Perhaps it’s the sunshine, but I desperately wanted to write about a new sense of optimism in UK industry this morning. We may be a long way from true recovery but positive economic statistics, billions of pounds of foreign investment, new infrastructure development and a renewed focus on industrial research give us real reasons to be positive about the future.
The Olympics may or may not have created a £10bn boost to the economy but it appeared to represent a mental turning point. As I was reminded at this week’s Royal Academy of Engineering Awards, British engineering has a lot to be proud of and we are now far more confident in showing it off to the world.
But my mood has been sadly disrupted by news that George Osborne is ramping up his “dash for gas” and plans to halve the tax bill for fossil fuel companies who start fracking the English countryside. The promise of a glut of cheap gas that brings down the heating bills of hard-pressed families and helps cut the UK’s carbon emissions by displacing coal – and creates thousands of jobs at the same time – is an attractive one.
But extraordinary claims require extraordinary evidence and, so far, evidence is severely lacking. Yes, we’ve seen the reports that Britain may be sitting on top of trillions of cubic metres of shale gas, but how much of it we can viably extract and what impact it will have on prices are still big unknowns.
A recent inquiry by industry and academic experts led by a former Tory energy minister and a Labour peer was the latest to conclude that the amount of economically recoverably shale gas in the UK remained highly uncertain, the environmental risks were poorly understood, and the near-term impact of fracking would be to diversify Britain’s energy exports rather than significantly lower prices.
The US may be reaping the benefits of its own shale gas revolution but the UK is a very different place. Instead of wide-open and sparsely populated plains that can be industrialised with little opposition, we have a crowded island where green countryside is preciously guarded and environmental damage would be more keenly felt.
The £100,000 per well that Osborne is offering to communities that host fracking sites won’t go far in an era of massive public spending cuts and seems small fry compared to the tax cuts (from 62 per cent to 30 per cent) being offered to an already wealthy industry that could make billions more. How easily will fracking operations be set up in the Tory shires that display such opposition to windmills?
We also have tighter regulations making operations more costly and an energy market that is tied more closely with that of our neighbours. As the Carbon Connect report put it: ‘Our liberalised and highly interconnected market would prevent prices remaining artificially low compared with neighbouring markets.’
With so many uncertain factors, it would be immensely foolish to tie ourselves to a strategy of more gas-fired power stations when we have a once-in-a-generation opportunity to move away from a reliance on fossil fuels. If the shale gas dreams turn out to be nothing more than hallucinations, we’ll be left at the mercy of an international market struggling with ever-increasing demand from rapidly developing countries.
Then, of course, come the environmental issues. Fears about earthquakes are a red herring – research has found fracking represents a similar a threat in this sense to coal mining and that resulting tremors would unlikely be felt at the surface. But what of the chemicals pumped into the ground and their impact on the water supply? Water firms have this week warned again of the dangers fracking pose both from its chemicals and its high water usage.
The Environment Agency says companies will only be allowed to use non-hazardous substances and the UK oil and gas industry likes to boast about its strong safety and environmental record. Behind the scenes, however, some experts are not so confident the rules will be strictly followed, and oil and chemical leaks are still common on North Sea rigs.
Perhaps most importantly of all, fracking will not reduce carbon emissions. Shale gas might help the UK meet its medium term CO2 targets but a greater supply of fossil fuels will put downwards pressure on prices and deter countries from decarbonising. We’re already seeing it happen in Europe, where coal consumption has increased thanks to a surge in US exports as the country switches to shale.
Simply put, the more fossil fuels the world takes out of the ground, the more carbon it will emit and the greater the risk of runaway climate change. There are so many uncertainties around fracking but we can be sure of one thing: it’s not the answer to the world’s climate problem.