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Westminster Hall
Thursday 18 July 2013
[Mr Peter Bone in the Chair]
Backbench business
UK Shale Gas
[Relevant documents: Seventh Report of the Energy and Climate Change Committee, Session 2012-13, The Impact of Shale Gas on Energy Markets, HC 795, and the Government response, Session 2013-14, HC 609.]
Motion made, and Question proposed, That the sitting be now adjourned.—(Michael Fallon.)
1.30 pm
Caroline Lucas (Brighton, Pavilion) (Green): It is a pleasure to serve under your chairmanship, Mr Bone. I thank the Backbench Business Committee for allowing this debate and colleagues from across the House for supporting it. It gives us an opportunity to examine some of the measures that the Government are putting in place to promote shale gas, and to explore the implications of fracking for our constituents, our countryside and our climate. I read with interest the Hansard report of Tuesday’s debate, which focused in particular on the details of community benefit packages but also touched on some issues that I am sure we will return to and explore further in this debate.
Before I discuss those questions, in light of recent lobbying scandals and concerns about inappropriate corporate influence on politics and policy making, I will declare my relevant interests. I am a proud, albeit small, shareholder in Brighton Energy Co-operative, which invests in community-owned solar power in Brighton and Hove and whose vision for community-owned renewables at the heart of our energy system I openly support. I have a similar very small interest in the Westmill Wind Farm co-operative in south Oxfordshire. I hope that other Members speaking today will agree that in the interests of transparency and rebuilding trust in the political process, it would be beneficial if all of us declared fully all interests relating to the energy sector or energy companies.
As part of the spending review, the Government set out their commitment to put in place the conditions to allow the shale industry to “reach its full potential”: new planning guidance, community benefits and tax breaks. The planning document was to be published by 18 July, in the depressingly common pattern of waiting until just before the summer recess to publish unpopular policies, but I was told this morning by the Department for Communities and Local Government that it would, after all, be published not today but “very soon”. That is even worse for the House’s ability to examine the details and hold Ministers to account on behalf of our constituents. I am sure that we would all like to hear from the Minister the reasons for the delay. It is hard to avoid concluding that his colleagues in the DCLG are scared of scrutiny.
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It is also pretty appalling that the new planning guidelines are set to come into force without public consultation, denying communities that stand to be affected by fracking any say in the new process. It is clear that Ministers and the fracking firms, which are, sadly, increasingly indistinguishable, are keen to press on rapidly, but it is wrong to refuse to consult on new planning guidance aimed at making it easier for developers to cast aside community concerns.
Even from a perspective of due procedure, I cannot see how the decision to deny communities a say in their new planning rules is remotely in line with the Government’s own definition of circumstances in which consultation is unnecessary. The relevant Cabinet Office principle makes it clear that that is appropriate only in the case of
“minor or technical amendments to regulation or existing policy frameworks, where the measure is necessary to deal with a court judgment or where adequate consultation has taken place at an earlier stage”.
Many of my constituents have e-mailed me over the past few weeks to call for a full public consultation, as well as for new planning rules that are strong on tackling climate change and follow the precautionary principle when it comes to issues such as groundwater contamination.
Another spending review measure is the consultation on tax incentives to encourage companies to press on with shale gas exploration. The Treasury is proposing reducing the tax payable on income from 62% to 30%. One of my concerns is that tax breaks for fracking amount to an additional fossil fuel subsidy, which is exactly what the UK and other G20 nations pledged to phase out three years ago. It looks like a backward step. Fossil fuel subsidies, which amounted to $500 billion worldwide in 2011, are effectively an incentive to pollute. Earlier this year, the chief economist of the International Energy Agency, Fatih Birol, called them
“public enemy No. 1 for sustainable energy development”.
Mr Peter Lilley (Hitchin and Harpenden) (Con): Will the hon. Lady make it clear that what she calls a fossil fuel subsidy in the case of the UK is, overwhelmingly, simply a lower rate of VAT on all energy use? Is she calling for a higher rate of VAT on all energy use, or just a higher rate on fossil fuels? To describe it as a subsidy is surely nonsense.
Caroline Lucas: I do not think that it is nonsense. The Environmental Audit Committee, of which I am a member, is in the middle of an inquiry into fossil fuel subsidies, and it is clear from some of the evidence that we have received that many people think that the Government’s definition of subsidy, which is narrow and does not include tax breaks, is wrong. I am happy to say that I do not think that fossil fuels should have tax breaks. Whether or not we want to call that a subsidy, I am clear that I think it is, and I am against it.
Charles Perry said in evidence to the Committee:
“The media in this country…would like us all to believe that we are paying a lot more for renewable energy as consumers, but if you compare what we are paying for renewable energy versus fossil fuels, it is six times more for fossil fuels as a taxpayer than it is for renewables.”
That sums up what I am saying.
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David Mowat (Warrington South) (Con): I heard that number with interest: six times as much for fossil fuels as for renewables. Can the hon. Lady take us through the calculation that gave that number? Was it, for example, by comparing solar with gas?
Caroline Lucas: I refer the hon. Gentleman to the Environmental Audit Committee evidence, which goes through that complicated calculation in a lot of detail.
David Mowat: Will the hon. Lady give way on that point?
Caroline Lucas: I have answered that point.
Ministers have given us an industry-led community benefit scheme. It was discussed at length on Tuesday and will be consulted on in the autumn. It is expected to yield £100,000 in community benefits per drilling pad, each with several wells, plus 1% of revenues. The hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) made a crucial point about the importance of additionality when it comes to such payouts, over and above what localities would normally expect under local government or other funding systems.
I share those concerns, not least in light of recent comments from the chief executive of shale gas explorer IGas, who said that local communities should be won over to shale gas fracking by being rewarded with more teachers in primary schools or more officers on the beat. Given the coalition Government’s cuts to crucial public sector services and local authority budgets, it would be outrageous if communities were faced with a situation in which the only way to secure adequate numbers of teachers or policemen and women was by accepting a giant fracking rig in their back yard.
The other recent development discussed on Tuesday is the creation of a new Office of Unconventional Gas and Oil. The Minister explained its co-ordination role, which aims
“to accelerate the development of shale responsibly.”—[Official Report, 16 July 2013; Vol. 566, c. 215WH.]
The new office has been given the role of cheerleader-in-chief for the shale gas industry, as well as being tasked with ensuring that shale development remains safe and the environment protected. We heard that it would also play a third role, providing information to the public on apparent myths to help people separate fact from fiction. However, the office and the Minister’s whole Department are so rampantly pro-shale gas that I cannot see how the public will have confidence or trust in them either to maintain the highest safety and environmental standards or to provide independent, credible, non-biased information about the risks of shale gas development. How does the Minister intend to manage that perceived conflict of interest?
During the rest of my remarks, I will concentrate on some crucial questions about shale gas development in the UK. First, do we understand fully the local environmental and health risks of shale gas and what our constituents and the general public think about fracking, and can regulation and the OUGO adequately address such risks and concerns? Secondly, does shale gas really have the potential to deliver lower-cost gas power and reduce energy bills, as the Chancellor and other fracking enthusiasts claim? Thirdly, is drilling for shale gas a sensible approach to addressing concerns
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about future energy security? Finally, is shale gas development compatible with the UK’s climate change commitments? I will set out why, sadly, I believe that the answer to all those questions is no, and why shale gas ultimately cannot and should not have a role in a secure and affordable energy system that is consistent with the UK’s climate change commitments.
On the environmental impacts, I am sure that I am not alone in having been contacted by many constituents concerned about a wide range of environmental and health risks from shale gas. I worry that Ministers and those with financial links to shale gas companies are quick to dismiss people’s concerns, especially about water resources. The International Energy Agency, not known for an overtly environmental perspective or for hyperbole, states:
“The scale of development can have major implications for local communities, land use and water resources.”
It goes on to list serious hazards
“including the potential for air pollution and for contamination of surface and groundwater”.
The number of wells would, of course, depend on how much extractible gas there is and the geological conditions. Huge uncertainties remain, so all estimates are assumptions, but a study by Bloomberg based on average well extraction data from the US, rather than just sweet spots, found that meeting North sea production levels of 1,460 billion cubic feet and sustaining those levels for 10 years would require between 10,000 and 20,000 shale gas wells. Does the Minister think that the visual impact of so many drilling rigs and the associated traffic would be considered preferable to the aesthetics of wind turbines, for example?
On Tuesday, Balcombe residents delivered a petition to the Environment Agency in respect of Cuadrilla’s application for a mining waste permit for its operations in that area. It states:
“We the undersigned residents of Balcombe and its surrounds strongly object to the activities of Cuadrilla and demand that you take all possible measures to ensure the cessation of its activities with immediate effect, on the grounds that it poses an unacceptable threat to our water supply, air purity and overall environment.”
It is wrong for Ministers to dismiss such concerns and to suggest that local opposition stems from a misunderstanding of the impact of shale gas extraction. Local campaigners I have met are not stupid or scaremongering. They are extremely well read and well informed. Last year, a survey by Balcombe parish council found that 82% of residents wanted their local elected representatives to oppose fracking. That gives a good overview of people’s concerns, which include issues such as the increase in road traffic through the village, the pollution of water supplies, the impact on an area of outstanding natural beauty and the effect on property values.
Opposition to fracking goes way beyond organisations such as Greenpeace and Friends of the Earth. One example this week is the Quakers, who issued a statement on the EU’s climate and energy package and said of shale gas:
“This is not an option for replacing coal power. The greenhouse gas emissions during the life cycle of a well (including after decommissioning) are too high to enable us to reach our long-term climate targets and stay within the vital 2°C limit, especially given the high risk of methane leakage.”
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“The fracking process contaminates water and soils causing major concerns for the environment and public health.”
Even the National Farmers Union has raised concern that fracking represents an additional water user, which could increase water stress in times of shortages, and what about the views of farmers in places where fracking is already established? In Alberta, Canada, the Canadian NFU has led calls for a moratorium, with the co-ordinator, who is a dairy farmer, warning last year:
“Many farmers in my area who either have direct experience with the destructive nature of hydro-fracking technology on their water wells or who have neighbours who have been affected have come to me with their concerns…our ability to produce good, wholesome food is at risk of being compromised by the widespread, virtually unregulated use of this dangerous process.”
The Minister has given assurances about robust regulation in the UK, but the implications of fracking for British farmers remains to be seen, not least in the light of increasing water scarcity and food price hikes. The Co-operative Group, which also farms, perhaps not coincidentally, is also calling for an end to the use of unconventional fossil fuels and for a massive upsurge in community renewables instead.
Another local concern is that leaks from well casings that have been inadequately completed or have subsequently failed are one route by which water and air pollution can occur. The first report from the Select Committee on Energy and Climate Change said that the risks are
“no different to issues encountered when exploring the hydrocarbons and conventional geological formations”
and recommends that the Health and Safety Executive tests the integrity of wells before allowing drilling activity to be licensed. The Minister has indicated that such a regime will be put in place. I wonder whether those same assurances were given in the US and elsewhere.
New data from the Marcellus shale show that 6.6% of Pennsylvanian wells are leaking. Examination of studies of well leaks by various bodies in the US, Canada and Norway shows that it is likely that world leakage rates come in at between 5% and 20%. Will the Minister confirm whether there is any difference between well design in the US and the UK that makes that less likely here? Will he also say whether there is a register of the performance of existing UK wells? I have not been able to find one. Such a register would allow us to have an overall picture of leakage in the UK and would tell us a lot about the world-class regulation argument that is so easily bandied about.
The need for robust regulation was discussed in our debate on Tuesday, providing a brief respite from the regulation-bashing rhetoric that seems to be fashionable at the moment. The hon. Member for North Warwickshire (Dan Byles) was present at that debate, and I am delighted that he spoke in favour of high environmental standards, in keeping with the gold standard that already applies to oil and gas regulation in the UK. However, last month alone, Britain’s offshore rigs and platforms leaked oil or other chemicals into the North sea on 55 occasions. I am not convinced that communities facing the prospect of shale gas drilling, albeit onshore for the time being, will find that reassuring.
The Minister says that robust regulation is now in place and that there is nothing to prevent licensees from bringing forward new drilling plans and seeking the necessary permissions. I worry that his Department is
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becoming increasingly indistinguishable from the fracking companies that are rubbing their hands at the prospect of tax breaks and drilling permits, particularly in his treatment of legitimate public concerns as myths.
It was heartening to hear the hon. Member for Fylde (Mark Menzies) speak of the need to put in place the highest environmental safeguards, as opposed to what is simply convenient for the industry. He also made the point that in addition to strong regulation, there must be sufficient resources to ensure that they are applied. The shadow Energy Secretary emphasised the importance of comprehensive monitoring. I would add that the remits and duties of the regulator also matter.
The proposed growth duty to be imposed on non-economic regulators such as the Environment Agency through the draft Deregulation Bill is of great concern in that respect. The Government claim that it will support growth without weakening environmental protection, but lawyers from the UK Environmental Law Association warn in their consultation response that
“A growth duty, as currently proposed, would make it harder for non-economic regulators to refuse environmentally damaging development, including those that threaten nationally important wildlife sites—even if the overall societal benefits of such a refusal are greater than the development.”
“This arises because the proposed duty does not adequately reflect evidence about the economic value of the natural environment and the need to value it accordingly in decision making.”
Ministers have a lot of explaining to do before anyone will be persuaded that this growth duty is not simply the latest attempt to weaken crucial environmental and public health safeguards, capitulating to corporate lobbyists who want short-term profit-making to trump public interest.
An additional concern, which is almost entirely ignored in the UK but is at the centre of debates in the US, is the radon risk from fracked gas pumped directly into householders’ kitchen stoves and hobs. Two month ago, the hon. Member for Newport West (Paul Flynn) was told in a written answer from the Under-Secretary of State for Health, the hon. Member for Broxtowe (Anna Soubry), that
“Public Health England…is preparing a report identifying potential public health issues and concerns, including radon…that might be associated with aspects of hydraulic fracturing…The report is due out for public consultation in the summer. Once released for public consultation, the report will be freely available from the PHE website.”—[Official Report, 20 May 2013; Vol. 563, c. 570W.]
Subsequent follow-up by telephone with Public Health England this week established that the “summer” has become “later this year”. That seems to be a trend. Will the Minister explain the delay in publishing this research report when the public debate over fracking is moving ahead apace?
In brief, the concern raised in the US has been led by Dr Marvin Resnikoff, now of Radioactive Waste Management Associates, who has more than 50 years’ research experience in radiation hazards. My purpose in raising this matter is not to scaremonger, but simply to ensure that the risks are not ignored. I look forward to hearing from the Minister on that aspect as well.
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As chair of the all-party group on fuel poverty and energy efficiency, I believe that the cost of energy policy decisions to householders, particularly those on low incomes, is an absolute priority. Current estimates suggest that fuel poverty now affects more than 6.5 million households throughout the UK. The Government’s figures show that rising wholesale gas prices are the overwhelming cause of higher energy prices, which raises questions about the economic merits of the gas strategy in which gas plays a big role long into the future, never mind that a gas-powered future would bust carbon budgets.
The Chancellor and the Prime Minister both seem to think that shale gas could have a positive impact on gas prices and household fuel bills. Yesterday, the Department of Energy and Climate Change published a new report in what looks like a desperate attempt to create some evidence to back up those dubious claims. The Daily Telegraph thunders:
“Gas prices could fall by a quarter with shale drilling”.
But on closer examination, the document is all about ifs and buts.
Dan Byles (North Warwickshire) (Con): We all want evidence-based decision making, and it seems odd to say first that there is no evidence that shale gas will reduce prices, and when the Government investigate and commission a report, to say that they have done so in a desperate attempt to find something that looks like evidence. Surely we should welcome the Government’s commissioning of independent research so that we can have an evidence-based debate.
Caroline Lucas: I would certain welcome that if it were reflected in the sort of statements that we hear from the Government about shale gas, but it is not. Time and again I have had debates with Ministers when they have easily and quickly leapt to the defence of shale gas by saying that it will incontrovertibly lead to lower gas prices. That is the problem. There is a gap between the rhetoric and the reality. If we all agree that the jury is out on that issue, I am pleased about that. The DECC report states that there is
“a high degree of uncertainty surrounding any price forecast.”
Let us look at what some of the energy market experts are saying about the cost question. Jamie Spiers, researcher at Imperial college, said that
“figures suggest that the cost of extracting UK shale gas reserves will exceed the price. This is a big issue that not been addressed very much.”
David Mowat: The hon. Lady makes the point that the cost of extracting the gas will be higher than the cost of selling it. If so, why would the private sector go ahead with such projects? Surely the problem will be solved. Why does she think the price of shale gas in the US has reduced the price of wholesale gas by 75%?
Caroline Lucas:
I think it will be made commercially viable through the sort of tax breaks that the Government are already beginning to give. I will return to the situation in the US later, but it is vastly different. The regulatory regime is different, as are the geology and the issue of exports. Time and again, people from the International Energy Agency downwards have been saying that it is
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irresponsible to think that we can simply read across the impacts in the US and assume that we will see those here in the UK.
I was giving examples of reputable organisations that are warning that UK shale gas will not bring prices down. Those warnings come from Deutsche Bank, Chatham House, Ofgem, and the International Energy Agency. Even the CBI has warned that there is only one direction for gas prices, and that is upwards. The highly respected former Energy Minister, the hon. Member for Wealden (Charles Hendry), has warned that the reverse is true, saying that
“betting the farm on shale brings serious risks of future price rises”.
The Government’s independent advisers, the Committee on Climate Change, have confirmed that relying on gas would be expensive, adding up to £600 extra on household electricity bills compared with low carbon power, which would add only £100 and would be a good insurance policy against high prices in the future.
Exploitation of the UK’s significant shale resources is unlikely to result in low natural gas prices as well, according to Bloomberg:
“The cost of shale gas extraction in the UK is likely to be significantly higher than in the US, and the rate of exploitation insufficient to offset the decline in conventional gas production, meaning market prices will continue to be set by imported gas.”
Professor Paul Stevens, Chatham House analyst and a recent winner of the prestigious OPEC award for outstanding oil and energy research, has said that the Chancellor’s view that gas will be cheap in the future, based on the views that that will be driven by a shale gas revolution as happened in the US, is “misleading and dangerous.” Here he comes to exactly the point that the hon. Member for Warrington South just mentioned, saying:
“It is misleading because it ignores the very real barriers to shale gas development in the UK and Europe more generally. The US revolution was triggered by favourable factors such as geology, tax breaks and a vibrant service industry amongst many others. However, in Western Europe the geology is less favourable notably with the shale containing a higher clay content making it more difficult to use hydraulic fracturing.”
At a meeting for concerned residents at a potential fracking site in West Sussex, a Cuadrilla representative was asked to comment on whether shale gas could drive down customers’ energy bills. Mark Linder, who is responsible for Cuadrilla’s corporate development, said:
“We’ve done an analysis and it’s a very small…at the most it’s a very small percentage…basically insignificant”.
In the article to which I am referring, a company spokesperson is reported to have said:
“Cuadrilla’s never said it…will bring down prices…We don’t think it will bring down prices, although it does have the potential to.”
The spokesman went on to stress that shale gas exploitation was about security of supply, rather than price, so now I will turn to that.
There is a broad consensus among gas analysts that little, if any shale gas will be produced commercially in the UK before 2020, so we should not expect domestic shale gas to have any impact on gas prices in the short to medium term. That time scale is very important, because so much of the energy debate focuses on the rest of this decade, for which shale gas is basically irrelevant. If we are talking about energy security perhaps
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in the 2020s, what that looks like obviously depends on how much gas is extractable. The British Geological Survey recently reported that the Bowland shale in Lancashire and Yorkshire may contain 1,300 trillion cubic feet of gas. It stresses that it is a highly uncertain estimate and that it is not an indicator of the volume of gas likely to be extracted, which will depend on economic, technological and environmental considerations. However, if 10% of that gas were extracted, it would equate to approximately 41 years of UK gas consumption, but defining energy security as security of supply, DECC believes that it is still too early to come to a firm conclusion on whether shale gas in the UK or elsewhere in Europe is likely to have a significant effect on security of supply.
The House of Commons Energy and Climate Change Committee recommended that the
“Government should not rely on shale gas contributing to the UK's energy system when making strategic plans for energy security”,
which seems extremely sensible given all the uncertainties. Indeed, given those uncertainties, a much less risky way to reduce the energy security risks associated with the UK’s growing gas import dependence is massively to increase investments in renewable energy generation—we know what the costs of fuel for solar and wind generation are, for example—and dramatically improve energy efficiency and reduce overall demand.
Much of the discussion on the climate change impact of shale gas centres on its relative emissions intensity compared with coal. That matter is of interest, but it must not distract from the most climatically relevant issue of the absolute quantities of emissions from the global energy system. When people get very excited that shale gas in the US is cutting emissions by displacing coal, they need to remember that that coal is simply being exported and the emissions created elsewhere, so that does not help very much with the overall reduction of emissions required in order to tackle climate change. Regardless of the precise life cycle in terms of the greenhouse gas impact of shale compared with other gas, the direct carbon content of shale gas means that its widespread use is incompatible with the UK’s international climate change commitments.
We hear a lot that the Committee on Climate Change says that we need to cut emissions from power generations to 50 grams of CO2 per kilowatt-hour by 2030, but we hear less often that that needs to be a step on the way to a zero carbon grid very soon afterwards. Yes, shale gas is lower carbon than coal, although the methane leakage question is still to be resolved, but it is still a high-carbon fuel. Arguing otherwise is not dissimilar to an alcoholic justifying a barrel of 7% cider on the grounds that it is less harmful than a crate of 13% wine.
What about carbon capture and storage, which is usually raised at this point as the get-out-of-jail-free card? At commercial scale, CCS will be significantly less than 100% effective at capturing carbon dioxide, but more importantly, CCS is unlikely to be commercially viable for at least another 10 years and probably more. The Opposition Front-Bench team have been very outspoken about the need for a 2030 decarbonisation target in the Energy Bill. I welcome their strong stance, and indeed, that of Members on both sides of the House on that crucial issue. The Opposition Front-Bench team are clearly trying to create an impression that they
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understand, more than the coalition, the pace and scale of carbon emission reductions needed. I hope that they would agree that rebuilding cross-party consensus in favour of urgent action on climate change is crucial, too.
However, from all the evidence that I have seen, if we take a scientific, evidence-based approach to tackling climate change, it simply does not make any sense to exploit the UK’s shale gas reserves, however much may be economically or technically recoverable. That is not only a green or environmental argument. As John Ashton, who was the UK’s former head climate diplomat for 10 years, including under Labour, told the Energy and Climate Change Committee,
“the issue here is not emissions, it is the security and prosperity of 60 million British citizens.”
I want to take issue with the view of the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) that those who oppose shale gas are taking an absolutist position. He said on Tuesday that people who are against shale exploration have a principled position, but their views are “ideological objections” that must be separated “from legitimate environmental concerns”, and that regulation is the way to do that. However, is he really suggesting that opposing shale gas extraction on climate grounds is not a legitimate environmental concern? Will he still be saying that when the next set of Intergovernmental Panel on Climate Change reports come out and we are all reminded of what is at stake and the consequences of a rise of more than 2°?
I say to the hon. Gentleman that such a position is neither ideological nor absolutist; rather it is a position that is honest about the science of climate change and the massive risks of our current emissions trajectory. The lack of realism and integrity is to be found not among shale gas opponents, but on the Opposition Benches for as long as they remain in thrall to the fossil fuel lobby and in favour of adding a new source of carbon-emitting fossil fuel to our energy mix.
In Tuesday’s debates, not once did the words “carbon” or “climate” pass the lips of an Opposition Member. It is clear that the shadow DECC team have seen the analysis by Carbon Tracker, which found that between 60% and 80% of existing fossil fuels cannot be burned if we are to have any hope of staying below 2°. The hon. Member for Liverpool, Wavertree (Luciana Berger) has asked questions about those unburnable high-carbon assets, and the International Energy Agency conclusions on burnable carbon are broadly the same. Perhaps today we will hear from the Opposition, as well as the Minister, exactly how they think that the exploitation of new sources of fossil fuels, including shale gas, is remotely compatible with the action needed to avoid catastrophic climate change and with the UK’s international commitment to keeping global warming below 2°, which was reiterated just last month at the G8.
In conclusion, I want to return briefly to the issue of the inappropriate corporate influence in Government. I believe that that is doing huge harm to our democracy and is at the core of the coalition’s irrational enthusiasm for shale gas and fossil fuels more widely. This fossil fuel obsession, or addiction, is preventing us from making the most of the UK’s indigenous renewable resources. Worse still, it means that we are seeing policies designed to maintain the status quo, where power is literally and
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metaphorically concentrated in the board rooms of big energy companies such as the owner of British Gas, Centrica, which recently bought shares in Cuadrilla.
Before the cold snap last winter, Centrica raised prices by 6%. Its full-year profits before tax were reported in May to be £602 million, with the group’s full-year earnings after tax expected to be 2% higher than last year at £1.4 billion. Therefore, I think it is reasonable to ask why it is remotely acceptable, for example, that Lord Browne, a former BP boss, is now holding a key cross-departmental role as the head non-executive director at the very same time as he holds significant shares in Cuadrilla. Lord Browne reports to the Minister for the Cabinet Office and Paymaster General, the right hon. Member for Horsham (Mr Maude), in whose constituency Cuadrilla wants to drill. The right hon. Gentleman explains that Browne
“has a cross Government role convening Non-Executives from the best of business and the third sector...The code of practice on good governance in government departments requires the board to record and manage conflicts and potential conflicts of interest appropriately. There is no conflict of interest in this case.”
However, a recent freedom-of-information response from DECC seems to undermine such assurances. It states:
“After a trawl of our Ministers’ private offices and very senior civil servants at DECC we can confirm that there have been four meetings with Lord Browne during the period specified”—
in other words, the past three years. Those all took place in DECC’s offices, and I am told that although DECC does not have minutes for the first two meetings, Cuadrilla’s activity plans and shale gas were discussed. The minutes that do exist are heavily redacted on the grounds that attendees were in a private discussion with the Minister. The response states:
“It would be likely to prejudice the commercial interests of Cuadrilla and inhibit communications with this organisation on an ongoing basis if we were to release details”.
Another non-executive director is old Etonian Sam Laidlaw, who has also had a long career in the oil and energy industry, including top roles at Enterprise Oil and Chevron. He is currently in charge of—guess what?—Centrica. I am therefore genuinely concerned that policy making on shale is skewed in favour of the companies, such as Centrica and Cuadrilla, and that the interests of our constituents are not being put first, as they should be, when it comes to the risks of fracking, keeping energy costs down or tackling climate change. I would like to know whether the Minister shares my concerns about the access and influence that these companies have in relation to policy making across the Government.
I want to highlight some questions that my constituents and other members of the public have asked me to put to the Minister during this debate. Will the Government confirm that they will mandate that fracking companies must name the chemicals that they use and their toxicity? Can he explain how fracking is compatible with the sustainability and emission reduction aims of what is meant to be the greenest Government ever? Where is the assessment of the risks of fracking, and how will those risks be properly managed? I would be grateful for answers to those questions as well.
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I want to end my speech by saying a few words about the positive energy future that we could decide to pursue, instead of this headlong rush to exploit every last drop of oil and gas. It is a future in which we are free from our fossil fuel reliance and on a path towards climate security, not catastrophe. It is an energy system in which the big six energy companies are replaced by independent generators and a blossoming of community and co-operatively owned renewable schemes—local, sustainable and democratically controlled.
The Centre for Alternative Technology launched just this week “Zero Carbon Britain”, showing how Britain could eliminate emissions by 2030, and not just from our energy system. It is the latest of many reports that show, from a technological perspective, that fossil fuels are fast becoming redundant. I recommend it to anyone who thinks that the only way to keep the lights on is to fry our planet and condemn young people and future generations to unmanageable climate impacts, not least on water and food security. As many have said, what we are lacking is not technological solutions to end our fossil fuel addiction and tackle climate change; it is political will. I hope that this debate will be one step further in generating that will.
Mr Peter Bone (in the Chair): I should like to tell right hon. and hon. Members that I will call the first Front Bencher no later than 10 minutes past 4. The Chairman of Ways and Means has given the Chairman of this debate permission to impose a time limit. I will not do that at the moment. Nine Back Benchers want to speak, so Members can do the arithmetic.
Mr Lilley: For Members who cannot do the arithmetic, can you tell us how long we have to speak, Mr Bone?
Mr Peter Bone (in the Chair): No, you are quite capable of doing that, Mr Lilley.
2.2 pm
Eric Ollerenshaw (Lancaster and Fleetwood) (Con): It is a pleasure to serve under your chairmanship, Mr Bone, and to have your understanding that I may have to nip out and see a Minister about a school. I hope that I will also have the understanding of other hon. Members.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on ensuring that we could have this debate. I think that this is the fifth time in 18 months that we have had such a debate, and my right hon. Friend the Minister has had the pleasure of my company and that of other hon. Members only in the last few days on pretty much the same topic. I will try to take a different tack from the hon. Member for Brighton, Pavilion, given that I represent a constituency that sits on the majority of the Bowland shale, which apparently is becoming the nirvana of plugging our energy gap. That is how it seems to many of my constituents, who are worried on a number of grounds.
Personally, I have always tried to take the middle ground. I am not, and never have been, completely set against the use of shale gas in the UK’s energy mix. However, following conversations with constituents and having done my own research, I do have concerns about the safety and the environmental aspects of the fracking process. That includes, in particular, the integrity of
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water supplies for those who draw water from their own boreholes and not from the mains supply. That is an issue that I keep raising, and I have raised it in meetings with companies and civil servants, who still do not seem to understand that there are people in Lancashire who do not have a mains water supply. They are clearly concerned about the possible contamination that may occur with a process that goes on below the water table; but more importantly, they are also concerned about the quantities of water taken from the water table to use in this process. They are still waiting to have those questions answered.
My constituency is right next to where the small earth tremors happened. Test drilling at Preesall in the Fylde constituency was stopped to check what was going on. As hon. Members can imagine, in a county that was already seeing the speed at which people were trying to get to the shale gas but hearing few answers, the fact that a small tremor happened—whatever one wants to argue about the tremor itself—led to extremely serious worries among my constituents.
I accept that, since then, the Secretary of State for Energy and Climate Change has put in place a number of additional safeguards. Certainly, the regulatory system has been beefed up. He has also confirmed that all data from the exploratory process will be monitored to assess further the environmental impacts. The additional safeguards; the monitoring of seismic activity; a strengthening of the regulations in relation to wellhead integrity; and—this is the important one for me and I am grateful to the Energy Secretary for it—the presence of an independent expert on-site, while fracking takes place, are all moves in the right direction. They are important measures, but I believe that more can be done to strengthen things further, particularly the water safety element.
I understood the hon. Member for Brighton, Pavilion to refer to the DCLG in terms of the planning regulations, and we in Lancashire are waiting to see the nature of them. I hope to see very strong roles for the Environment Agency and the Health and Safety Executive throughout this process. There needs to be some understanding that the area of the Bowland shale is rural Lancashire, so there are extreme concerns about the impact not just on the ground, but on some of the most outstanding countryside that we have in this country. We need to be assured that each site will be assessed on its own merits in terms of how it affects the local landscape. I have always made the same point in relation to applications for wind turbines, and it would be wrong of me to approach planning consents for shale gas well pad sites differently. Local people must be allowed to have a full say in the planning process.
I will now return to a familiar theme. Hon. Members have heard this long and hard from me, but the issue still concerns me. If we are to have large-scale extraction of shale gas, how will that represent a bonanza for the local community? The mineral rights belong to the Crown, to the duchy or to the county, and local residents will not see the sums that communities and landowners in the US or Europe could get. Moreover, the statements on the number of jobs that will be available are not convincing enough for me. Promises are being made, but I do not believe that this activity will create large-scale employment opportunities across Lancashire.
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I accept that a move to industrial-scale production of shale gas has not been advocated by the Energy Secretary at this stage, but it does look as though there is more and more evidence that economically viable extraction is possible. I have seen a reference to £366 billion-worth of extractable gas from the Bowland shale. Therefore, the community’s share of the profits needs to be sorted. I am determined that if Lancashire is to produce shale gas that benefits Lancashire and the rest of the country, Lancashire residents will get financial recompense.
We have now heard that a community compensation scheme will be established, which is good news. However, we are told that it will be a voluntary scheme, run by the United Kingdom Onshore Operators Group. The plan is to provide £100,000 per well at the exploration stage, and once production starts, 1% of all revenues generated during the well’s lifetime will be allocated to the local area, with one third going to the county and two thirds to the local community. That is a good start, but I and others in this Chamber would like to see a lot more. We want to see more clarity, more certainty, a guarantee of additionality and, ideally, more money.
David Mowat: My hon. Friend is making a number of strong points on behalf of his community in Lancashire, and I agree with them all. I will just draw his attention, though, to the unemployment figures that came out yesterday. The three constituencies with the lowest unemployment in the country are all around Aberdeen, and that has been achieved without community transfers. Does my hon. Friend not think that there will be a bonus in terms of economic activity, potentially centred on his constituency?
Eric Ollerenshaw: On balance, my hon. Friend makes a fair point. It has been put to me that, if the area were the first where fracking went ahead, the potential for university research, engineering and skills would be an advantage, but as I have tried to explain, against that is the fact that we have had one test drill, which caused an earth tremor. We have seen nothing else, and we need to see what one of these well pads does to the environment. No one has seen that yet.
Dan Byles: I know that my hon. Friend is looking at the issue carefully, as well he should. Does he agree that we will be able to answer these questions only if planning permission is granted for the next series of exploratory wells? Only when we have wells being drilled and operated can people look, sniff and prod, and we will then know what the wells look like and what the impact will be.
Eric Ollerenshaw: My hon. Friend makes an extremely valid point, but he must understand that we then get the argument that, because we have had exploratory wells, we obviously need to go ahead since we have spent all that money on exploration. My constituents need assurances that the wells are exploratory, that they are part of a pilot and that there is the possibility that we can close down the whole thing if something else goes wrong. Those are the kinds of assurance that they want.
The community fund that the Onshore Operators Group will apparently be in charge of will provide more money locally, but there are still questions about what the local community is. Will funds go to community groups, parish councils or even district councils in my
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area, such as Wyre borough council or Lancaster city council? They are all below county council level and there is a huge spread of locality between them. What will the money be spent on? Could it come in the form of cash payments, reduced energy bills, building community facilities, reduced council tax bills or affordable housing contributions? If that kind of money is spent in those ways, there are possible tax implications, which is how the problems with the Shetland Charitable Trust developed.
Tessa Munt (Wells) (LD): The hon. Gentleman is probably already aware of the Sullom Voe agreement, under which community benefit is brought into the community at parish level. I believe that for every barrel of oil taken from Shetland Island waters, a number of pence—totalling something like £23 million or £24 million—goes to the Shetland Islands council for it to distribute. That is probably a good model for us all.
Eric Ollerenshaw: It is an interesting model, but there are serious problems with the definition of what the council can spend money on. If the council spends money on certain things and gives financial recompense to the residents, they will face tax anyway, and that is the issue.
I turn to the subject of certainty. We are talking about a voluntary community compensation scheme. I had hoped that we would be dealing with something more substantial, preferably underpinned by statute. We need to ensure that there is no wriggle room. Local residents and councils need to know that there will be no about-turn, that promises will be lived up to and that changes in company control will not lead to changes to the commitments made by companies now.
Additionality is important. Basically, I want a guarantee from Ministers that if local councils receive extra funds through the community compensation scheme, that will not be used against them when calculating normal standard local government grants. Put simply, I do not want to see a case of robbing Peter to pay Paul. There must be extra money to compensate local communities for the problems that they will have to deal with in hosting shale gas extraction, and that compensation must not be seen by the Government, of whatever hue, as an alternative to normal grant funding. That might be achieved by using a separate fund, as the hon. Member for Wells (Tessa Munt) has already suggested, rather than by paying money into the usual revenue streams—almost a Lancashire sovereign wealth fund. Such a fund would be managed by professionals according to a strict charter, for the benefit of the most closely situated residents on the one hand and the whole of the county on the other. Obviously, it would have to work closely with local authorities of all tiers, to deliver genuine and tangible benefits for local residents and the county.
I hope there might be room for negotiation on the amounts involved. One per cent of revenues of £366 billion is interesting and a good figure, but we hope that it is just a starting negotiating point. If we are to have a profusion of wells, which I remind hon. Members are not like oil wells and need to be located every few miles across the patch or move round the patch—that is my
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understanding, but those more expert than I am may correct me—we want a fund able to invest for the time when the gas goes, as surely it must, given its nature.
Dr Alan Whitehead (Southampton, Test) (Lab): The hon. Gentleman may find it helpful to consider—certainly looking at US experience—that a fracking pad in production is about twice the size of a football field and has six different wells, each of which last seven to eight years before a new well needs to be drilled. He is right that a number of wells and pads would be required in any area to sustain substantial shale gas production over a period.
Eric Ollerenshaw: I thank the hon. Gentleman for his technical expertise; that is also my understanding. I remind hon. Members that I am talking about rural Lancashire, the vast majority of which is defined as an area of outstanding natural beauty. I have fought wind turbines owing to the impact of their look on the area, and in the same way, shale gas development raises serious questions about protecting such areas, of which we have few left.
My obsession with compensation should not be taken as support for a move to full-scale fracking. Ministers have to understand how fracking is perceived at the moment. All they read in their national papers are new figures building on new figures and the huge possible bonanza, while my constituents sit on those possibilities. Too often, Lancashire has seen itself used to generate profits that did not return to the county. As the hon. Member for Brighton, Pavilion said, constituents in the affected areas have done a hell of a lot voluntary work to look at fracking at all levels. A farmer in the Bleasdale area of my constituency pointed out at the end of an involved meeting—I hope you accept the reference, Mr Bone—“Eric, this gas has been down there millions of years; there can’t be harm in waiting a little bit longer. It will still be there when we want it.”
2.17 pm
Barbara Keeley (Worsley and Eccles South) (Lab): It is a pleasure to speak in this Backbench Business Committee debate with you in the Chair, Mr Bone. I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate and on the way in which she opened it. I have a potential site for fracking for shale gas at Barton Moss in my constituency, and I want to talk about constituency concerns, as the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) has just done. My constituents have a number of concerns, and they are building by the week and month. I want to talk about those concerns over the potential impact of fracking for shale gas on their quality of life, because that is the key issue for me.
First, even the suggestion of fracking for shale gas moving into the area is bringing house prices down. I had a quick look before I came to the debate, and found various articles talking about a house price downturn of up to 30% in various parts of Manchester and the north-west. When major projects such as large rail schemes are introduced into an area, they bring house prices down. Such a loss would mean a cost running into millions of pounds for all the local people affected by a house price downturn.
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Graham Stringer (Blackley and Broughton) (Lab): Will my hon. Friend give way?
Barbara Keeley: Will my hon. Friend wait until I complete this point? I will come to him in a moment. His constituency is at the other end of Salford from mine, and I know that he will disagree with what I say.
As we heard extensively from the hon. Member for Lancaster and Fleetwood, there is talk of a community bonus of £100,000 per well. The difficulty is that it is out of scale with the potential loss in house values that people will see. The 1% of any revenue will also come along far too late. If someone’s house has lost value and they have become fed up and moved away, they will not be helped by 1% of revenue.
Graham Stringer: Outside London and the south-east, the highest house prices in the country are in Aberdeen, due to the benefit of the oil industry in the North sea. Eventually, the improvements in the economy if shale gas is exploited are likely to lead to a rebalancing of the UK economy and higher house prices.
Barbara Keeley: My hon. Friend is entitled to that view, but I do not agree with him.
There are serious concerns about the impact of fracking on communities. I want to quote from the International Energy Agency’s “Golden Rules for a Golden Age of Gas: World Energy Outlook Special Report on Unconventional Gas”:
“Producing unconventional gas is an intensive industrial process, generally imposing a larger environmental footprint than conventional gas development. More wells are often needed…The scale of development can have major implications for local communities, land use and water resources. Serious hazards, including the potential for air pollution and for contamination of surface and groundwater, must be successfully addressed.”
Those are the issues and concerns that are starting to bear down on my constituents, and the notion that anyone living in an area where such things were being contemplated would see house price increases is just not realistic.
I want also to quote from a report by the Tyndall Centre for Climate Change Research produced by local academics at the university of Manchester:
“The depth of shale gas extraction gives rise to major challenges in identifying categorically pathways of contamination of groundwater by chemicals used in the extraction process. An analysis of these substances suggests that many have toxic, carcinogenic or other hazardous properties. There is considerable anecdotal evidence from the US that contamination of both ground and surface water has occurred in a range of cases.”
“there are a number of documented examples of pollution events owing to poor construction and operator error. There are reports of incidents involving contamination of ground and surface waters with contaminants such as brine, unidentified chemicals, natural gas, sulphates, and hydrocarbons”.
Government Members appear to be saying “Nonsense.” I think I heard the Minister say it too, so I hope he can give me information that I can pass on to my constituents that will help to settle their minds.
Mr Lilley: There have been some 2 million wells fracked in the United States and not a single person has suffered from water contamination as a result.
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Barbara Keeley: That is interesting, and if the right hon. Gentleman has references that he wants to pass on for me to use in my constituency, he is welcome to do so.
We have read the various reports, and it is clear that there are things that need to be borne in mind, not least the potential effect of the shale gas industry’s environmental impact on my constituents. There are many points in the process at which groundwater contamination could occur, due to fracturing fluids or contaminants being mobilised from migration under the surface. There is also the contamination of land and surface water, and potentially groundwater via the surface route, arising from any kind of spillage. Right hon. and hon. Members who have lived in the vicinity of chemical processing industry plants—we have a number in the north-west—know that such things happen. I used to work alongside someone who had worked for ICI, who constantly told me about the evil soup they would get rid of on one particular day. Such things have happened, and people remember them.
The key point is that there will clearly be impacts on the land and the landscape from the drill rig, the well pads, storage ponds or tanks and access roads. People will experience noise and light pollution during the well drilling, and local traffic will be affected. All those impacts are not uncertain; they are certain.
We also know that seismic impacts are possible, and the hon. Member for Lancaster and Fleetwood has touched on that issue. The western part of Salford was previously mined for coal and has many quarries—unlike the eastern part, which my hon. Friend the Member for Blackley and Broughton (Graham Stringer) represents. I have already had experience in my constituency of part of a street of newly built houses falling backwards—subsidence is a hazard for home owners throughout the area. We have come across a study by geologists at Columbia university, who feel that large earthquakes can trigger, even from a great distance, smaller seismic reactions near waste water injection well pads. People read the studies and take away that fear.
It would be helpful if the Minister could tell me, so that I can pass the information on to my constituents, what research has been conducted into that domino effect. If, as we get into shale gas development in various places—not, I hope, in my constituency—there are further seismic impacts, will areas such as mine be affected?
Dan Byles: The hon. Lady is absolutely right about the report, but it was, as she said, about geological waste water disposal, not about hydraulic fracturing. I believe that geological waste water disposal is already prohibited in this country, under a number of EU regulations. Last year’s Royal Society report considered closely the issue of induced seismicity and declared the risk of it to be very low.
Barbara Keeley: Those are interesting points, but I can assure the hon. Gentleman that if he was at meetings with constituents of mine who have these fears, he would realise that it is very hard to persuade people who are personally affected by living next to a site.
I want to mention the Lancashire Wildlife Trust, because it is a key stakeholder in any proposals for gas exploration and exploitation at the site. The trust has a role in protecting and restoring the precious mosslands
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resource in Salford, which is adjacent to the site in question. The area of raised peat bog has suffered for decades from peat extraction, but we have just won council approval to refuse a licence for peat extraction—in which the trust played a key role—and people were feeling that things might get back to normal and calm down. The trust gave me the following statement:
“The Wildlife Trust for Lancashire considers that the most significant local issues for biodiversity are the impact of the footprint of the physical development (e.g. buildings, parking areas, waste water storage tanks and well-heads)”
on adjacent wildlife sites on the mosslands,
“and the safe disposal of the waste water. Any proposal for shale gas extraction should go through the full planning process including public consultation, compliance with EU Directives and a full Environmental Impact Assessment.”
I have concerns about planning, which I will come to. The statement continues:
“The Environmental Impact Assessment should disclose all chemicals involved in the process and identify the least damaging disposal route for the waste water.”
I am already getting questions from constituents that I cannot answer about what chemicals are involved in the process, so that is clearly very important to people.
The trust goes on the state that it
“will treat each planning application for energy generation on its own merits and we would expect there to be a net gain in biodiversity in line with current legislation, local planning policies and the National Planning Policy Framework”.
The final point the trust makes, as we have already heard from the hon. Member for Brighton, Pavilion, is that
“the precautionary principle should be adopted until adequate scientific evidence exists as to the environmental impacts.”
Dan Byles: The hon. Lady is being very generous in giving way. I might have misheard her, but I think she said that she could not answer the questions about what chemicals are put into fracking fluid. If she looks on the Environment Agency website, she will see that they are listed in full, as required by the agency’s rules. That is entirely transparent.
Barbara Keeley: I do not think that that is my job—
Mr Lilley: Show some leadership.
Mr Peter Bone (in the Chair): Order.
Barbara Keeley: I do not know about the particular developer we will have or the particular process that it will undertake. To be perfectly frank, in the current environment I do not know whether I have the resources to get into that anyway, so it would be helpful if the information could be provided.
Mr Lilley: Will the hon. Lady give way?
Barbara Keeley: No, I want to make some progress.
I want to touch further on the potential environmental impacts of shale gas developments. Constituents of mine have brought reports to meetings and have raised
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their concerns. I have already mentioned the issues they see as being more likely to cause problems for the local environment and for human health, including water contamination and air pollution, and I want to go a little further into the latter.
In certain places in the States—Wyoming and Texas have been mentioned—there have been cases of photochemical smog, which increases susceptibility to asthma. A hospital system in Texas, which serves six counties, has reported asthma rates of three times the national average. In my constituency, we already have significant problems with air pollution, due to the volumes of traffic and traffic congestion on the three motorways. My constituency is surrounded by the M60, the M62, the M602 and the local road network. Recent roadworks near a junction of the M60 caused tailbacks of up to two hours, with traffic nearly at a standstill, and that was in the same area as the drilling site.
The current mortality figure for Salford attributable to air pollution is as high as 6%, which is higher than the average for England of 5.6% and much higher than the figures for other parts of the country, such as Devon and Cornwall. We have evidence from the United States of some hazardous pollutants being prevalent around shale gas wells. In my constituency, the Barton Moss site is close to two local housing estates—the real difference is that the hon. Member for Lancaster and Fleetwood was talking about a rural area, while I am talking about a heavily populated urban one—so any drilling for shale gas would only add to the harmful air pollutants already breathed in by my constituents. Has the Department done any work to examine the outcomes and the potential risk of exploiting shale gas in such urban areas? I do not know whether there is information about that, because there is concern about air quality now that the monitoring duty has been taken away from local authorities.
There is a concern that many of the data currently used to promote shale gas extraction are limited or at best incomplete. Hon. Members have given examples and pointed out certain websites. The Tyndall Centre for Climate Change Research has argued that, although there are increasing volumes of data on the subject—such as lists on websites—many of the data are built on provisional sources and there is a paucity of reliable data. Will the Minister tell us what measures he is taking to develop the information used to underpin Government policy, so that people have certainty? It is important to have certainty about the data on fracking that are being relied on and the potential effect on the environment.
Another concern is that any gains from shale gas will not be as substantial as claimed. A fear that I have heard from my constituents is that gains will go straight to the Treasury and bypass the local community, as we have heard today. It is right to question to what extent shale gas may cut energy bills. Although there has been a boom in the United States, experts say that costs in Europe will be up to 50% higher than in the US because of such factors as the less promising geology and the higher population density. Bloomberg New Energy Finance has said that hopes that shale gas will cut energy prices are “wishful thinking”, and the former Energy and Climate Change Minister, the hon. Member for Wealden (Charles Hendry) has written that
“betting the farm on shale brings serious risks of future price rises.”
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Like the hon. Member for Lancaster and Fleetwood, I am concerned about the real bonus, if there is one, to the local community in Barton and Irlam, because they will experience all the disbenefits. It is said that exploiting shale gas will lead to cheaper fuel bills, but we have heard from other sources that it may not.
I return to the planning issue and whether local communities can have a proper say on any decisions about shale gas that affect them. I have to say to the Minister that the changes to the planning and permit process advertised over recent months have served only to make my constituents more anxious. We know that the Growth and Infrastructure Act 2013 will allow developers to bypass local authorities in some cases, which is a real concern in my constituency. The Act creates an opportunity for developers to fast-track major projects instead of going to the local authority, and I have many times been asked, “Is that going to happen to us?” The Act allows developments for large onshore gas extraction over a certain size to be fast-tracked to the Secretary of State, so it would be helpful if the Minister said whether he thinks shale gas extraction will be fast-tracked.
The hon. Member for Brighton, Pavilion has already referred to the fact that on 27 June the Government published their document on infrastructure investment, which stated that they intended this month to publish measures
“to kick start the shale gas industry in the UK.”
The measures were to include guidelines that, as she said, are not currently available. I am concerned about that, so can the Minister shed any light on why they have not been published? Most alarmingly, the 27 June document stated that the Environment Agency would
“significantly reduce the time it takes to obtain environmental permits for exploration.”
A process seems to have been built in for fast-tracking or streamlining permits in a standard period of 13 weeks from August, but in as little as six weeks in some cases. Alarmingly, by February 2014 permits will be issued within one to two weeks, based on standard rules. Will the Minister tell us what we can expect with the new planning and permit regime, so that I can pass that on?
I want to quote some policy lines that relate to the debate. The shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls), has said that
“the green economy and low carbon energy will be central to Labour’s plans in government”,
“on industrial strategy will also have energy and environmental policy at its heart. So will…Armitt’s review into the way in which we make our infrastructure decisions. Without a low carbon infrastructure plan and economic strategy, in the modern economy you simply don’t have an economic plan. Our vision is for a race to the top—to secure a world-leading position for British businesses in helping the world meet the low carbon challenge—and in doing so create prosperity and jobs for people in this country.”
The point about jobs has already been raised.
My hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) has set out the questions that need to be answered to ensure that exploration and extraction are properly regulated and monitored, and he may say more about that later. He has quoted President Obama as saying that plentiful shale gas does
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not make climate change and its associated emissions go away; it makes the need for carbon capture and storage all the more essential and the need to drive renewable technologies more urgent. Legitimate environmental concerns should be addressed and, I would add, consultation with communities should be meaningful. Energy policy needs responsible leadership, and I hope that this debate helps point the way to that and, more importantly, helps to get answers that I can pass on to my constituents.
Mr Peter Bone (in the Chair): Order. Because of the number of Members who have indicated that they wish to speak, with the authority of the Chairman of Ways and Means, I am imposing with immediate effect a time limit on Back Benchers’ speeches of eight minutes, with added time for two interventions.
2.36 pm
Mr Peter Lilley (Hitchin and Harpenden) (Con): It is a pleasure to be at this debate under your chairmanship, Mr Bone, and I am delighted that you are a chairman of so many things. I congratulate the hon.—and old Malvernian—Member for Brighton, Pavilion (Caroline Lucas) on obtaining the debate. I mention her school since she seems to be obsessed with other people’s schools. It is important to have the opportunity to debate the issues.
The hon. Lady asked Members to draw attention to their interests. I invite everyone to look at my interests, as declared in the Register of Members’ Financial Interests. They will find that I have no interest in fracking or in any oil and gas companies in this country. Over my lifetime, I have been—indeed, I still am—involved in an oil company in central Asia and I was involved in analysing oil companies and predicting energy prices for 20 years, when I had a proper job before coming to this place, so she may try to insinuate that that somehow makes me too well disposed to the oil and gas industry. She may therefore be surprised that, as the hon. Member for Southampton, Test (Dr Whitehead) will confirm, I was the only member of the Energy and Climate Change Committee who criticised, as she does, the suggested special tax breaks for fracking. On the basis of my knowledge of the oil and gas industry, I think that they are probably unnecessary, and we should not give away unnecessary tax breaks; although if they are necessary, that would be fair enough.
I want to draw Members, attention to one interest that is not declared in the Register of Members’ Financial Interests. I probably share this interest with all other Members, although too many ignore it. It is my interest in my 70,000 constituents who want their heating bills kept as low as possible, my interest in the people in this country getting jobs and my interest in reviving the manufacturing industry in this country and providing it with fuel that is as plentiful and cheap as possible.
I have great respect for the hon. Lady and those who, like her, simply want to keep fossil fuels in the ground, although if that was my objective, I would start by keeping coal in the ground rather than gas, which produces only half or less of the carbon dioxide emissions of coal. I do not support such a policy because, probably like her, I take as given the Intergovernmental Panel on
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Climate Change summary of the science, I also, unlike her, accept its summary of the economics of taking action to prevent global warming. It has concluded that, in relation to the level of CO2 in the atmosphere, it could not identify
“an emissions pathway or stabilisation level where benefits exceed costs.”
Unless and until we can find a pathway or a stabilisation level for CO2 that will produce greater benefits than its costs, we should not set about impoverishing this generation in the vague hope that we may make some generation in the future richer.
Caroline Lucas: I think I said that the driver for increasing fuel bills for most people today is rising prices of gas rather than renewables or anything else. Those interests that the right hon. Gentleman declared at the beginning of his contribution around jobs and keeping fuel bills low are better met through green energy sources than through gas, the prices of which are pushing up bills right now.
Mr Lilley: The current cost of electricity produced from gas or coal is £50 per megawatt-hour. The current cost of producing it from windmills is £100 per megawatt-hour. For offshore windmills, it is £150 per megawatt-hour and for solar it is off the scale. If we think that we will get cheaper, lower energy bills by going to energy sources that are two, three or four times as expensive, we are living in la-la land.
Caroline Lucas: Far from my being in la-la land, the right hon. Gentleman has very effectively not answered my question. I said that if we were to look at a fuel bill to try to ascertain which elements made it high, we would find that it was gas rather than renewables. Yes, renewables have a greater degree of subsidy now, but that is because they are new. They have a rate that will enable them to come to grid parity very soon. Gas, by contrast, is an old technology and hardly needs those kinds of subsidies.
Mr Lilley: Even that is not true. The most recent generation of gas turbines are so much more efficient than the previous ones that the savings from replacing all our gas turbines with the most recent generation would probably be greater than the savings in CO2, emissions from using wind. I will, if I may, make some progress.
Until we find a way of controlling CO2 levels in the atmosphere that will not cost more than the benefits of doing so, we should not impoverish this generation. My respect for the hon. Lady and her colleague, the hon. Member for Worsley and Eccles South (Barbara Keeley), begins to evaporate when they abandon their real belief, which is that we should not burn any fossil fuels, and start to concoct fabricated fears and spurious arguments against fracking. Their first argument is that there will not be much there—that was what they originally said. Now the British Geological Survey says that there is probably an awful lot there, but that we will not know until we have drilled it.
The hon. Lady went on to say that the process will be so costly that it will cost more than the price, in which
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case no one will extract it, so her fears can evaporate. She clearly does not believe her own argument otherwise she would not even bother to attend this debate because it would not be important. She alleges that it will be more difficult geologically to extract shale in this country than in the United States, and that the geology here is less attractive than there, but that is simply not the case.
When the Select Committee interviewed Cuadrilla and BHP Billiton in the States, we asked them how thick the shale beds were in the States that they typically extracted from. They said 300, 400 or 500 feet thick. How thick is the Bowland shale? It is a mile thick; up to 20 times as thick as in America, which means that from one surface pod, we can get up to 20 times as much fracking as they can in the States—perhaps it is only a dozen times.
Dr Whitehead indicated dissent.
Mr Lilley: The hon. Gentleman can intervene if he wishes to put me right.
Dr Whitehead: The right hon. Gentleman will lose time from me intervening, so I am sorry about that.
Mr Lilley: If the hon. Gentleman can be quick.
Dr Whitehead: Thickness is not necessarily the final indicator.
Mr Lilley: If the hon. Gentleman does not have anything interesting to say, then he should not waste my time.
Dr Whitehead: Well, it relates to geological faulting, clay, extractability, tightness—
Mr Lilley: Thank you very much. I am grateful to the hon. Gentleman. That was not very helpful to the debate in general.
The second and more plausible argument is that, even if there are large quantities of gas here and we will not know that until we have drilled, it will not succeed in bringing down prices in the UK, because our prices are fundamentally set by marginal suppliers from Europe. That is both plausible and possibly true, but either we will have so much here, and there will be so much elsewhere, that gas prices will come down, or they will not in which case the tax revenues from producing gas in this country will be substantially greater—three times as much per cubic metre extracted as in the States. With those extra tax revenues, we will be able to reduce our other costs on the economy or other tax bills that people face.
Shale is ubiquitous; it is incredibly widespread across the world. For the hon. Lady to suggest that it will be extractable only in the States is really to express the belief that God is an American, that he has created a particularly unique situation in America with shale that is so different from shale elsewhere in the world and with a technology that will only apply there, and that he has maliciously arranged things so that the technology will not apply to the shale in the UK, France, Poland, China or elsewhere in the world. I simply do not believe that that is true. In all probability, we will see a shale gas revolution worldwide that will probably keep gas prices
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low. It is certainly likely to prevent them going up, and it may even bring them down as it has done in the States.
When pessimism about reserves and prices fails, some people resort to fabricated scares, which are as irresponsible and as unjustified as the MMR scares, which stopped people taking advantage of vaccination. I hope that we will not allow similar scares to stop us taking advantage in this country of the potential resources that exist beneath our soil.
The letter from the people in Balcombe from which the hon. Lady quoted says that fracking is considered to be an uncertain and risky technology. It is far from being uncertain and risky. The first gas well was fracked on 17 March 1949. Since then 2 million wells have been fracked in the United States, and 200,000 in the last year, without anyone being poisoned by contaminated water, or any buildings or people suffering damage from minuscule seismic tremors.
The Royal Society and the Royal Academy of Engineering dismissed fears about water contamination. They 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.
2.47 pm
Dr Alan Whitehead (Southampton, Test) (Lab): The debate here falls into two categories: a wider category and a narrower category. It is undoubtedly true in terms of the wider category that we will have to leave a lot of the carbon that we otherwise could get out of the ground in the ground over the next few years. Indeed the understanding of the Department of Energy and Climate Change of this process in terms of what will need to be done with regard to gas as a component of wider energy sources in the 2030s reflects that in the way in which gas will need to be used at a much lower level and fairly sparingly in the running of gas-fired power stations. But that is also an issue in terms of what we do with oil, coal and a variety of other mineral sources of energy under our soils.
We are talking specifically about shale gas in the UK, and I want to address the narrow issue of what the consequence would be of our deciding that we really were going to go for a shale gas “bonanza” in this country and try to extract as much shale gas as possible in order to underpin our energy economy. First, there is indeed a large amount of shale gas reserve under the ground in the UK. How much of it is recoverable is another matter. If we recovered what looks to be a possible level of recoverability from the present fairly uncertain estimates of how much shale gas there is, shale gas could perhaps underpin 10% of our overall necessary gas supplies in this country.
[Mr David Amess in the Chair]
For shale gas to do that, we would have to have just over 100,000 shale gas wells. There is a popular misconception that drilling for shale gas is like drilling for offshore North sea gas, but that is not the case, as we have already heard. A large number of small wells would be the order of the day; in themselves, they would not produce a large amount of gas but collectively they would produce quite a large amount of gas. Perhaps
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there would be about 100,000 to 107,000 wells. Admittedly, they would not be separate wells. Usually, there would be about six or seven wells on one pad, going outwards from the pad, which would create a need for about 18,000 pads. So, if we did a straightforward division between the constituencies of this country, each constituency would have to support 164 wells. Obviously, the wells would not be distributed constituency by constituency, because there would be concentrations in different parts of the country, but I can well understand the concerns expressed by the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) and my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley).
Barbara Keeley: Whatever number of wells my hon. Friend thinks each constituency would have to bear, does he think that there are particular issues in urban areas that already have very high levels of pollution, such as the ones I outlined?
Dr Whitehead: My hon. Friend is absolutely right. Indeed, in the US shale gas drilling takes place right in the centre of a number of towns, such as Fort Worth. There are very considerable concerns about that, precisely on the grounds she refers to, not because shale gas will kill us all but because of particular concerns about how the shale gas is extracted: what happens with the waste water; what happens with the operation of the shale gas facility itself; and indeed the arrangements in the US relating to mineral rights that cause that drilling to take place. That would not be the case in this country, so I would not for a moment suggest that we will get a rash of shale gas wells in the middle of town, because there is an entirely different mineral regime in the UK. Nevertheless, she makes an important point.
How would those 100,000-plus wells be built? Well, as I have mentioned, it would be on the basis of pairs of football ground-sized pads across the country, concentrated in particular areas, perhaps including my own area. Hampshire and Sussex would be one area where there would be a fairly large number of those wells, if that is the sort of ambition we wanted to achieve.
Dan Byles: I am not sure if the hon. Gentleman has seen the report by the Institute of Directors that was published two months ago, which did some modelling of what a UK shale gas industry could look like. The IOD concluded that potentially we could meet up to a third of UK peak gas demand by 2030 from 100 two-hectare sites across the country.
Dr Whitehead: Well, those are entirely different points. At a particular point we could meet a larger supply, but what I am talking about is the overall question of supply over a period of time that would be possible to underwrite as a result of that sort of level of shale gas production—two different points.
The additional point that needs to be borne in mind about shale gas wells is that they do not last very long. Research from the US demonstrates that the average life of a shale gas well is about seven years or so. That is because shale gas wells produce a lot of gas to start with, but they deplete very rapidly. So, after about seven
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years they are producing negligible amounts, even—as has happened in a number of instances—on the basis of refracking. Refracking of a well produces a little increase, but the well still dries over a fairly short period. Therefore, to maintain that sort of level of production over a longer period, one would need to redrill a number of those wells. That is the sort of scenario that we would set for ourselves if we were to introduce a level of shale gas production that would support the sort of intervention in the gas market that I have mentioned.
My second concern is this: would shale gas production actually reduce prices for everybody, if we went for it to that extent? The clear answer is no. The intervention of the shale gas itself would not reduce prices because of the way that gas is traded on the international markets, particularly in this country. There are three international markets for gas trading. Gas is not particularly transportable, except through vessels such as liquefied natural gas carriers, which make a marginal difference in terms of supply; gas is largely transported by pipelines. Gas is traded on the European market, the far east market and the north American market. The north American market has seen substantial price decreases because of the concentration of shale gas within that one particular market. We would need to have a similar amount of shale gas produced throughout Europe in order for the European traded gas market to come down significantly in price compared with what it is currently, notwithstanding LNG imports coming into the European market overall. So shale gas might make a marginal difference over a period of time, but probably not—for the reasons I have given—unless there were fundamental changes in gas trading.
David Mowat: I am trying to understand the point that the hon. Gentleman has just made. Is it that because there is not enough shale gas in Europe potentially, it will not have enough of an impact on the European gas price vis-à-vis what has happened in the US? Is that the point?
Dr Whitehead: If every country in Europe produced the same amount of shale gas that is being produced in the US, yes, that is possible, in terms of the trading in the European market, but that probably is not going to be the case. Therefore we have to look at the relevant prices of gas within the markets. It is a question of trading in a market, not a question of the gas being plugged into someone’s home and therefore creating a reduction in price there.
Dr Whitehead: I am sorry, but I cannot give way any more; I would lose the rest of my time.
What happens with those large numbers of wells in terms of the fracking process? That process involves the use of between 2 million and 7 million gallons of water, and 5,000 gallons of chemicals, per frack; whether we know what is in the chemicals or not, that is the sort of volume of chemicals needed. As has been said, that water cannot be injected into seams deeper than the fracking itself, as is the case in America, but would have to be disposed of by other means. Also, unless the
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fracking companies brought the water with them, water would have to be taken from the water table within the area where the fracking was taking place, which has implications for the integrity of the water tables in those particular parts of the country. That is an important but largely forgotten point.
The final thing that I want to say, given the short amount of time I have, is about the policy implications of going for a large amount of fracking. If we went for a large amount of fracking, as I have said we could perhaps supply—over a period—10% of overall UK gas supplies. If we went for a large programme of anaerobic digestion, we could provide 10% of the domestic gas supply. A farm-sized anaerobic digestion plant costs about £2 million to build—
Mr Lilley: What’s stopping them?
Dr Whitehead: The right hon. Member may well have asked a very valid question. As I was saying, such a plant produces about a third of the gas over a 20-year period that a fracking well would produce over 7.5 years, but anaerobic digestion plants will produce gas continuously because the cows that provide the stuff that produces the gas continue to produce the feedstock, as do we from our own waste and our food. Therefore, anaerobic digestion plants do not deplete. A long-term strategy for gas supply security might concern itself with anaerobic digestion and biogas, rather than going for a gas bonanza. We ought to look at all these factors when looking at the future of gas supply in this country.
2.58 pm
Dan Byles (North Warwickshire) (Con): I can confirm that I have no financial interests outside of this place whatsoever. I sit on the Energy and Climate Change Committee, I chair the all-party group on the environment and I also chair the all-party group on unconventional oil and gas. “Unconventional gas”—that is what we call shale gas, which is a bit of a misnomer, because it really is just gas. It is the same gas that we use to heat 83% of our homes and to generate 30% to 40% of our electricity.
Accessing gas from shale rock is not new. My right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) said that gas has been hydraulically fracked in the US since 1949, but he may not be aware that the first exploratory shale gas well drilled in the UK was in 1875, in Netherfield in the south of England. It was an academic activity at that time, but the first commercial shale gas wells in Europe were drilled in northern Spain in the 1950s. Hydraulic fracturing itself is not a new or an unknown process, as my right hon. Friend has already said.
I want there to be a calm debate about this subject, informed by the evidence. Sadly, there is too much rhetoric around the entire shale gas debate, often—it has to be said—on both sides of the debate. Whenever anybody uses the phrase “shale gas bonanza”, I cringe as well. My view is that the evidence to date shows that shale gas can be accessed safely, if operations are done to a high standard and with effective regulation. That is backed up by a growing library of research from reputable expert organisations, such as the Royal Society, the International Energy Agency, the Royal Academy of
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Engineering, and others. The weight of evidence so far shows that unconventional gas can be developed safely, with effective regulation.
Ultimately, this is not a debate about whether to use gas. It is important to state that, because sometimes this debate strays into a discussion about the gas strategy. This is a debate about where we get the gas we use from. Under the Department of Energy and Climate Change’s central forecast scenario, we will be using broadly the same amount of gas in 2030 that we do today. The trouble is that both the Institute of Mechanical Engineers and the Institute of Directors estimate that by 2030 we will be importing up to 80% of our gas, at a cost of some £15 billion a year. That gas will come from Norway and Qatar and in future, probably, from Russia. It will include liquefied natural gas that has to be liquefied, transported and re-gasified. I have no confidence that Russian gas is produced and transported to higher, or even the same, environmental standards as gas in the UK.
Graham Stringer: Will the hon. Gentleman accept that not only would that gas be expensive because it is being imported, but the price would be artificially forced up, because under the Government’s scenario it is being kept for back-up supplies and is therefore used inefficiently? Although the hon. Gentleman is right to say that that is the Government’s position, it would be better if gas were used as a main supply for energy.
Dan Byles: Although I said that we would be using broadly the same amount of gas, the hon. Gentleman is right; we will probably be using it in a different way, for back-up and peaking plant, which clearly would be less efficient—ceteris paribus—than using it for base load.
Dr Whitehead: Does the hon. Gentleman concur—I think that he already is concurring—that the notion of that supply might make a difference to our balance of payments, but because one would purchase those supplies through the European market, and could not do otherwise, the cost would be based on the prevailing price in that market at that time, not on an artificial price for the UK?
Dan Byles: I agree. I do not think that the hon. Gentleman could accuse me of saying that lower prices is the reason why we should do this. In fact, later on I will mention other reasons why this is useful for the UK economy. Actually, lower prices are not the be-all and end-all of why we should develop shale gas, because, of course, we are part of a European gas market.
In terms of importing LNG, the Committee on Climate Change said:
“Our recent assessment of lifecycle emissions showed that well regulated shale gas production within the UK could potentially have lower lifecycle emissions than imported liquefied natural gas.”
The IOD, in a comprehensive report published two months ago, estimated that a domestic UK shale gas industry could, by 2030, halve our import requirement and meet up to a third of peak UK gas demand. The key thing here is that, unlike imported gas, every pound’s worth of domestic gas that we produce generates tax revenue for the Government—for the nation, not the
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Government; I am not socialist—and jobs. The IOD estimates up to 74,000 direct, indirect and induced jobs across the country.
With lower imports and lower life-cycle emissions than LNG, tax revenues, jobs and inward investment, an argument does not have to be made about the price of gas to argue that developing a UK shale gas industry could bring tangible economic benefits to the country. A few days ago in this Chamber, we debated the need for those tangible economic benefits to be shared directly with the local community, where shale gas is likely to be developed, in the forms of jobs and infrastructure and the community benefit fund, as we discussed. That is right. Communities that host shale gas developments should benefit from what are, in effect, their own natural resources.
It is right—I agree with hon. Members who have said it today—that industry and Government need to do more work to explain to people many of the basic facts and processes of shale gas and hydraulic fracturing. It is true that people get concerned, particularly about uncertainty. I agree, again, with my right hon. Friend the Member for Hitchin and Harpenden, who said that we have heard some scary and inaccurate comments today, from Members of Parliament.
Barbara Keeley: The hon. Gentleman makes a valid point. This issue is developing in my constituency, and the companies are not helping themselves at all, because they constantly minimise everything, saying that there will be no disturbance, no traffic movement and that people will hardly even notice that this is there. I say that this is a large footprint industrial process, but they never use such terms themselves. It is about time we started to level with our communities.
Dan Byles: I agree. If companies are implying that there will be almost no impact whatever, they should look at that. I often make the point that this is an industrial process, although I am making a slightly different point when I say it. I am saying that this is not a scary process; it is simply an industrial process that should be managed like any others. In my experience of looking at new nuclear at Hinkley and at this, most people are often more concerned about the generic construction type blight—about truck movements, and so on—than about the intrinsic nature of a nuclear power station or shale gas.
I want briefly to mention a few points that have already been made. The Royal Society and the Royal Academy of Engineering were commissioned by the Government last year to investigate induced seismicity—earthquakes, for want of a better word—and they were clear in their findings: the intensity of the earthquakes caused or induced by hydraulic fracturing was lower than natural UK background seismic activity.
We heard that the public do not want it. I think the hon. Member for Brighton, Pavilion (Caroline Lucas) said that people do not want shale gas or fracking. Actually, only one organisation that I am aware of—Nottingham university—has been conducting regular background public opinion monitoring. Since 2010, it has monitored background public opinion on shale gas, approximately every quarter, using YouGov, with proper balanced samples. It has found that acceptance of shale gas is slowly rising and fears about it are slowly falling.
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Its most recent survey, with 2,200 respondents, done in the past month or so, found that levels of recognition are rising—more than 60% of people know what shale gas is when asked—and of those who can identify what it is, nearly 60%, although not quite, say that fracking should be allowed. The evidence is not clear that people are, on the whole, in aggregate, afraid of or concerned about fracking. I think people recognise it for what it is: that it is not particularly scary; that it needs to be managed properly; but that it could benefit the country.
Impact on water resources has been mentioned as well. I am not talking so much about fears about pollution of water, but about access to and quantities of water. Again, the Royal Society and the Royal Academy of Engineering assessed the impact of water use. They concluded:
“estimates indicate that the amount needed to operate a hydraulically fractured shale gas well for a decade may be equivalent to the amount needed to water a golf course for a month; the amount needed to run a 1,000 MW coal-fired power plant for 12 hours; and the amount lost to leaks in United Utilities’ region in north west England every hour”.
The idea that access to quantities of water is an issue is probably another myth that needs to be busted.
Dr Whitehead: Does the hon. Gentleman accept that the use of water would not be on a regular basis over 10 years, but would be intensive during the period of fracking, re-fracking and clearing up?
Dan Byles: The hon. Gentleman is right. It peaks and then trails off, but in that entire 10-year period, including the peak, it is one hour’s worth of lost water from United Utilities. I agree with him.
On the impact on climate change, I find that often people who oppose shale gas increasingly no longer refer to earthquakes and some other issues, because I think a lot of people understand now that that is not an issue. The most common issue being raised with me now is the one that the hon. Member for Brighton, Pavilion mentioned, in respect of bigger picture climate change issues, with people saying that fossil fuels should stay in the ground. There is a discussion to be had in that regard, but I still believe that the elephant in the room for climate change is coal. Some 600 GW of new, unabated coal-fired plants are estimated to be coming online globally by 2030. I am amazed at the effort being put into opposing gas by some people when they should be opposing coal.
I shall end by quoting the Committee on Climate Change, from its report published in May this year. It said:
“The overall picture, therefore, is one in which well regulated production of shale gas could have economic benefits to the UK, in a manner consistent with our emissions targets, while reducing our dependence on imported gas.”
Other hon. Members want to speak, so I will give them an extra 15 seconds.
Mr David Amess (in the Chair): Members will be pleased that the air conditioning has now been fixed. They will now feel better.
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3.9 pm
Graham Stringer (Blackley and Broughton) (Lab): I had not noticed that the air conditioning had changed.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas), whom I tend to either agree or disagree with 100%. Today I am afraid it is the second of those two positions.
There have been many excellent speeches on both sides, and I will try not to say what I was going to say, because that would mean repeating some of the points that have been made; instead, let me deal with some of the facts and issues that have come up.
One of the last points to be made was about water. While relatively little water is used, it has not been pointed out that there is, in most cases, a mile of rock between where the fracking takes place and the water table, so contamination is very unlikely.
On house prices, I was responsible, as chair of Manchester airport, for building the second runway there. At the bottom of it is a beautiful Cheshire village called Style. When the runway was being built, people claimed that house prices there would go down, but the only time prices were affected was during the campaign against the runway, when there were lots of signs up in the village. As soon as the campaign went away, house prices went up, even though the runway was taking very large planes. The fact is that house prices are related to economic activity, so my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) can reassure her constituents that house prices will not be brought down.
Barbara Keeley: It is important to tell my hon. Friend that I already have evidence that, because of these developments, people are planning to move out of the area, which I would not want to happen, while others have said they will not move into the area. This really is having an impact.
Graham Stringer: That is completely consistent with what I was saying—that the fear of the activity, rather than the activity itself, is the problem.
I want now to move on to the science and to speak as a scientist. I agree with virtually everything the right hon. Member for Hitchin and Harpenden (Mr Lilley) said, apart from when he completely accepted what the Intergovernmental Panel on Climate Change said. We must remember that it involves a political process, which lies on top of a number of scientific papers; its work is not necessarily put together by scientists themselves.
The hon. Member for Brighton, Pavilion could be accused of being unrealistically precise in her comments about what is likely to happen in the climate over the coming years, and I would make two simple points about the science. First, I have talked to most of the leading scientists on climate change in this country and in the United States, and there is no known way of distinguishing natural variations in the climate from impacts caused by carbon dioxide—nobody knows how to do that.
Secondly, the models that have been used to predict the increase in temperatures have all been wrong. In the Met Office, we have the biggest supercomputers in the world, which are great at back-projecting climate, but their projections of climate into the future have all been
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inaccurate. That is just an indication that there is something unknown about the science, which is not to say that carbon dioxide is not a greenhouse gas, because it clearly is, and it has been known as such for a long time. However, an artificial precision is being introduced into the debate, and it really should not be there. We do not, therefore, often talk about the science.
My next point is about the costs of all the different policies and the price that will result. An interesting report by Liberum Capital indicates the difference between the cost of the Government’s policies on replacing the sources of our energy and the cost of replacing like with like. It finds that there is a difference of more than £200 billion between the two, and that will come out somewhere in the price of gas to our constituents.
The Government’s energy policy is based on taking a long-term position on the price of gas and oil—fossil fuels. Essentially, they are betting the house, the country or hundreds of billions of pounds that the price of fossil fuel will continue to rise. If that happens, and if renewables are put in place, they are likely to win their bet—and it is a bet. They will have to find the capital to fund those renewable energy supplies, but given that prices of publicly quoted shares in the European renewables market have dropped below their level in 2004-05, that looks very unlikely. If the Government lose their bet, our constituents will pay more for their energy than they should.
David Mowat: I agree with the point the hon. Gentleman has just made about renewables and potential increases in the price of fossil fuels. Effectively, the Government’s strategy is to use renewables as a hedge against increased fossil fuel prices. That is not altogether unreasonable, is it?
Graham Stringer: It would not be if it was just a hedge and it was not artificially pushing the cost of gas and other energy supplies up by holding them in reserve. The hon. Gentleman is right: it is a hedge, but it is a very expensive hedge indeed.
There are two reasons for being against fracking, and the debate has been helpful in clarifying some of the facts. One—it is a completely reasonable to make this point on behalf of constituents—is that people worry when they hear that there is to be fracking in their area. It is therefore quite reasonable for them to ask for the good health and safety standards and good environmental standards that apply elsewhere in the country. However, it is not reasonable to push those standards to the point where the fracking does not happen. When the hon. Member for Brighton, Pavilion talks about the precautionary principle, that is really a way of trying to stop everything. She really should read the Science and Technology Committee report from the previous Session on the precautionary principle, which is often quoted, but it is often used to prevent anything from happening.
Let me give an example. One often has to use the best available evidence to do something, and the reason we are not getting protected areas in the sea at the moment is that the Government are looking for more and more scientific evidence when we should be using the scientific evidence available. If the hon. Lady wants to stop fracking by using the precautionary principle, she is likely to do that, but I think we have to look at the scientific evidence we have and apply high environmental standards.
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Finally, I want to put the Government’s energy policy, which is not coherent, in the context of what is happening on emissions worldwide. Much of the Government’s policy is based on reducing emissions, in the belief that that will bring down global warming and slow down or stop climate change. However, the policy is failing, and emissions are going up. With emissions, one has to deal with imported goods, which are often created using industrial processes that create more carbon dioxide than processes here do. If we push up the price of energy here, we will export production to China, India and other places and increase the amount of carbon dioxide. That is a deindustrialisation policy, and I hope that, by exploiting shale gas in a safe and environmentally responsible way, we can start reindustrialising this country and creating the 72,000 jobs or more that it has been predicted will come from exploiting shale gas.
3.19 pm
David Mowat (Warrington South) (Con): I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on obtaining the debate and on her spirited contribution. Unlike the hon. Member for Blackley and Broughton (Graham Stringer), I can only recall being in debates in which I disagreed more or less 100% with her, but I may have missed some of the other debates.
I want to make a few points about the hon. Lady’s spirited contribution. One of the phrases that I have heard used several times is that we are “betting the farm” by moving ahead with shale gas. I have not heard anyone in the Government or otherwise saying that we should do that. We do not want to bet the farm on it. We want a mixed supply of energy for the future, and gas will rightly be part of that. She mentioned Sam Laidlaw who now runs Centrica and who was previously at Conoco and Amerada Hess. Just to put her mind at rest, he is an ex-Etonian, just as she is from Malvern, but I went to a state school in the midlands, and she can take my speech in that way.
I want to pick up on four points. The hon. Lady talked about fossil fuel subsidy. Apparently tax relief —VAT or other forms of tax relief—would be a subsidy. There is a difference between giving a technology money to make it work—I am not necessarily against doing that for some renewables—and just taxing it a little less, and we need to recognise that. I think that she also said—she must intervene if I am wrong—that fossil fuels were six times more expensive than renewables.
Caroline Lucas: They are subsidised.
David Mowat: I apologise; it is probably my fault. Just to be clear, the price of solar is something upwards of 45 times the price of electricity produced from gas at the moment.
As for the climate change issues around shale gas, or unconventional gas, I would take hon. Members’ concerns about the impact of climate change more seriously—I am inclined to think that we should address it—if they took a different attitude to nuclear power, the technology that is far and away the most likely, worldwide, to make a difference at scale to carbon emissions.
I want to consider whether shale gas will affect the UK economy. The hon. Member for Southampton, Test (Dr Whitehead) made an interesting speech about
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the necessary volume of wells. I was not aware of what he said and found his numbers hard to believe, but if they are true, the point is interesting and important. Let us be clear: shale gas is already having a massive influence on the UK economy, because right now one of our major industrial competitors, the US, has energy prices and therefore electricity prices that are a quarter of ours. It has feedstock prices as an input to the global gas industry and the petrochemicals industry that are a quarter of ours. That is already making a difference at the margins. Some industries are already deciding not to invest in the UK and to bring petrochemicals and chemicals back to the US—indeed, out of China, let alone Europe. Shale gas is already having a massive impact on the UK economy, and it is nonsense to pretend that anything we say in this debate, or that the Government do, will make any difference to that.
Graham Stringer: One of the points that has not been made is that there is a slight assumption that shale gas is just methane. It is actually ethane and propane as well, and those can be used as feedstock to our chemical industry, lowering chemical prices and making the industry more competitive.
David Mowat: I thank the hon. Gentleman for that point. He is completely right. Indeed, it would be more accurate for us to talk about unconventional gas than about shale gas, because coal gas is also part of what we are discussing.
Clearly, there is already an impact on the UK economy. I used to do a lot of work on the correlation between energy prices and GDP. They are closely correlated, and particularly so if we are trying to rebalance the economy back towards manufacturing, chemicals, aluminium, steel and chlorine production, and all that goes with that. We cannot do that if we have differentially higher energy prices than our competitors. I refer mainly to the US, although there is increasing concern that the rest of Europe is taking a different path from the UK on carbon taxes, and so on. It is right to let shale gas go ahead and let the market define prices and how things will work.
In the US, the gas price has fallen from $12 per million British thermal units to about $3. The cost of importing liquefied natural gas, if its export is allowed, is about $5. That implies a cap on European gas prices if there were a free market; and the hon. Member for Southampton, Test is right to say that there are three gas markets currently. Such a move would imply a cap of about $8 or $9, which is considerably lower than now, although I accept that for strategic reasons the US Government might not agree to export any gas at all.
My hon. Friend the Member for North Warwickshire (Dan Byles) made an excellent point about climate change. The issue about climate change and gas emissions is how we get coal out of the system. The UK still produces 70% of its energy from coal and oil and something like 3% or 4% from renewables, taking into account transport as well as electricity production. The UK has lower carbon emissions per head and per unit of GDP than nearly every country in Europe, in spite of the fact that we have less in the way of renewables. The reason is that we burn less coal than most countries in
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Europe. Incredibly, apparently aided and abetted by members of the Green party in Germany, a programme has kicked off there to build 10 or 12 unabated coal-fired power stations.
David Mowat: They will burn, as my hon. Friend says, a dirty coal. It is extraordinary that that is happening right now in the EU, and even more extraordinary that there appear to be members of the Green party in that country’s Government while it is happening—the same Green party that purports to care about carbon emissions and climate change.
Caroline Lucas: Germany is on course to meet its emissions reduction target far more effectively than we are. There is a short-term gap, admittedly, because it got rid of nuclear so fast. No one wants more coal, but it is a short-term thing as Germany gets its renewables even further up to speed. It is massively ahead of us on renewables and will get its emissions down faster than we will.
David Mowat: The hon. Lady makes an important point, if it were true, but the fact is that Germany has 25% higher carbon emissions per unit of GDP than the UK, and the UK is decelerating more quickly than Germany. To pretend anything else is not right.
I have some more time—I thank the hon. Lady for that—so I want to wrap up by talking a little about local considerations. When I first became interested in the subject, I could see that Lancashire—my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) made a good speech on behalf of his constituents today—was heavily affected. However, the maps of shale gas have since come out in more detail, and there is more in Cheshire, around Manchester and Warrington. Of course it is right that the work should not go ahead without adherence to the highest environmental standards and that the Government should not give permits without being satisfied that fracking will not considerably increase the earthquake cost and all that goes with it. There should be no compromise on that.
In an intervention, I mentioned the fact that Aberdeen contains three constituencies with the lowest unemployment in the country. That is not a coincidence; it is because the sort of economic activity that we are talking about brings jobs. I want to say on behalf of the people of Warrington that we welcome IGas and Cuadrilla. If they wonder where they should have their UK headquarters and if they pick up the text of this debate, I say to Mr Egan and Mr Austin from those companies, we are open for business in Warrington. We would like them to have their UK head offices in our town. It is only an hour and 40 minutes from London. They are very welcome, and we should go ahead as fast as possible.
3.29 pm
Kerry McCarthy (Bristol East) (Lab): As always, it is a pleasure to serve under your chairmanship, Mr Amess. I want to focus on the area in Somerset that borders my constituency. I note that the hon. Member for Wells (Tessa Munt) intends to speak next, so I hope that I do not steal too much of her material.
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So far, four petroleum exploration and development licences have been granted in an area extending from Keynsham, just south of Bristol, down to Pilton and Evercreech—east of Glastonbury—and covering towns such as Marksbury, just south-west of Bath. The area is significantly covered by green belt and includes the Mendip hills—an area of outstanding natural beauty—and there are water catchments for several areas, including Bristol. Bath’s hot springs, which are of course a world heritage site, could be affected. The unique combination of features in the region is said to result from the
“specific geological circumstances of the Mendip Carboniferous strata.”
I understand that UK Methane, which has been granted three of the licences in partnership with Eden Energy, has confirmed that it has been working on plans in the Ston Easton area and around Compton Martin, both within the Chew valley, for its next test drilling sites. UK Methane intends to apply for permission for full production at a site beside the Hicks Gate roundabout on the Bristol ring road in Keynsham towards the end of 2013. Again, that is very close to the border of my constituency. I should say that the areas have been identified for coal bed methane extraction, rather than for fracking, although coal bed methane extraction commonly comes under the same heading and the process can involve fracking.
I thank Louise from Frack Free Somerset for her time this week in setting out the organisation’s concerns. The umbrella organisation brings together many groups, from families to farmers and from the Mendip Campaign to Protect Rural England to Bristol Rising Tide. Residents are particularly concerned about the impact of possible soil, water and air pollution on tourism and agriculture, and there are also concerns about light and noise pollution, especially as some wells could be flaring off gas 24/7. There will be noise from rigs operating 24 hours a day and roads will become blocked with lorries carrying chemicals and waste.
Another key concern is the potential for water contamination, which could also affect people living outside the licence area. The reservoir water supply in the Chew valley needs to be protected, and the impact on the hot springs that supply Bath’s spa water is still unknown. The British Geological Survey’s report to Bath and North East Somerset council concluded that hydraulic fracturing within the carboniferous rocks would
“pose an undefinable risk to the springs.”
The written ministerial statement issued by the Secretary of State for Energy and Climate Change on 13 December 2012 acknowledged instances of water contamination outlined in reports by US regulators and review bodies, which he said confirmed
“the need for the industry to consistently apply good practice, and the need for proper scrutiny and oversight of the industry to ensure that this is in fact done.”—[Official Report, 13 December 2012; Vol. 555, c. 47WS.]
The Environment Agency is of course responsible for providing that scrutiny, but there is real concern that it does not have the staff to monitor wells effectively.
Residents in the area who are opposed to the plans are particularly concerned by evidence emerging from coal bed extraction in south-west Queensland, from gas leaking into local rivers to perceived heath problems
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such as nosebleeds and skin rashes. The Health Protection Agency does not appear to have published its review of the public health impact of shale gas. I hope that the Minister agrees that potential health risks should be assessed before exploration is allowed to go ahead.
Bristol Greenpeace has raised with me its concern about UK Methane, which was described by a local resident, Laura Corfield, in a recent article in The Guardian by John Harris as
“a company of two guys in a broom cupboard”.
It is difficult to confirm UK Methane’s financial position, but John Harris tracked down its head office to an industrial estate in Bridgend with no listed telephone number. I understand that DECC has set out criteria that need to be met for a company to become a licensee, including a level of financial capacity to show that it is able to meet the actual costs that may be reasonably expected to arise.
How does awarding three licences to UK Methane square with DECC’s guidance? Is it presumed that UK Methane will ultimately be trading its licences to a larger company in the same way as with Eden Energy, with which it was partnered and that has now sold its stake to Shale Energy, a UK firm, for a large amount? That does not appear to be consistent with DECC’s view that licences are not regarded as
“mere tradable assets, and we expect companies to buy licence interests with a view to exploiting them—not merely to sell them on.”
There are specific issues with the area’s geology, including the prevalence of coal mine shafts in Bristol and Somerset, which makes the land more unstable and potentially more prone to both subsidence and tremors. A recent technical report by independent geologists Integrale Ltd concludes:
“Unlike much of North America and Australia where ‘simpler’ rock strata occur, the Carboniferous Coal Measures of the Bristol-Bath Basin form the most tectonically complex area of the UK, ie the rocks are highly fractured, folded, contorted and faulted... So gasfield exploration and exploitation in this district will be commercially and technically ‘high risk’”.
There is a point about whether companies need public liability insurance, given the risks. I understand that, apart from employers’ liability insurance, there is no statutory requirement for insurance.
The hon. Member for South Thanet (Laura Sandys), who is Parliamentary Private Secretary to the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), said that planning applications for shale gas
“make onshore wind farms look like a walk in the park.”—[Official Report, 6 September 2012; Vol. 549, c. 146WH.]
She was referring to the public opposition that is likely to be encountered.
Mr Lilley: Does the hon. Lady ever feel that she has a duty to her constituents not merely to pander to every anti-development pressure group and to give credence to every scare story, but to give some balanced account of what, for example, the royal societies, the Royal Academy of Engineering and the British Geological Survey have said? Two million such wells have been drilled in the States without untoward effect.
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Kerry McCarthy: Perhaps the right hon. Gentleman should speak to his Conservative colleagues who control Bath and North East Somerset council, which recently voted unanimously on a motion objecting to unconventional gas exploration and extraction in Somerset.
There is a concern that the Government’s scheme to provide financial benefits to local communities does not seem to cover coal bed methane extraction unless fracking is used. If he is actually listening to me at the moment, will the Minister confirm that that is the case? Will he ensure that the planning application process provides meaningful opportunities for affected communities to express their concerns? As shown by all the concerns that I have outlined, there is a great deal of uncertainty and unhappiness in the area.
Barbara Keeley: My hon. Friend is making an excellent representation of her constituents’ concerns, and she is the third Member to do something similar in this debate. It is rather remiss of the Minister and Government Members to spend their time chuntering and shouting, as they did to me. It does not bode well for such debates when that goes on when we are doing our job representing our constituents.
Kerry McCarthy: I entirely agree with my hon. Friend. The patronising responses from some Government Members, with their references to living in la-la land, are unseemly.
My final point is on the Government’s link to shale gas companies. Last year, The Observer found that two key executives of the energy trading giant Vitol—its chief executive officer, Ian Taylor, gave more than £500,000 to the Tories and was a guest at one of the Prime Minister’s cosy kitchen suppers—are personal shareholders in a company bringing fracking and CBM to the UK.
Just this weekend, an article by Mark Leftly in The Independent on Sunday detailed a host of senior Government advisers who have financial interests or close ties to fracking companies, from Lord Browne—the chairman of Cuadrilla, who is also lead non-executive across the Government—to Sam Laidlaw, the lead non-executive at the Department for Transport, who is also chief executive of Centrica, which has just bought a one-quarter stake in Cuadrilla’s licence in Lancashire.
Of course there is the conflict of interest between Lynton Crosby’s lobbying firm—which represents the Australian Petroleum Production and Exploration Association, which has been aggressively campaigning for shale gas—and the advice that he gives to the Tory party as its election strategist. When I raised the influence of the shale gas lobby with the Government in January, the Minister failed to respond. I hope that he will do better in answering my concerns today.
3.38 pm
Tessa Munt (Wells) (LD): Thank you for your generosity in allowing me to contribute to this debate, Mr Amess. I apologise for having to be absent for a short while.
I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) first for bringing this debate to the House and secondly for setting out some of the points that I was going to make myself.