Fracking incentives

The Westminster Energy and Climate Change Committee (ECCC) has reported on the shale gas industry. The British Geological Survey estimated that Britain has between 1,300-1,700 trillion cubic feet (Tcf), enough to last us for a century.

On the impact on gas prices they said, “It is still too early to conclude what effect shale gas will have on gas prices in the UK”. They also believe there are too many uncertainties surrounding the UK’s shale gas reserves to determine what the impact would be on the energy market here. However, they have said the development of the shale gas industry “is likely to be different to the experience of the US”.

The ECCC has recommended that we should “learn the lessons of the US experience” by creating a “favourable climate for companies to operate in”, while ensuring environmental damage is avoided. This includes exploratory drilling providing public concerns are taken into account.

The FT reports that this is exactly what the UK Government plans with bribes to local communities. The government’s paper on “community benefits” will propose policies that aim to persuade locals to drop their resistance to fracking in northwest and southeast England, where the largest shale-gas deposits are found. The biggest incentive being discussed is cheaper household energy bills for people in the area. Neighbourhoods could also be offered funding for new sports clubs or community centres and other projects to improve local amenities. Very similar to planning gain and councils will be able to retain business rates as an institutional incentive.

Despite this package the government could still face big protests against fracking sites, similar to grassroots Tory hostility to onshore wind turbines. One Conservative MP, Laura Sandys, has said that planning applications for shale-gas drilling will “make onshore wind farms look like a walk in the park”.

One use for the extra gas comes in a report from the cross-party think-tank Carbon Connect that says switching from coal to gas or sustainable biomass is the most viable method to help reduce carbon emissions. The report calls for more incentives to ensure gas fired generation is maintained at current levels, although used “increasingly for backup purposes”, while coal fired plant is closed down. They also argued for a balanced energy policy.

But others are not convinced. Michael Meacher MP, writing in Left Futures, identifies three big problems.

“First, well integrity is the most likely point of failure, and checking the wells should clearly be made the highest priority, but neither DECC nor HSE have the resources to develop and implement a regulatory framework. The problem is that if they know no-one is checking – and with fracking they know no-one is checking – the temptation to cut costs is too big to resist.

Second, most of the UK shale deposits are in the south and east of the country. If HS2 and wind turbines meet with resistance, just wait till the first drilling stations start to operate in East Anglia.

Third, there are the obvious known dangers: chemicals used in the process can leak into the water supply, as has already happened in the US, and methane leaks (21 times as powerful as CO2) are possible, let alone small earthquakes as already off the Blackpool coast. At the very least there must be a mandatory obligation for all operators to fully disclose the chemical composition and concentration of fracturing fluids, the effect of which on public opinion could be decisive.”

  • Posted in: Gas

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