Shale gas – for the record

On Monday we had the “big announcement” from David Cameron on shale gas incentives for local councils.  I ended up on Sky News and BBC News 24 talking about the potential and risks of shale gas.  So just for the record here is a short version of my opinions on the great shale gas debate.

Firstly we need to get real on energy policy as we facing three big crises.  First of all the electricity supply crisis which is due to years of under investment in new generating capacity and the effect of the EU Large Combustion Plant Directive closing down coal plant and the ageing nuclear fleet having to close.  Secondly we are also facing a balance of payments problem in that importing energy makes up about 50% of the balance of payments deficit and in 2012 we shipped £24bn a year out of the country to energy producing countries.  (Europe paid out some €500 billion euros for energy).  Thirdly we have a fuel poverty crisis in which many people have trouble paying their energy bills and there is a big human and social cost resulting from early deaths and cold related illness.  To address these problems we need to do two things, increase domestic production of energy and accelerate our efforts to improve energy efficiency in all sectors.  Exploiting shale gas won’t solve the one to five year time-scale problems but it certainly has the potential to contribute to solving the five to ten year time-scale problems.  Exploiting it will give us an indigenous resource at a relatively low price just as has happened in the US but until we actually start exploring it we won’t really know the size of the resource or the actual production costs here in the UK.

We certainly have a large shale gas resource in the UK and most of what is happening now is exploring that resource.  We need to explore and then we need to use appropriate technologies to exploit it – and that means hydraulic fracturing.  Although we should always be aware of environmental issues in all things many of the concerns are over played. We do need strong regulation and we need to enforce that regulation.  We should not allow “self regulation” and we do need to ensure that the enforcement agency – the Environment Agency – is equipped and resourced to ensure regulations are followed.  At a time when the EA is being cut in some areas, at least according to recent reports in relation to the flooding problems, this is a concern.  We also need to make sure the industry is transparent in the materials and processes it uses and make sure it uses the most advanced technologies which reduce water use and improve efficiency.

One of the problems with all governments is that they like to talk about a particular technology as if it is the only answer.  Now shale gas is in that role – it is being presented as the answer to everything – but there isn’t a single answer, we actually need to use all our indigenous resources, shale, unconventional oil and renewables.  On renewables, however, we can’t continue to subsidise technologies forever and neither should we subsidize nuclear or unconventional oil and gas.  Even if, or when, we achieve more economic renewable technologies we still need to deal with the intermittency issue, and that means we will need rapid response gas fired power plants and ultimately of course more energy storage, but large scale storage isn’t there yet.

We definitely need to ensure the benefits from shale gas are shared with local communities. On the whole the renewable industry largely has not done that.  We need to engage the population with energy realities and that that can happen in many ways, including sharing in benefits, and as some communities are now doing, establishing local community owned energy companies.  Some of these local energy companies could utilise locally produced shale gas in high efficiency combined heat and power plants proving district heating for example.

So to sum up, shale gas could be a “new North Sea” but we won’t know until we really start.  We do know that improved efficiency is also another potential “new North Sea” and we need to exploit that resource with as much gusto and high-level government support as is currently being given to shale gas.  Our official energy forecasting has always been, and continues to be poor, but I think the UK energy future will have more shale gas and more efficiency – as well as renewables and no doubt some stuff we haven’t even thought about yet.

You can watch the Sky News piece here.