Appendix: Government
Response
Introduction
In the light of the wide ranging nature of the Committee's
report, this is a joint response which includes contributions
from the Department of Energy & Climate Change (DECC), the
Treasury, the Department for Environment Food & Rural Affairs
(Defra), the Health & Safety Executive (HSE), and the environment
agencies of England, Wales and Scotland: The Environment Agency
(EA), and the Scottish Environment Protection Agency (SEPA).
Committee Recommendations and Government Response
BACKGROUND
1. Mitigation of the risk to water aquifers from
hydraulic fracturing relies on companies undertaking the proper
measures to protect the environment from pollution. However, there
is no evidence that the hydraulic fracturing process itself poses
a direct risk to underground water aquifers. That hypothetical
and unproven risk must be balanced against the energy security
benefits that shale gas could provide to the UK. We conclude that,
on balance, a moratorium in the UK is not justified or necessary
at present. But evidence must continue to be collected and assessed.
We recommend that the Department of Energy and Climate Change
monitor current drilling activity in the Bowland Shale formation
extremely closely during its early stages in order both to assess
the likely environmental impact of large scale shale gas extraction
in the UK and also to promote public confidence in the regulation
of the activity (Paragraph 17).
As is the case with all UK onshore oil and gas activities,
DECC has a regular dialogue with those companies which are licensed
to operate within the UK, and further consents from DECC are
required before such companies are able to go ahead with exploration
drilling or move to production. In view of the fact that the
exploration taking place in the Bowland Shale is the first shale
gas project to be undertaken in the UK, DECC has been monitoring,
and will continue to monitor, this exploration activity very closely
and liaise with the other regulatory bodies, the HSE and the EA,
as the activity moves forward.
Following the seismic tremors which took place in
April and in May, DECC had discussions with the operator, Cuadrilla,
and agreed that a pause in hydraulic fracturing operations is
appropriate so that a better understanding can be gained of the
cause of the seismic events experienced in Poulton-le-Fylde.
A geomechanical study is being undertaken, along with further
work by the British Geological Survey and Keele University. The
implications of this information will be reviewed before any decision
on the resumption of these hydraulic fracture operations is made.
Prospects for Shale Gas
2. We conclude that shale gas resources
in the UK could be considerable. However, while they could be
sufficient to help the UK increase its security of supply, it
is unlikely shale gas will be a "game changer" in the
UK to the same extent as it has been in the US. It is more likely
that in countries such as Poland—with a larger reliance
on gas imports and greater potential shale gas resources—the
impacts of shale gas production will be significant. (Paragraph
24)
3. We conclude that it is important
for the UK to monitor the development of shale gas in Poland—the
"barometer of Europe" on this issue—both in terms
of exploration and regulation. We are concerned that there could
be adverse competitive consequences for the UK if Poland unilaterally
develops its shale gas resources within the EU, particularly if
their energy policy is driven by energy security—in spite
of the environmental concerns associated with hydraulic fracturing—owing
to their reliance on imported gas. (Paragraph 37)
Along with other Member States, the UK plays a key
role in helping to shape European energy policy. We also closely
monitor developments taking place in Member States and beyond.
The UK Government is aware that Poland is looking to exploit
potentially large shale gas resources and will be keeping a close
eye on any exploration and development success there. Once the
size of that potential becomes clear from a commercial perspective,
we will also be considering the wider implications from UK security
of supply perspective.
4. In the crowded UK we cannot afford
to risk the creation of contaminated and abandoned sites where
shale gas production has stopped. The prospect of such a risk
must be carefully considered when licences and other permissions
are granted. We recommend that DECC should require that a fund
be established to ensure that if wells are abandoned they can
be "plugged". Such a fund could be established through
a levy on shale gas well drilling or an upfront bond. (Paragraph
41)
The drilling of any shale gas well already requires
specific consent from DECC, which gives DECC the opportunity to
prevent the well from being drilled if it is not satisfied about
any aspect of the well, including the applicant's financial capacity.
A requirement to provide for post-activity site restitution
would be an issue for the planning process, and the relevant
planning authority may attach conditions to the
planning permission to ensure that this happens. We do not consider
that further powers are necessary.
In England and Wales, in the event that a permit
is required under the Environmental Permitting Regulations 2010
for certain activities at the surface, such as large scale refinement
or combustion, controls would be in place to require site restoration
in the event that the activity led to the site becoming contaminated.
Such permits would be issued by the Local Authority or the EA,
depending on the nature of the activity. Where the activity does
not require a permit and pollution to water occurs, an anti-pollution
works notice under the Water Resources Act 1991 may be served.
In Scotland equivalent regulatory controls exist to ensure environmental
damage caused by permitted sites is remediated prior to permit
surrender.
5. There is substantial evidence that
UK offshore unconventional gas resources could dwarf the potential
onshore supplies. While these might be economically unviable at
present, "uneconomic" reserves can become economic quickly
as technology and prices shift. We recommend that DECC encourage
the development of the offshore shale gas industry in the UK,
working with HM Treasury to explore the impacts of tax breaks
to the sector. (Paragraph 47)
We are not aware of any offshore shale gas exploration
anywhere in the world at present, and because of the much higher
costs of offshore operations, no early change in the prospects
for such activity seems likely. A few companies have discussed
with us possible shale gas prospectivity that they have identified
offshore, along with conventional oil and gas prospectivity in
the nearshore area. If these prospects were pursued
it would most likely be done using horizontal drilling from onshore
locations. As usual, the Government is happy to maintain
a dialogue with companies on the impacts of the fiscal regime,
but has so far not been presented with any evidence making the
case for tax changes.
6. Planning for any new gas transport
infrastructure required to exploit shale gas should take into
account the opportunity to minimise disruption and costs by sharing
pipelines between different companies operating near to each other.
We recommend that the Government consider amending the Town and
County Planning (Environmental Impact Assessment) (England and
Wales) Regulations 1999 to require Environmental Impact Assessments
for smaller gas pipeline projects, with the aim of avoiding unnecessary
duplication of infrastructure. (Paragraph 54)
The statutory regimes under the Pipelines Act 1962
for consenting pipelines over 10 miles allow the Secretary of
State to impose requirements for pipelines to be rerouted or diverted
to minimise duplication. As regards environmental impact assessment,
while proposed pipelines less than 40km long may not automatically
require assessment under the EIA, the Directive and implementing
Regulations allow for an EIA to be required on a case by case
basis where the impacts of such a proposal (including cumulative
impacts) make this appropriate.
UK Policy Implications
7. We conclude that a glut in shale
gas production could drive the price of conventional gas down,
but there is uncertainty as to the extent of this. If there were
to be a fall in prices it is unlikely to be as dramatic as that
seen in the US. (Paragraph 65)
The unexpected growth in unconventional gas production
in the US in conjunction with other factors helped to depress
UK and global spot wholesale gas prices over the course of 2009
by reducing the US need for LNG imports. However, as the global
economy emerged from recession, gas markets have tightened with
UK wholesale prices rebounding strongly. There is now a substantial
gap between US and UK spot prices.
The prospects for unconventional gas production outside
North America are uncertain. Most analysts suggest that a range
of factors make unconventional gas more costly and harder to access
in regions outside North America and it is unlikely that significant
production of unconventional gas will occur in Europe in this
decade.
Given the uncertainties around when, and the degree
to which, unconventional gas will be produced outside North America,
we continue to take a cautious view of the implications for gas
prices.
8. Shale gas has the potential to diversify
and secure European energy supplies. Domestic prospects—onshore
and potentially offshore—could reduce the UK's dependence
on imports, but the effect on energy security is unlikely to be
enormous. We conclude that energy security considerations should
not be the main driver of policy on the exploitation of shale
gas. (Paragraph 71)
Within the UK, as we move towards a lower carbon
economy, one of the Government's main objectives is to maximise
indigenous resources, both offshore and onshore. We will continue
to encourage industry to invest in exploration and development,
but recognise that the full potential for commercial shale gas
production in the UK remains to be proven. On this basis, overall
policy on security of supply is based on achieving a diverse and
sustainable supply of energy supplies from indigenous and external
sources. Government recognises the need to take a balanced approach
and does not believe that security of supply considerations will
be the main driver of policy in relation to the exploitation of
shale gas in the UK.
9. Conventional sources of natural
gas in the North Sea are diminishing. We conclude that if a significant
amount of shale gas enters the UK market (whether from domestic
sources, imported from another European country, or from the global
market via LNG) it will probably discourage investment in more-expensive—but
lower carbon—renewables. The UK needs to manage this risk
in order to achieve its aim of generating more electricity from
renewable and other low carbon sources This could be done through
the progressive implementation of an Emissions Performance Standard
(EPS) that would prevent gas power stations operating as base
load providers after a certain date unless fitted with carbon
capture and storage. (Paragraph 82)
Fossil fuels will continue to play an important role
in our energy mix as the UK makes the transition to a low carbon
economy. Gas in particular will be needed to provide vital flexibility
to support an increasing amount of low carbon generation and to
maintain security of supply. It is important that we do not undermine
investment in gas generation over the next few years, and provide
sufficient certainty for investors. As such, as part of energy
market reform (EMR) we proposed to introduce an EPS in a way which
will provide guarantees to gas plant over the EPS level they would
face. We consider that introducing an EPS now which restricted
the operation of gas plant in the future could add significant
uncertainty, given that CCS has not yet been demonstrated at commercial
scale. This could, in turn, prevent investment and have implications
for security of supply. Following consultation, the Government
has therefore concluded that it will introduce an EPS above the
level of emissions of gas plant, and those plant consented before
the end of 2015 will be offered a guaranteed EPS for a pre-determined
period. We will work be working with stakeholders over the coming
months to determine how this should be implemented and what the
period should be, recognising that we must balance investment
certainty, security of supply, and support for decarbonisation.
It may be appropriate to use an EPS in a different way in the
future, which is why we will review it in line with the decarbonisation
reporting process required under the Energy Act 2010.
10. We conclude that shale gas has
the potential to shift the balance in the energy markets that
the Department has tried to create away from low carbon electricity
generation. We recommend that the Department take account of the
impact of shale gas in its decisions on reform of the electricity
market and its expectations of future investment in the energy
industry. (Paragraph 83)
The modelling shows that the effect of electricity
market reform (EMR), in particular the Carbon Price Floor and
the Feed-in-Tariff for low carbon generation, will be an increase
in low carbon forms of generation, including nuclear, renewables
and CCS. The proposals are tested against a range of fossil
fuel prices (including low gas prices up to 2030) to assess their
robustness to changing assumptions. We are confident that EMR
will create a framework that will ensure we can meet our renewable
and carbon emissions reduction targets.
11. We recommend that UK legislation
and regulation should take specific account of the challenges
unique to shale gas exploration and production; specifically,
the combination of hydraulic fracturing and horizontal drilling
at multiple wells that requires large volumes of water and chemicals,
and leads to the production of large volumes of waste water that
must be managed and disposed of. (Paragraph 93)
The technologies used in shale gas operations are
not generically novel or unfamiliar. Hydraulic fracturing, water
injection and lateral drilling, individually or in combination,
are all familiar techniques that DECC and the other regulators
have had to deal with robustly for a long time.
Waste water management is mainly an environmental
issue, but requirements in health and safety legislation (e.g.
relating to maintaining well integrity), can help to mitigate
the risk on an environmental incident. HSE feels that existing
health and safety legislation (especially the regulations that
address well design, construction integrity and control) already
takes specific account of the challenges unique to shale gas exploration
and production. However, HSE will not be complacent and will continue
to monitor the health and safety legislation relating to shale
gas that is introduced by other Member States to highlight any
gaps.
The EA and SEPA not foresee significant challenges
for wastewater treatment and disposal that are unique to unconventional
gas activities. Operators will either transfer wastewater offsite
for treatment to a permitted facility, or treat and dispose of
wastewater onsite for which they will require an environmental
permit themselves. Provisions for the safe handling of wastewater
onsite will be a condition of local authority planning permission,
and will be considered during the respective environment agencies'
assessment of a site's environmental permitting requirements.
Likewise, adverse effects on water resources as a
result of possible expansion of the shale gas industry in the
UK are not expected.
Should a supply of water be needed directly from
the environment for shale gas or coal bed methane, operators will
need to hold an abstraction licence. The respective environment
agencies license water use to control the level of abstraction
to protect both water supplies and the environment. A licence
will only be issued where a sustainable water supply is available.
Operators may also obtain water from mains water
supplies, subject to the agreement of the water company and there
being availability of such a supply. Water companies must operate
within their own abstraction licences and would determine whether
a sufficient supply could be made available to any industrial
customer.
Abstractions (other than of very small quantities)
from and discharges to the water environment require authorisation.
Applications for authorisation are rigorously assessed to ensure
that significant adverse impacts do not occur. This means that
there will be adequate protection of the water environment and
other water users irrespective of whether operators undertaking
hydraulic fracturing:
- abstract water directly from
the environment, or indirectly by making use of mains supply;
or
- discharge directly to the water
environment, or instead make use of a treatment and disposal facility
authorised to a third party
Where assessments identify a potential impact adequate
mitigation measures will need to be put in place or the application
will be refused.
Enforcement action can be taken against operators
who cause pollution as a result of an unauthorised release of
contaminants into the water environment
12. We note that stronger environmental
regulations and increased population density means that in the
UK, and Europe more broadly, shale gas development here will follow
a different route to that of the US. Although energy is not an
EU-level competence, the UK Government will need to work with
its European partners to ensure, so far as is possible, a reasonable
degree of level competition between domestic shale gas producers.
(Paragraph 94)
13. We recommend that the UK Government
monitors carefully the regulatory approach adopted by Poland and
any other EU countries where shale gas exploration and production
takes place. We recommend that the Government explores the possibilities
of common environmental standards within the EU for shale gas
exploration and production. (Paragraph 95)
In its dealings with Europe, the UK Government will
always look to encourage competition in markets and, although
energy is not an EU-level competence, the EU has a range of legislation
in place to facilitate competition within the market and within
Member States.
As indicated in response to recommendation 3 above,
the UK closely monitors developments taking place in Member States
and beyond, and will be watching shale gas activity in Europe,
including that taking place in Poland. If the European Commission
concludes that there is a need for common environmental standards
above and beyond those already in place to deal with issues specific
to shale gas activity, the UK would be ready to feed into such
considerations. We believe that the UK regulatory approach could
provide a good benchmark in this respect.
Environmental Risks of Shale Gas
14. We recommend that the Government
consider the future funding for the Environment Agency should
the shale gas industry expand in the UK. As the situation stands,
shale gas operators are unlikely to explore in areas where the
Environment Agency will determine there is a risk to groundwater,
so an Environmental Permit will not be necessary. However, the
Environment Agency will still be expected to monitor for contamination
and pollution, without being able to recover costs through the
issuance of a permit. (Paragraph 101)
Indicative budgets have been set for the Environment
Agency (EA) and for Defra for the Spending Round 10 period up
to 2014/15. EA reviews business planning on an annual basis
and seeks Defra approval for this through its corporate plan.
In the event of new pressures arising (such as this) Defra
would first seek to identify with EA how these could be met through
reprioritisation of existing work. Any additional funding
needs beyond this would of course have to compete with other EA
and Departmental priorities.
Although shale gas operators are unlikely to explore
in areas where there are risks to groundwater; coal bed methane
operators are more likely to undertake exploratory drilling in
proximity to ground or surface water resources and are likely
to require a permit. Where a permit is issued the Environment
Agency can charge the operator a fee proportionate to the amount
of resource required for this service.
15. We conclude that hydraulic fracturing
itself does not pose a direct risk to water aquifers, provided
that the well-casing is intact before this commences. Rather,
any risks that do arise are related to the integrity of the well,
and are no different to issues encountered when exploring for
hydrocarbons in conventional geological formations. We recommend
that the Health and Safety Executive test the integrity of wells
before allowing the licensing of drilling activity. (Paragraph
113)
It is the operator's responsibility to ensure the
integrity of the well, not the regulator. HSE will proactively
regulate these activities using the same approach it adopts for
any onshore hydrocarbon gas extraction and production activity.
HSE will assess an operator's well design in advance of work activities
starting, review weekly updates on progress of the well and inspects
well activities. These interventions allow HSE to intervene when
appropriate, including taking formal enforcement action (e.g.
stopping the well operations). Well operators are also required
to put in place a scheme of examination where an independent competent
examiner reviews all programs of work that a well operator proposes
to undertake on a well.
16. We recommend that the Environment
Agency should insist that all companies involved in hydraulic
fracturing should declare the type, concentration and volume of
all chemicals they are using. (Paragraph 114)
Injection into groundwater of water containing pollutants,
including fracturing fluids, requires authorisation. Any application
for authorisation must be accompanied by information on the type
and concentration of these pollutants.
In England and Wales where a permit is required,
information on the type, concentration and volume of all the substances
that they intend to discharge to ground, including frack fluids,
will be included on the public register. Where frack fluids are
injected into formations that do not contain groundwater a permit
may not be required. The Environment Agency still expects companies
to disclose the nature and composition of the discharge and can
use powers under the Environmental Permitting Regulations to obtain
such information.
In Scotland where operators can demonstrate that
information on discharges to ground is commercially sensitive
they may request that it is withheld from the public register.
17. We recommend that before the Environment
Agency permits any chemicals to be used in hydraulic fracturing
fluid, they must ensure that they have the capabilities to monitor
for, and potentially detect, these chemicals in local water supplies.
(Paragraph 115)
When assessing the permitting requirements for any
hydraulic fracturing activity the respective environment agencies
review the chemical additives to be used by an operator and assesses
their potential environmental impact. The agencies will routinely
challenge any use of chemicals that would not normally be monitored
for or would not be detected in local water supplies, and will
prohibit or not authorise the use of any chemicals they consider
unsafe or inappropriate. This may include, for example, substances
that are difficult to detect or for which adequate analytical
techniques are not available.
The environment agencies do not routinely monitor
the chemical content of return fracking fluid if it is not being
disposed of directly to the environment. However, it will be necessary
for operators to undertake their own analysis to allow them to
dispose of waste fracking fluid via an appropriate waste management
route (disposal off site).
If it was proposed to discharge fracking fluid back
into the environment e.g. to surface water after treatment, this
activity in itself requires authorisation by the appropriate environment
agency. Full disclosure of all chemicals to be discharged into
the environment would be required and the environment agencies
would expect the operators to monitor the discharge and, if necessary,
would undertake compliance monitoring themselves. In England and
Wales, any substances or group of substances liable to cause pollution
would be subject to conditions, would be noted on the permit and
therefore lodged on the public register.
In order to gain some baseline data for future reference,
the EA will complete selected monitoring of the hydraulic fracturing
process at Cuadrilla's Preese Hall site in Lancashire. This will
include an analysis of radioactivity, the concentration of chemical
additives used in the fracking process, as well as other indicators
of pollution in the return waters.
18. We conclude that there is only
a small risk that the large volumes of water required for hydraulic
fracturing will place undue stress on the water supply, though
this could be more significant at times of drought in low rainfall
areas. We recommend that the Environment Agency should have the
power to prescribe the minimum amount of water recycling that
takes place during unconventional gas exploration, on a site-by-site
basis that takes into account the water stresses particular to
the region. (Paragraph 125)
It is possible that wastewater could be recycled
at individual fracking operations. However recycling may also
significantly concentrate pollutants in return fracking waters,
which may have other disadvantages and may complicate final disposal
routes. Varying geological conditions means that it is not possible
to forecast the volume of water that might be available for recycling.
The UK environment agencies may recommend a minimum
amount of water recycling as part of the permitting process, where
it is safe to do so. The suitability of recycling water would
need to be assessed on a site by site basis, and whilst the Agency
would encourage any methods to improve the efficient use of water,
it may not be feasible to recycle at some sites. In Scotland,
water users have a duty to use water efficiently. SEPA will encourage
operators to maximise the re-use of water and can make it a condition
of an authorisation that operators use certain amount of recycling.
The suitability of recycling water would need to
be assessed on a site by site basis, and whilst the agencies would
encourage any methods to improve the efficient use of water, it
may not be feasible to recycle at some sites.
19. We recommend that DECC and DEFRA
ensure that the Environment Agency monitors randomly the flowback
and produced water from unconventional gas operations for potentially
hazardous material that has been released from the shale formation.
In order to maintain public confidence in the regulators—and
in the shale gas industry—we recommend that both water and
air be checked for contamination both before and during shale
gas operations. (Paragraph 132)
The environment agencies do not routinely monitor
the chemical content of return fracking fluid or produced water
from unconventional gas operations if it is not being disposed
of directly to the environment. However, it will be necessary
for operators to undertake their own analysis to allow them to
dispose of waste fracking fluid via an appropriate waste management
route (disposal off site). Waste treatment operators will be subject
to their own environmental permit ensuring the safe transport,
treatment and disposal of waste waters.
If an unconventional gas operator proposed to discharge
fracking fluid back into the environment e.g. to surface water
after treatment, this activity would require authorisation by
the appropriate environment agency. The agencies would expect
the operator to monitor this discharge and would require operators
to undertake analysis of hydraulic fracturing fluid before injection
is authorised. Where necessary the relevant environment agency
would undertake compliance monitoring itself. Analysis of return
and production waters will be a condition of an abstraction licence
issued by SEPA.
The environment agencies do not monitor air quality
at unconventional gas operations unless there are specific permitted
activities onsite (e.g. large scale refining or combustion of
gas) however it may make recommendations as part of the planning
application process to ensure operations' designs allow appropriate
management of emissions to air.
Local authorities also have a statutory duty under
the Government's Air Quality Strategy and Local Air Quality Management
process to monitor and assess local air quality. If necessary
local authorities may take action to reduce emissions in the event
that they might risk contributing to any breach of air quality
standards.
UK environment agencies take a risk-based approach
to the monitoring and regulation of unconventional gas operations,
and considers the existing provisions for the monitoring of wastewater
from these operations to be appropriate. In the event of a significant
increase in the commercial development of unconventional gas wells,
the environment agencies may review the suitability of their monitoring
regimes.
Given the general lack of knowledge of actual fugitive
emissions, UK environment agencies are currently investigating
options to monitor unconventional gas sites for emissions of methane
to gain a better understanding of their likely carbon footprint.
20. We encourage the Government to
insist that as the shale gas industry develops, companies are
required to work together in order to optimize the use of waste
water treatment plants, to minimise both the number of plants
and the distance waste water has to be transported. (Paragraph
133)
UK environment agencies will monitor the development
of the unconventional gas industry in relation to the provision
of appropriate wastewater treatment, and work within the wastewater
industry's Periodic Review process to make recommendations as
and when required. The agencies do not foresee the need for new
wastewater treatment infrastructure unless there was very significant
commercial development of unconventional gas requiring hydraulic
fracking or coal bed dewatering.
Market signals due to any significant increase in
demand for wastewater treatment, may prompt operators to treat
wastewater onsite and dispose to the environment where it was
safe to do so (i.e with the appropriate environmental permits)
21. We recommend that the Environment
Agency should have the powers to insist that—in collaboration
with the Health and Safety Executive—planned onshore venting
and flaring of natural gas for extended periods are not permitted.
(Paragraph 140)
Onshore venting and flaring are already regulated
by DECC. For all oil and gas activities, onshore and offshore,
DECC requires that flaring or venting should be kept to the minimum
that is justified to achieve the technical objectives during the
exploration and testing phase.
For
onshore oil and gas activity during the development phase, some
flaring or venting of gas is sometimes unavoidable either for
safety reasons or because there is no economic evacuation route
for the gas. DECC already has the power to grant consent to long
term flaring or venting of small quantities of gas.
Operators are required to minimise flaring and avoid
venting by implementing best practice at an early stage in the
design of the development and by continuing to improve on this
during the subsequent operational phase in accordance with good
oil field practices. In relation to shale gas, alongside the commercial
imperative for companies seeking to exploit this resource, DECC
will be pressing operators to ensure that any such gas disposal
is kept to the absolute minimum.
HSE would only be able to prohibit the "planned
onshore venting and flaring of natural gas for extended periods"
if there was a risk of serious personal injury to personnel associated
with that operation. HSE does not give consent for flaring
or venting operations. HSE would expect the notification of well
operations submitted to it as per Regulation 6(1) of the Borehole
Sites and Operations Regulations 1995 (BSOR) to include details
of any venting / flaring operations. HSE would inspect the
notification and asses if the risks to personnel from the
venting / flaring operations were as low as is reasonably practicable.
22. We conclude that the development
of the UK shale gas industry will be different from the US—greater
population density and stricter environmental legislation in Europe
will give a greater incentive to drill fewer, better wells that
take advantage of multiwell pad technology and horizontal drilling
to minimise the impact on the landscape. (Paragraph 147)
The Government agrees with the Committee that the
development of shale gas in the UK is likely to show significant
differences from the pattern of development in the US. In addition
to the factors cited by the Committee, it should be noted that
the US experience is that different shales perform in different
ways, and evolution of effective production techniques for particular
shales may need considerable time. It is not therefore to be
assumed that the success of US production techniques in any location
can simply be transferred into UK geological conditions.
23. We recommend that the Environment
Agency and the Department of Energy and Climate Change take lessons
from unconventional gas exploration in the US, especially at the
state-level where much of the expertise lies. The US has a great
deal of regulatory experience of dealing with the issues of water
contamination, the volume of water required, waste water treatment
and disposal, air pollution, and infrastructure challenges. The
UK Government must use this experience to ensure the lowest achievable
environmental impacts from unconventional gas exploitation here.
(Paragraph 148)
As noted above, there are many differences between
UK and US conditions, but we agree with the Committee that there
is value in evaluating the experience of the US in regulating
the shale gas industry for over a decade, and it is important
to have a dialogue with US regulators so that we can gain a clearer
picture of the potential challenges which can arise if shale gas
activities build.
The EA has had informal discussions with the US Environmental
Protection Agency to understand the statutory framework in place
in the US, and to establish key points of contact if required
in the future. They will continue to liaise to ensure environmental
management is informed by robust evidence, and to exchange information
about best practice. For example, the US EPA are currently undertaking
an assessment of risks to drinking water from shale gas activities,
to be completed in 2012. The EA will study its findings to identify
lessons to be learned for the UK.
Carbon Footprint of Shale Gas
24. We conclude that in planning to
decarbonise the energy sector DECC should generally be cautious
in its approach to natural gas (and hence unconventional gases
such as shale gas). Although gas emissions are less than coal
they are higher than many lower carbon technologies. (Paragraph
159)
25. Shale gas could lead to a switch
from coal to gas for electricity generation, thereby cutting carbon
emissions, particularly projected emissions from developing economies.
We conclude that this will help to reduce the impacts of climate
change, but will not be sufficient to meet long term emissions
reduction targets and avoid the worst effects of global climate
disruption. (Paragraph 164)
We need a diverse mix of energy technologies so we
are not dependent on any one type or source. Fossil fuels will
continue to play an important role in this energy mix as the UK
makes the transition to a low carbon economy. For example, gas
will be needed to provide vital flexibility in the electricity
sector in order to support an increasing amount of low-carbon
generation and to maintain security of supply.
Emissions from shale gas extraction processes will
be determined by the design and conditions of a particular development.
Provided that good practice is adhered to, particularly in the
control of fugitive emissions of methane, shale gas should have
a carbon footprint of the same order as natural gas from conventional
onshore fields, and significantly lower than that of other hydrocarbon
sources including coal.
26. The emergence of shale gas increases
the urgency of making carbon capture and storage (CCS) technology
work for gas as well as coal. We recommend that both gas and coal
carbon capture technology should be pursued in parallel and with
equal urgency. (Paragraph 165)
Government recognises that, over the longer term
it is likely that gas plant will need to reduce their emissions
if we are to largely decarbonise the electricity sector and
meet our climate change targets. There is therefore likely to
be a role for gas plant equipped with carbon capture and storage,
which is why new gas plants are required to be built carbon capture
ready.
The Government is committed to public sector investment
in CCS technology for four power stations. In November last year
the Government announced that the CCS demonstration programme
would include at least one gas-fired power station. We are now
in high level negotiations for the contract for the first demonstration
project with a consortium led by Scottish Power. This project
will demonstrate post-combustion capture on the coal-fired Longannet
power station in Fife. DECC published information in December
about the process for selecting demonstrations 2 to 4 and we are
currently undertaking a market sounding exercise with potential
bidders. We intend to launch a call later this year, this will
be open to applications for projects on both coal- and gas-fired
power stations.
| 
