The scandal of official reluctance to develop Britain’s shale gas potential is at last beginning to surface. It may prove to be the dress rehearsal for the ultimate drama — the inexorable collapse of our whole energy strategy.
Most of us have by now heard about the US shale gas revolution. In little more than six years, shale gas has reduced America’s gas prices to a third of what they are in Europe, increased huge tax revenues, rebalanced the economy, created tens of thousands of jobs, brought industry and manufacturing back to the country’s heartlands, and given rise to a real prospect of American energy self-sufficiency by 2030.
Britain may well have comparable shale resources. Indeed, the Bowman shale in Lancashire is a mile thick, whereas most US shale plays are just 300 to 500 feet thick — a strangely unpublicised piece of good news. If shale gas proves abundant it could help the government meet three key objectives: rebalancing the public finances by generating large tax revenues, rebalancing the economy by boosting manufacturing, and rebalancing the north/south divide by creating jobs and a whole new industry in the north.
We will only know for sure how much is there, and can be economically extracted, by drilling. So you might assume governments would be forcing the pace. Far from it. In 2011, the government imposed an 18-month moratorium. Since that ended, Cuadrilla — the only company which has drilled in the UK — has suffered further delays because of bizarre environmental obstacles. Department of Energy and Climate Change ministers have consistently talked down the industry’s prospects. When the British Geological Survey recently dramatically revised up their estimates of Britain’s shale potential, the department’s chiefs allegedly told them to redo the figures — further delaying the publication of their findings until the summer. There is still no date for the next licensing round to open up more acreage for drilling.
Why is Britain dragging its feet? It is all the more puzzling because there is a widespread belief that governments are putty in the hands of Big Oil. The surefire way to win a burst of applause on Question Time is to assert, when anyone mentions the Iraq and Afghan wars, that ‘the real reason we went to war was oil’. Yet the petroleum industry has been singularly unsuccessful in galvanising the British government to open up its own shale resources.
Whatever the power of Big Oil in the past, it has been eclipsed by ‘Big Green’. The green lobby is in control of the Department for Energy (to the Treasury’s dismay), its objectives are enshrined in law, it dominates the EU, and it is institutionalised in Whitehall via the Climate Change Committee. These state bodies are egged on by powerful environmental NGOs, which are heavily financed by the EU (WWF receives €600,000 and Friends of the Earth Europe €1.2 million) and our government (we pay WWF £4.1 million) to create the semblance of popular support. These NGOs can deploy any uncorroborated scare story in their war against fossil fuels.
There is a legitimate argument that the world should phase out fossil fuels to minimise global warming. The power of that argument has weakened recently. Global temperatures have failed to rise for 16 years. Recent measures of how much global temperature rises as carbon dioxide in the atmosphere increases are far lower than is built into climate models. The case for unilateral action to decarbonise the EU economy has weakened because China, India, USA et al won’t do likewise. Even EU solidarity is crumbling now that Germany is shutting its nuclear plants and building 20 new coal ones. So the idea of Britain going it alone is risible.
The green lobby has changed tack and adopted three separate arguments to put us off exploiting our shale gas potential. First it asserts that there isn’t much there anyway, and what may be there will be impossible to extract technically, economically and socially. When the PM received a briefing on shale, Cuadrilla was excluded. The select committee instead had to listen to an array of bodies from the Committee on Climate Change to the WWF — none best known for their geological expertise. We would not ask British Gas how to protect pandas, so why we are consulting WWF about shale beats me.
Without evidence from drilling, all estimates of shale gas reserves are merely educated guesses. The answer, then, is to get on and drill, not listen to these Cassandras. If they believed their own downbeat assessments about the potential of shale, they would have nothing to worry about. They argue instead that we should not drill because we might find so much that we would be tempted away from the path of righteousness, which is to abandon fossil fuels.
They have a second, more plausible argument: that even if we find enough shale gas to meet UK needs it would not bring down the gas price here as it has in the US. We are linked into the EU gas grid, so prices are set by the cost of supplies to Europe. But if gas prices don’t fall as much here, the tax revenues will be far higher than in the US — allowing Britain to reduce other costs correspondingly. (Incidentally, this makes tax breaks for shale proposed in the budget look unnecessary: why give concessions to Big Oil as well as Big Green?)
When pessimism about reserves and prices fail, the green lobby deploys scare stories with a reckless disregard for the truth comparable to the MMR scare. They claim fracking will harm the water table and trigger earthquakes. The Royal Society and Royal Academy of Engineering has dismissed fears about water contamination. It concluded that any ‘health, safety and environmental risks associated with hydraulic fracturing… can be managed effectively in the UK as long as operational best practices are implemented and enforced’. The British Geological Survey debunked the earthquake scare by pointing out that Britain annually experiences 150 natural or mining-related shocks of similar or greater strength without complaint, campaigns or moratoria on mining. But green campaigners — who denigrate anyone who queries the ‘scientific consensus’ on climate change — reject out of hand the evidence of our official scientific and geological bodies when it refutes their position.
Fracking simply means pumping water under great pressure into shale beds several kilometres underground; tiny fissures open up which are then kept open by grains of sand so that the gas can flow out. Fracking itself lasts a few days — thereafter the field pumps gas much like any conventional field. Fracking is a tried and tested technology, used since 1947. More than 100,000 wells have been fracked in recent years. Before being ousted from the Department for Energy and Climate Change, John Hayes acknowledged that not a single person had been poisoned by fracking contaminating the water table. Nor has a single building been damaged by the almost imperceptible seismic tremors. Moreover, where UK shales are a mile thick, a single rig may be able to access shales that would require up to 20 drilling sites in the USA.
Ignoring facts, greens have preferred to pay heed to the propaganda film Gaslands, which shows tapwater bursting into flame. Yet its producer, Josh Fox, has been completely discredited. The documentary Fracknation filmed Fox admitting that he knew (but chose not to mention) that gas flowed from taps decades before fracking reached that area.
Sadly, Energy Secretary Ed Davey gave credence to these scare stories by ordering an unnecessary moratorium on drilling, when a fortnight’s visit to the US would have confirmed that they were nonsense. Environmentalists don’t want safer shale gas. They want no shale gas. Professor Kevin Anderson, former head of the Tyndall Centre and ayatollah of the green movement, frankly states that ‘from a climate-change perspective, this stuff simply has to stay in the ground’.
In this respect, the battle over shale gas is only the prelude to the impending energy crisis if we continue to pursue the government decarbonisation agenda. Greens in and out of government imagine that if shale gas can be kept in the ground or little is recoverable, decarbonising the British economy will be plain sailing. As imported gas becomes ever more expensive, the alternatives will grow cheaper by comparison.
Even if UK shales prove unproductive, it is inconceivable that fracking technology will only work in the US and be incapable of extracting huge quantities in other provinces — unless, as the pessimists clearly believe, God is an American. A worldwide shale revolution will dramatically change the supply and price balance in favour of gas.
In any case, a new report by Liberum Capital warns that ‘moving from a largely fossil-fuel-based power system to one dominated by renewables and nuclear in just a decade and a half, whilst keeping the lights on and consumer bills affordable, may simply be impossible’. It continues: ‘EU policy makers have grossly underestimated the difficulties and risks of their drive to decarbonise the power sector… A crisis in UK energy policy looks increasingly likely.’ As a result, investors may refuse to fund Britain’s £430 billion programme of decarbonisation.
Other than nuclear power, which is painfully slow and increasingly expensive, there are simply no affordable renewable technologies available to replace fossil fuels. Wind, solar, tidal — all need fossil fuel back-up for the substantial periods when wind, sun and tide are not available. And the lowest-carbon fossil fuel is gas. That is why DECC’s central projection actually shows Britain using more gas in 2030 than it does now.
Maybe it is the realisation that Britain is rapidly approaching a crisis of our own making that explains the sudden resignation of Jonathan Brearley, the civil servant who masterminded the Energy Bill currently going through Parliament, followed by the DECC’s director of strategy, Ravi Gurumurthy. The Department for Energy and Climate Change is in disarray. With luck this will prompt ministers to question the direction in which they have been heading.
Some day, viable alternatives to fossil fuels will become available. But any policy based on the assumption that this is imminent is doomed to fail. The sooner we wake up to that fact and throw off the thrall of Big Green, the better.
Peter Lilley is MP for Hitchin and Harpenden and is a member of the Prime Minister’s Parliamentary Advisory Board