2 Implications for our climate change
obligations
Viability
11. The Energy and Climate Change Committee's report
on Shale Gas in 2011 concluded that "Shale gas resources
in the UK could be considerable—particularly offshore—but
are unlikely to be a 'game changer' to the same extent as they
have been in the US, where the shale gas revolution has led to
a reduction in natural gas prices."[18]
Tom Burke of E3G told us that:
If you do not go to scale, it is very hard to
see how the costs of any gas produced could begin to compete ...
The public acceptability will be a very strong issue for investors,
as you move from exploration to scale, to question whether or
not the prospects and the possible benefits are actually deliverable.[19]
12. In March 2014, E3G dismissed claims that shale
gas could reduce energy prices in Europe: "Many of these
[US] prevailing conditions do not exist in the EU and, as a result,
EU production costs are expected to be 150%-250% higher per unit
of gas extracted."[20]
Grantham Research Institute told us that:
Domestic shale gas reserves are likely to be
too modest to affect gas market prices in the UK, which may remain
largely driven by uncertain wholesale prices charged by foreign
suppliers. A decrease in gas prices could have positive consequences
for the UK economy, but could also affect the profitability of
fracking, resulting in lower production.[21]
Similarly, Professor Paul Stevens believed that:
There is the myth that if the UK were to have
a shale gas revolution this would bring down the domestic price
of gas in the UK. I find that argument extremely weak, not least
because we are connected to the continent. Generally speaking
… gas prices on the continent tend to be higher than here,
so if you have an increase in gas supply from shale it is going
to go to the continent rather than here.[22]
… It is very unlikely that a shale gas revolution
in the UK—assuming we can even have one—is going to
bring gas prices down.[23]
Security of supply
13. Professor Paul Stevens concluded in December
2013 that:
There are two ways in which energy security—defined
as physical access to energy sources—can be enhanced by
shale gas, at least in theory. First, it represents a diversification
of gas supplies away from offshore UK production and imports by
pipeline or LNG. … Second, shale gas represents a domestic
source of energy.[24]
The Committee on Climate Change noted in 2013 that,
although shale gas "should not mean a dash for gas"
(paragraph 19), it:
Can displace [Liquid Natural Gas] imports, improving
the UK's energy sovereignty. Due to the decline in North Sea gas
production, the UK is a net importer of gas, by pipeline (e.g.
from Norway) and LNG (e.g. from Qatar)—UK shale gas production
would reduce our dependence on imports and help to meet the UK's
continued gas demand, for example in industry and for heat in
buildings, even as we reduce consumption by improving energy efficiency
and switching to low-carbon technologies.[25]
14. But many of those who provided evidence to our
inquiry doubted the security of supply potential of UK fracking.
Grantham Research Institute told us that "reserves could,
at best, make up for the decreasing size of conventional domestic
resources as reservoirs are depleting. But shale gas is unlikely
to expand domestic gas availability beyond current levels, let
alone render the UK energy-independent and free from the need
to import natural gas."[26]
The UK Energy Research Centre called promises of greater energy
security from UK shale gas "hype" and "lacking
in evidence."[27]
Climate change impacts
15. In their July 2014 progress report, the Adaptation
Sub-Committee of the Committee on Climate Change stated that "The
UK Government, together with others around the world, considers
rises beyond two degrees to bring increasing risk of dangerous
and irreversible impacts. By the end of the century, a 3.2°C
to 5.4°C global rise above the baseline can be expected based
on continuing emissions growth, with further warming into the
next century."[28]
The Climate Change Act's carbon budgets regime has set a framework
for emissions policy since 2008. Between 2008 and 2012 the UK
reduced its emissions by 22.5% against a 1990 baseline set by
the Kyoto protocol (against a target of 12.5%). UK emissions rose
by 3.5% in 2012,[29]
but in 2013 fell by 2%.[30]
In 2013, 5.2% of our energy was generated from renewables,[31]
towards an EU target for 2020 of 15%. The EU has now set emissions
reduction targets for the period to 2030,[32]
pending a wider international UNFCCC agreement in Paris in 2015.
16. The first carbon budget (for 2008-12) under the
Climate Change Act was met, substantially because of the economic
slow-down after 2008, but the prospects for later budget periods
are uncertain.[33] As
we reported in our October 2013 Progress on carbon budgets
report, there had been a risk to our longer term emissions reduction
because of prolonged uncertainty over low-carbon investment caused
by the prospect of a review of the Fourth carbon budget (for 2023-27)—announced
in 2011 and undertaken in 2014.[34]
We criticised the Government's reluctance to set a power sector
decarbonisation target for 2030 in the Energy Act 2014.[35]
In our report on Green Finance we identified a significant
gap in low-carbon investment, with levels less than half the £20
billion a year required to meet decarbonisation targets.[36]
We said that the Government's decision in July 2014 not to adjust
the Fourth carbon budget[37]
would bring greater confidence about the UK's future emissions
reduction performance "provided … that the Government
soon identifies the additional emissions reduction policies and
programmes that will be needed to deliver against that budget."[38]
We might have added another proviso, that additional fossil fuel
sources were not encouraged.
17. A DECC commissioned report by Prof David MacKay
(former DECC chief scientific adviser) and Dr Timothy Stone in
2013 found that the carbon footprint of shale gas extraction and
use was comparable to that from gas extracted from conventional
sources, but lower than the carbon footprint of coal.[39]
The Secretary of State for Energy and Climate Change said at the
time that:
UK shale gas can be developed sensibly and safely,
protecting the local environment, with the right regulation. And
we can meet our wider climate change targets at the same time,
with the right policies in place. Gas, as the cleanest fossil
fuel, is part of the answer to climate change, as a bridge in
our transition to a green future, especially in our move away
from coal. Gas will buy us the time we need over the coming decades
to get enough low carbon technology up and running so we can power
the country and keep cutting emissions.[40]
18. Whether shale gas is "part of the answer
to climate change", as the Secretary of State put it, depends
on the key question articulated by Professor Paul Stevens: "What
is it going to substitute for? Is it going to substitute for coal
or is it going to substitute for renewables?"[41]
He told us:
If it replaces coal this might be regarded as
a good thing, although it depends on what assumptions you make
about fugitive methane emissions there. On the other hand, if
it starts to replace renewables that is bad news.[42]
19. The Committee on Climate Change concluded that
"Shale gas lifecycle emissions could be lower than those
of imported LNG … and much lower than coal. … But it
should not mean a 'dash for gas' in the power sector. Expanded
use of gas for power generation is not needed to drive coal from
the system, as most of the UK's coal plants are already due to
close under EU air quality [Large Combustion Plant Directive]
regulations."[43]
In 2011, Tyndall Centre had concluded that:
There is little to suggest that shale gas will
play a key role as a transition fuel in the move to a low carbon
economy … The need for rapid decarbonisation further questions
any role that shale gas could play as a transitional fuel as it
is yet to be exploited commercially outside the US. In addition,
it is important to stress that shale gas would only be a low-carbon
fuel source if allied with, as yet unproven, carbon capture and
storage technologies.[44]
20. The Chartered Institution of Water and Environmental
Management believed that:
Shale gas, like other forms of gas, cannot be
regarded as a low-carbon fuel source. Pursuing a more carbon based
fuel strategy will make it more difficult to reach our climate
change commitments and potentially our renewable energy targets
… Gas will continue to play a part in our energy mix, especially
for its role in heating, in the medium term, but measures to minimise
lifecycle emissions will be needed.[45]
Grantham Research Institute believed that shale gas
could have a higher carbon footprint than the production of natural
gas from conventional sources,[46]
but that the "main issue is not whether fracking would be
compatible with the UK carbon budgets (to the extent that its
potential may be modest, and emissions comparable to conventional
gas), but rather whether the overall UK policy concerning gas—including
conventional, unconventional and imported resources—is consistent
with them."[47]
21. Professor Paul Stevens told us it would take
10 to 15 years "before there is any significant impact"
from any potential shale gas extraction.[48]
Whether shale gas could be a "bridging" energy source
is not dependent on the level of emissions in 2025, 2030 or any
other year, but rather its cumulative contribution over a number
of years. The carbon budgets regime is founded on that cumulative
approach. Dr John Broderick from the Tyndall Centre emphasised
that our concern should be whether "we would be adding to
the total burden that we place on the atmosphere and on the climate
system".[49] He
told us that:
Cumulative greenhouse gas emissions largely determine
the extent of climate change so the timescales of changes in the
energy system, and the quantities of emissions during this period
of change, matter a great deal. Any meaningful claim to gas being
a 'transition fuel' must relate the time period of transition
to the cumulative emissions released along the way and therefore
the likelihood of dangerous climate change arising.[50]
22. Timing is an important factor. The carbon budget
a decade from now—when fracking might be significant—will
be tighter. Dr Broderick explained how this would limit the scope
for shale gas:
Consider the claim that the Bowland Shale contains
sufficient gas to meet our current demand for gas for up to 51
years on the basis of 10% recovery rate. This amount could not
be accommodated in the [Committee on Climate Change's] Interim
budget when deductions are made for non-CO2 emissions
from agriculture. In the UK, it is unlikely we would have commercial
production of this scale (~80bcm p.a.) before 2025 even with favourable
geology. The budget available from this date is equivalent to
3% to 4% of the central [British Geological Survey] gas-in-place
estimate for Bowland shale.[51]
[The] advised emissions reductions pathways from
the Committee on Climate Change … is what matters—not
the ultimate endpoint—the total quantity of emissions up
to that point.[52]
Greenpeace believed that:
Gas extracted in the UK won't displace other
gas that's already been earmarked for extraction—it will
just add to fossil fuels already being burnt, which we can't afford
to do … A mature shale gas industry producing gas for domestic
use would push the UK's carbon budgets to breaking point.[53]
23. Any pressure on carbon budgets from shale gas
extraction will be exacerbated if that coincides with a squeeze
on renewable energy. Professor Paul Stevens concluded in 2013
that:
There is a serious danger that UK consumers,
growing increasingly concerned about their domestic energy bills,
may press for shale gas to substitute for renewables which they
see (probably incorrectly) as being responsible for these higher
energy bills. This would be bad news for carbon reduction targets
if it had an impact on the drive for renewables.[54]
UK Green MEPs argued that shale gas is not needed
and will not reduce carbon emissions, but distract from commitments
to renewable energy.[55]
Grantham Research Institute raised the prospect that shale gas
extraction would have to be stopped at a later stage:
To alleviate concerns about the lock in of gas-based
infrastructures, the Government would need to credibly signal
to the private sector that gas (without CCS) will be not subject
to a favourable regulatory environment in the medium term. The
private sector would then invest in gas capital assets (fields,
power plants etc.) on the basis that they could make an economic
return over the coming 15-year period, but no longer.[56]
24. A recent report by Christophe McGlade and Paul
Ekins of University College London identified the types of energy
reserves which could not be burned, and their regional location,
to keep global temperature rise to two degrees.[57]
It suggested that 6% of Europe's gas reserve is unburnable, including
75% of its unconventional gas resources.[58]
Our witnesses highlighted that that analysis did not take into
account the impact of a binding limit on emissions, which could
increase the proportions that would have to remain in the ground.[59]
What is clear, however, is that the prospect of a 'carbon bubble',
which we examined most recently in our Green Finance report,[60]
would be increased by fracking.
25. Even without shale gas extraction, the Infrastructure
Bill's provision for a strategy to maximise oil and gas extraction
from UK reserves (paragraph 7)—a "potentially dangerous
addition to a piece of legislation" Lord Smith believed[61]—will
make it more difficult to decarbonise our energy sector. As Dr
John Broderick put it, "it is counterproductive to be going
looking for more fossil fuel reserves when we already know that
we have to leave the majority of our existing fossil fuels underground".[62]
As some of our witnesses highlighted, further development of fossil
fuel energy in the UK will dilute our authority in the UN climate
negotiations leading up to the Paris conference at the end of
this year.[63]
26. Any large scale extraction of shale gas in
the UK is likely to be at least 10-15 years away. It is also unlikely
to be able to compete against the extensive renewable energy sector
we should have by 2025-30 unless developed at a significant scale.
By that time, it is likely that unabated coal-fired power generation
will have been phased out to meet EU emissions directives, so
fracking will not substitute for (more carbon-intensive) coal.
Continually tightening carbon budgets under the Climate Change
Act will have significantly curtailed our scope for fossil fuel
energy, and as a consequence only a very small fraction of the
possible shale gas deposits will be burnable.
27. A moratorium on the extraction of unconventional
gas through fracking is needed to avoid the UK's carbon budgets
being breached in the 2020s and beyond, and the international
credibility of the UK in tackling climate change being critically
weakened — already a prospect if the provisions in the Infrastructure
Bill aimed at maximising North Sea oil extraction are passed.
28. The Infrastructure Bill should be amended
to explicitly bar fracking of shale gas. This could be done through
an Amendment to Clause 37, to qualify the provision in the Bill
which seeks to introduce a strategy to maximise the economic extraction
of 'petroleum' (which includes natural gas) reserves, so that
the "principal objective [of the strategy] is not the objective
of maximising the economic recovery of UK petroleum but ensuring
that fossil fuel emissions are limited to the carbon budgets advised
by the Committee on Climate Change and introducing a moratorium
on the extraction of unconventional gas through fracking in order
to reduce the risk of carbon budgets being breached."
18 Energy & Climate Change Committee, Fifth Report
of Session 2010-12, Shale gas, HC 798, Summary Back
19
Q6 Back
20
E3G, Shale gas: four myths and a truth, March 2014 Back
21
Grantham Research Institute (FRA0009)
para 6 Back
22
Q10 Back
23
Q11 Back
24
Prof Paul Stevens, Shale Gas in the United Kingdom, Chatham House,
December 2013 Back
25
Committee on Climate Change website, A role for shale gas in a low-carbon economy?
(September 2013) Back
26
Grantham Research Institute (FRA0009) para 5 Back
27
Ministers' shale gas 'hype' attacked, BBC website, 12 November
2014 Back
28
Adaptation Sub-Committee, Managing climate risks to well-being and the economy
(July 2014), page 15 Back
29
Environmental Audit Committee, Fifth Report of Session 2013-14,
Progress on carbon budgets, HC 60, page 3 Back
30
Committee on Climate Change, Meeting carbon budgets (July
2014), page 55 Back
31
Office for National Statistics, UK energy in brief 2014 (July
2014), p31 Back
32
European Council, Conclusions on 2030 Climate and Energy Policy Framework
(October 2014) Back
33
Environmental Audit Committee, Fifth Report of Session 2013-14,
Progress on carbon budgets, HC 60, paras 22, 24 Back
34
Environmental Audit Committee, Fifth Report of Session 2013-14,
Progress on carbon budgets, HC 60, para 36 Back
35
Environmental Audit Committee, Fifth Report of Session 2013-14,
Progress on carbon budgets, HC 60; Ninth Report of Session 2013-14,
Energy subsidies, HC61 Back
36
Environmental Audit Committee, Twelfth Report of Session 2013-14,
Green Finance, HC 191 Back
37
HC Deb, 22 July 2014, col 115WS Back
38
Committee on Climate Change, Meeting carbon budgets (July
2014), page 25 Back
39
DECC, Potential Greenhouse Gas Emissions Associated with Shale Gas Extraction and Use,
September 2013 Back
40
DECC, 'The Myths and Realities of Shale Gas Exploration', 9 September
2013 Back
41
Q9 Back
42
Q3 Back
43
Committee on Climate Change website, A role for shale gas in a low-carbon economy?
(September 2013); Q11 Back
44
Tyndall Centre for Climate Change Research, Shale gas: a provisional assessment of climate change and environmental impacts,
January 2011 Back
45
CIWEM (FRA0006) para 25 Back
46
Grantham Research Institute (FRA0009), para 7 Back
47
Grantham Research Institute (FRA0009) para 9 Back
48
Q30 Back
49
Q4 Back
50
Dr John Broderick (FRA0075) Back
51
Dr John Broderick (FRA0075); Qq 11, 20 Back
52
Qq11, 12 Back
53
Greenpeace (FRA0050) Back
54
Prof Paul Stevens, Shale Gas in the United Kingdom, Chatham House,
December 2013 Back
55
UK Green MEPs (FRA0014) Back
56
Grantham Research Institute (FRA0009), para 13 Back
57
McGlade, C & Ekins, P., The geographical distribution of fossil fuels unused when limiting global warming to 2 °C,
January 2015, published in Nature Back
58
The Carbon Brief, 'Blog,' accessed 21 January 2015 Back
59
Q18 [John Broderick] Back
60
Environmental Audit Committee, Twelfth Report of Session 2013-14,
Green Finance, HC 191 Back
61
Q137 Back
62
Q17 Back
63
Q27 [Tom Burke] Back
|
