact expected to press Obama to help reduce Europe’s reliance on Russian energy by exporting US natural gas, as the president pays his first visit to Brussels since he first took office, in 2009.

Ukraine is set to top the agenda for discussions with Obama, in light of the EU’s efforts to scale back its imports of Russian energy. Russia provides around one third of the EU’s oil and gas and some 40% of the gas is shipped through Ukraine.

German Chancellor Angela Merkel said she supported asking Obama to relax restrictions on exports of US gas.

21st century trade pact

One way to do that is through the proposed free-trade agreement between the United States and the European Union, which would be the world’s biggest accord of its kind, dubbed the Transatlantic Trade and Investment Partnership, or TTIP.

“We should have an ambitious chapter on energy in the TTIP,” EU Trade Commissioner Karel De Gucht, who will attend the summit, said at the weekend, referring to EU demands for a clear framework setting out US commitments on gas exports.

The issue will also be discussed next week at a special EU-US Energy Council, officials said.

In the wake of the worst financial crisis since the Great Depression, EU governments and the Obama administration see a deep and broad free-trade deal as the best way to create jobs, removing burdens and customs duties on businesses.

They say a “21st century” trade pact. encompassing almost half the world’s economy, could generate $100 billion (€72 billion) in additional economic output a year on both sides of the Atlantic and set the standards for global business, before China does.

The European Union and the United States already trade almost $3 billion in goods and services each day, and by thickening economic ties, the pact could create a market of 800 million people where business could be done freely.

But eight months into talks, public hostility is growing at the idea of unfettered transatlantic commerce, while negotiators remain far apart on many issues.

Reports of US National Security Agency spying in Europe have combined with concerns about the damage to food safety and the environment under a free-trade pact. In both the United States and Europe, unions also worry about lost jobs or lower working standards, and say that a trade pact will serve only the interests of multinational companies.

Inside the negotiating rooms, other difficult issues include how to open up to each other’s markets, removing customs duties that cost companies billions of dollars each year, particularly automakers such as Ford and Volkswagen.

Washington and Brussels are at odds over an initial exchange of offers to open up markets and cut tariffs, with each saying the other has not been ambitious enough.

In an effort to overcome that, Obama, along with European Commission President José Manuel Barroso and European Council President Herman Van Rompuy will promise to remove all tariffs on bilateral trade, according to a draft of the summit’s joint declaration seen by Reuters.

“We reaffirm the objectives we agreed,” the summit draft declaration said. “Those goals include eliminating all duties on bilateral goods trade.”

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.

However, by pumping water, sand and chemicals into rock formations under high pressure via a technique known as hydraulic fracturing or 'fracking', energy companies believe they have found a part of the answer to Europe's energy security problems.

The method remains intensely controversial because of its possible environmental risks, including poisoning groundwater and higher greenhouse gas emissions than traditional gas.

To proponents, shale gas represents a hitherto 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.

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