This is a very good topic for a debate. Professor Muller’s report goes straight to the heart of an issue that is central to the environmental debate and it needs more attention. The issue is harm reduction and choosing the lesser of two evils rather than being frightened by a small risk, thereby allowing a larger risk to happen, or allowing the best to be the enemy of the good, as Voltaire put it. For example, the environmental opponents of genetic modification have, in effect, left us using more pesticides than other countries. That has been the effect of that campaign. The environmental opponents of nuclear power have left us using more coal than other countries, as well as particularly in Germany, Japan and other places.

The question is: what would happen if we do not develop shale gas? What would be the environmental impact of not developing shale gas? I ask the Minister to press her officials to take this approach to some of the questions; namely, to weigh up not just the risks of fracking but the risks of not fracking. In this case, as Professor Muller makes clear in the paper for the Centre for Policy Studies, it would mean both more air pollution, with damaging effects on people’s health, and more carbon dioxide emissions. There is no question about that. We have several years of experience and it is clear that the environmental benefits of shale gas development that were thought about a few years ago have been drastically underestimated, whereas the environmental risks have been greatly exaggerated.

As I have mentioned, the benefits include carbon dioxide reduction. As a result of the shale gas revolution, America’s energy-related carbon dioxide emissions are now back to 1994 levels and, in per capita terms, are back to 1964 levels. That is an extraordinary change, which is much faster than in any other country on the planet. We have mentioned urban air pollution. There is also an enormous opportunity now for natural gas vehicles, which are much cheaper to run, in the United States. Many commercial fleets are turning to natural gas vehicles, which can reduce urban air pollution. Not just the displacement of coal but the displacement of diesel is a great opportunity as well.

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However, there is an enormous other potential benefit from shale gas: land-sparing; that is, using less land to produce energy. As we know, renewables, as a way of trying to do without carbon dioxide emissions, need an awful lot of land. To put this in perspective, if we were to use wind power alone to try to not just reduce but prevent an increase in global carbon dioxide emissions, we would have to build a wind farm the size of the British Isles every year. That is an extraordinary number.

It is not just land but the wildlife that goes with that land. There is a recent estimate that 82,000 birds of prey are killed every year by wind turbines in the United States. If you scale that back to the size of the UK wind industry, that means 16,000 birds of prey in this country. I suspect that the number is lower than that because we do not have migration corridors of the kind they have in the USA. There are also 150,000 bats. These are some of the creatures that could survive if we decided to stop building wind turbines and started working on shale gas instead. I mentioned in another debate this afternoon the possibility that we would not have to cut down forests, and all the pollution that goes with that.

As for the environmental risks and problems of fracking, I have found over the past few years that it is like chopping the heads off a hydra: every time you meet one objection, people come up with another. We have heard things like radioactivity might be coming out of fracked wells; that has now been buried. Most people now accept that the earthquakes are extremely small; much smaller, incidentally, than the earthquakes you get from hydropower, for example. As for water contamination, the myth has been well buried now that there has been serious aquifer contamination as a result of hydraulic fracturing, and if you have seen “GasLand”, you should also make a big effort to watch “FrackNation”, the film that answers it and puts it in perspective. The methane leakage question is very interesting. A recent study from the University of Texas puts the number at about 0.4%, which is extremely low. We should remember that coal mines leak more methane than that, so using and transporting coal actually generates a lot more methane and anyway methane levels in the atmosphere are not actually rising very fast; they are rising slower than predicted by the IPCC over the past two decades.

As for the issue of using chemicals in hydraulic fracturing, we put 99.5% water and sand down the hole, with a few kitchen sink chemicals, extremely diluted. This is put into rocks that are absolutely riddled with organic toxic chemicals. That is why we are going there: to get those toxic chemicals out. So it is a bit ridiculous to worry about that aspect of things.

Above all, it is worth bearing in mind that affordable energy is itself good for the environment. As McKinsey pointed out, America has had probably $250 billion of benefit from the shale gas revolution in the past three years. Think what you can spend $250 billion on—think how much environmental benefit you can buy with that.

6.53 pm

Baroness Jones of Moulsecoomb (GP): My Lords, I speak as a politician but also as a scientist, albeit in a slightly more esoteric area of science. I congratulate

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the noble Lord, Lord Borwick, on securing this debate. It has not done anything for my blood pressure. I am so constrained by time that I cannot answer all the points that have been made but I will cover a few, I hope.

First, on pollution, the European Commission and US research have identified significant pollution risks from leaking wells, including the contamination of drinking water by methane, heavy metals, radioactive elements and carcinogenic chemicals. There is also air pollution and noise pollution. Wildlife loss is a threat, although if we want to save more birds we should ban cats rather than wind farms. PM2.5 is a very nasty component of our air here in London and major cities in Britain. If we want to cut it significantly, we should cut traffic. I would be glad to hear noble Lords’ ideas on that. It is also hard to regulate away human error. It is incredibly difficult to make anything completely safe.

On costs, instead of investing in energy efficiency to reduce our bills, our Government are giving 50% tax giveaways to an industry forecast to have rising prices for decades. The Secretary of State for Energy, Ed Davey, warns that it would be really expensive if we were over reliant on gas. Furthermore, UK fracking is likely to be much more expensive than the US variety. Despite what Ministers claim, the experts at Deutsche Bank, Chatham House and Ofgem all predict that shale gas extraction will not bring down fuel bills, so fracking will not help the 1.5 million children growing up in cold homes in the UK.

There would also be lost opportunities. By undermining investment in offshore wind power, tax giveaways for shale gas will suppress development of clean renewable energy. That is exactly what we do not need. A reckless dash for shale gas could prevent clean electricity being supplied to 7.8 million homes and cost more than 40,000 clean energy jobs. That is really too much to bear.

Finally, on climate incompatibility, shale gas is likely to be burnt in addition to coal. Shale gas drilling and combustion are completely incompatible with UK climate change commitments. Replacing conventional fossil gas with shale gas to generate electricity would increase greenhouse gas emissions by up to 11%. A mixture of methane, a greenhouse gas much more potent than CO2, will further contribute to the dangerous climate change impacts of fracking and, finally, recent research suggests that replacing coal with gas may be worse for climate change in the medium term. So this environmentalist is not convinced.

6.56 pm

Baroness Worthington (Lab): My Lords, what an interesting debate we have had. I start by addressing the question put to us: should every serious environmentalist now favour fracking? I have read the report and found it very interesting, but I was left with an overriding impression that it was an excellent report in arguing against coal but not as persuasive in arguing in favour of fracking. In fact, I take issue with the title because, really, this was about gas, not about fracking and, as anyone who has studied the subject will know, fracking is as much about oil extraction as it is about

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gas. Certainly in the US it has led to a big increase in oil production. That has had interesting geopolitical consequences—I do not doubt that—but it is not an environmental move forward if you are starting to argue that oil is somehow a benign, low-carbon substance that we should move towards. So it is partial in its coverage of the issue of fracking by omitting to reference the fact that it is as much about oil as it is about gas.

I find myself in an interesting position whereby I support what the noble Earl, Lord Caithness, has said. I am very glad that he made the point that there is no way in which you can present shale gas or fracking as a panacea. You can point to the fact that it could have great benefits but you cannot say that it is the answer to everything. When I hear the noble Lord, Lord Lawson, speak with such passion for this subject—almost as much passion as he has for arguing that climate change is not real and that renewables are not worth it—I always wonder why that is. It must, I suppose, be a personal interest in the technology or an excitement about it. However, it is nice that we are having a debate in which the framing of this is that shale gas is needed to reduce carbon dioxide. Clearly, that is true; gas can have a significant bridging effect in helping us to tackle climate change.

Lord Lawson of Blaby: I am still not quite clear what the position is of the Labour Opposition on the development of resources of shale gas.

Baroness Worthington: If the noble Lord had given me a moment, I was going to come on to that. We have a very clear position: it has a role to play but we need a seasoned, mature and rational debate about that role. There is no point in overhyping it and claiming that it is going to be this great, wondrous change in how we use energy in the UK. We can all look to the US and say what an amazing experience they have had over there. When I was in Washington recently, I read an excellent book called The Frackers—I have been wracking my brain but I cannot remember the author—which I recommend to everyone. It is an inside account of how the fracking industry grew up in the US. I was left feeling admiration for its energy and enthusiasm, the amount of risk it was prepared to take and how many setbacks it went through. That these wildcat prospectors brought about a massive change in the US is absolutely true.

Do I think it could be replicated in the UK or Europe? Absolutely not. I am afraid that the conditions here could not be more different to those that led to the fracking revolution in the US. One can argue that they have helped to develop new technologies, which is absolutely right—horizontal drilling and fracturing are now new tools in the extractive industry’s toolbox—but will they be able to deploy them in the UK at scale and have the kind of impact that they have had in the US? I doubt it. There are very different factors: the way in which the US treats land rights, and it being an isolated market, meant that prices could plunge rapidly there, which they will not in Europe. We are connected to the global gas network and we have prices set for us on the global market in a completely different way to the US. I recommend reading the book, because it brings a dose of realism to the whole debate.

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As to whether environmentalists could be persuaded to endorse fracking, it has a potential role to play. The key is for the industry to be upfront about why people are potentially opposed to it. It is often not about the pollution, the water or taps that might catch fire, but more to do with local objections. Again I find it ironic that we have a nation which cares deeply about what happens in its backyard. That is why onshore wind has been held back and why in the past we have seen great opposition to incineration in local communities. There will be the same reaction to fracking, I am afraid, and unless the industry is upfront and honest about that, it will be missing the point.

Perhaps this reference will not work very well in the House of Lords, but I heard recently that Bez from the Happy Mondays is now standing as an anti-fracking candidate. That says something about what popular public opinion thinks about this technology. Whoever was responsible for its PR has done a disastrous job; it is not the Government who are holding it back. The Government have given fracking tax exemptions and changed local planning to try to encourage it, so there will be money flowing. I am not saying it is bribery but it is encouragement. I still think there is going to be a great deal of unhappiness and opposition to this, and we have not even started. We have one or two test wells that have been sunk yet here we are talking about this as if it is a huge contributor of change in the UK. I severely doubt that.

As the noble Earl, Lord Caithness, pointed out, population density is important. In answer to the challenge from the noble Lord, Lord Lawson, in those areas of the US where population density is higher, there is great opposition. In the north-eastern states, where there is a huge reserve, some states have imposed an outright ban; others have taken it very slowly. This is because the population there are capable of standing up and objecting to it. They are largely wealthy, middle-class citizens who do not want to see their local environment disrupted. The noble Lord, Lord Borwick, said something that catches the point of this. Although these rigs may be temporary, an awful lot of them are needed because they are temporary. The fact that the industry has to keep disrupting people and moving on will mean that this will be slow to develop, if it develops at all.

Another thing that quite a lot of people will cite as a reason for their opposition is that the industry has been slow to acknowledge that it is still a fossil fuel, particularly if it is oil based. Even if it is cleaner gas, it is still a fossil fuel. The industry needs to be much more upfront about how this new influx of gas will be compatible with our climate change targets. That will have to be through embracing carbon capture and storage. I would love to see the shale gas industry acknowledge that its future will lie with carbon capture and storage and that all of the engineering expertise we have for extracting things out of the ground can be redeployed to putting it back underground so that we can make it safe. If that were part of the narrative, then we would see much less opposition than at the moment.

We have to be very cautious. This is not going to be fast. It could be 10 or 20 years before we really know. I am sure it is true that the UK could play an important

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leading role in the EU in establishing rules and regulations, but I hope that that is not the case. I hope that Poland moves ahead with this because, let us face it, Poland needs gas more than we do. I also hope it happens in China because, as the report rightly says, China has a huge demand for coal and we need to do everything we can to wean it off that polluting source of energy, not only in terms of carbon emissions but also in terms of human health.

However, the report fails to point out that China will develop nuclear power in a way that we in Europe can scarcely imagine. There are already 20 nuclear reactors in operation and 28 more are under construction. There will be 150 gigawatts of nuclear power in China by 2030. That is where the revolution will come from and I hope that that will happen alongside all the other things that China is doing.

7.05 pm

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con): My Lords, I thank my noble friend Lord Borwick for the measured and informed way in which he introduced the debate. He made a clear and eloquent case for the importance of shale gas development, including on why those who combat man-made climate change should support it.

Gas is a critical part of our energy mix. Our projections, and those of National Grid and others, show that we are likely to use almost as much gas in 2030 as we do today. Half the gas we use is for domestic heating and cooking and a quarter for industrial and commercial uses. These will be difficult to substitute.

I am glad that there was general acceptance, except by the noble Baroness, Lady Jones, that shale gas will play an important part in the contribution of gas to our energy needs. We all recognise that there is a long way to travel in order to be in receipt of those benefits. However, the debate has once again demonstrated that we need to have these debates. We need informed debates and to bust the myths that keep being generating around this issue. It was my noble friend Lord Ridley who said that you bust one myth and another crops up.

We import half of the gas we consume, and by the middle of the next decade, without shale gas production, it could be more than 80% as conventional gas production declines. The UK has invested in facilities to make sure that gas is easy to import, but we cannot be complacent. There is a compelling energy security case for shale gas development. There are economic benefits, as suggested by my noble friend Lord Borwick. The Institute of Directors published a study last year in which it estimated that a UK shale gas industry could support more than 70,000 jobs at peak production, with £3.7 billion of annual investment and significant tax revenues. The institute forecasts that production levels could reach a level of more than a third of the gas we consume today.

We support exploration activity to see what the actual commercial viability of UK shale is, but we are clear that we will allow only activity that is safe, sustainable and properly regulated. The UK has a strong regulatory system that provides a comprehensive

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and fit-for-purpose regime for exploratory activities, and we need continuously to improve it, as my noble friend Lord Caithness rightly said. The UK has more than 50 years’ experience of regulating the onshore oil and gas industry to draw on. This is supported by an authoritative review of the scientific and engineering evidence on shale gas extraction conducted by the Royal Academy of Engineering and the Royal Society in 2012. This concluded that,

“the health, safety and environmental risks associated with hydraulic fracturing … as a means to extract shale gas can be managed effectively in the UK as long as operational best practices are implemented and enforced through regulation”.

My department’s Office of Unconventional Gas and Oil will work closely with regulators, such as the Environment Agency in England, the Health and Safety Executive and industry to ensure that regulation is robust enough to safeguard public safety and protect the environment while imposing no unnecessary burdens of operators. We have also put in place appropriate measures to manage seismic risk. Of course, we would not proceed with shale development if it conflicted with our climate objectives.

A recent report by my department’s chief scientific adviser, David MacKay, and Dr Timothy Stone concluded that the carbon footprint of UK-produced shale gas would be likely to be significantly less than coal and lower than imported gas. The report made a number of recommendations further to mitigate any emissions from shale gas operations and the Secretary of State will respond positively to that report shortly.

I appreciate that there may be concerns about the impact on local areas, and it would be helpful briefly to explore them. A site will be smaller than a cricket pitch, and although it might produce shale gas for around 20 years, there will be certain periods when most of the activity takes place—for example, during set-up or in preparation for fracture. These operations should have broadly similar impacts on health, local amenities and traffic movements to those from existing onshore gas and oil extraction methods. Each application’s local impact is carefully considered via the local planning system. The industry has made a commitment to work with local communities to minimise the impact of shale gas and oil operations wherever possible and is researching methods and technologies that will reduce traffic movements to and from the site.

I am sure noble Lords will agree that it is important that local communities benefit from hosting shale gas developments. That is why we welcomed the package of benefits industry has announced. At exploration stage, £100,000 in community benefits will be provided per well site where fracking takes place, and 1% of revenues at production stage will be paid out to communities. Industry estimates that that could be worth between £2.5 million and £10 million for a typical producing pad. Each year, operators will have to publish evidence of how they have met their commitments. The benefits will be reviewed as the industry develops, and operators will consult further with communities. This is a new sector developing. My department is working hard to help people to understand the facts about shale gas, particularly with local communities.

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A few questions were raised so I will quickly address them in the time I have left. My noble friend Lord Lawson said that we need to reduce regulation on shale. The Environment Agency has—

Lord Lawson of Blaby: I never said anything of the sort, as my noble friend should recall. I said we need rigorous regulation, but it must be clear and as speedy as the rigour allows.

Baroness Verma: I apologise for misrepresenting what my noble friend said—absolutely. The Environment Agency is developing a single application form for permits. In 2014, the Environment Agency will aim to reduce the time for low-risk activity from 13 weeks to approximately two weeks. I hope that that addresses the point raised by my noble friend. Of course, it is not about reducing regulation; we do not want to see regulation reduced, but we also do not want to see barriers where they do not need to be in place.

My noble friend Lord Teverson mentioned CCS projects. As my noble friend is aware, we were able to go forward with two of them at Peterhead and White Rose—the Drax project. The Government have committed £1 billion to CCS—a commitment from this Government to make sure that we are not lacking in ambition for CCS. My noble friend also mentioned dependency on Russian gas. I reassure him that only a small percentage of our gas comes from Russia. By and large we are better connected, with 50% being our own gas and a larger proportion of what is left coming from Norway.

Lord Teverson: I entirely realise that and was talking about a broader European perspective. Actually, we import a lot of Russian coal.

Baroness Verma: I think my noble friend will agree that that is a different debate.

My noble friend Lord Caithness asked whether shale gas was more leniently regulated at European level. I reassure him that shale gas is regulated in the same way as any other energy sector. A recent proposal in the European Parliament to require environmental impact assessments in all shale projects did not proceed. We welcomed this because we do not want minor impact drilling such as taking core samples impeded.

The noble Baroness, Lady Jones, said that fracking would cause water contamination and that there was evidence to prove it. We have seen no evidence. The Environment Agency is one of the most respected regulators globally, as are many of our regulators, and we would be careful to consider the advice that we were given by our regulators before we proceeded to do anything that would allow any kind of contamination. Hydraulic fracturing will take place more than 1,000 metres below groundwater level, where there are impermeable layers of rock which will stop the gas and fracking fluids escaping into the water.

The noble Baroness also touched on tackling cold homes and fuel poverty. The Government have done a lot to respond to those challenges and measures are in place to address the issues that she has raised. There is much more to be done but this Government have been

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very proactive about addressing the issues where the people who need help most and quickest are getting that help.

The noble Baroness, Lady Worthington, said that shale gas cannot be seen as a panacea. The Government have never suggested that shale gas is a panacea. We have said that it is important that we explore the possibilities that shale gas will bring because we need energy security. If shale gas is explored and exploited, it will become an important part of the energy mix. We all know that gas and oil will still play a large part in our wider energy mix.

I am not quite sure from the noble Baroness’s remarks that she understood her own party’s position on fracking. However, it would be unhelpful to close

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down the debate on the real benefits that shale gas can bring. I recommend that we have further informed debates because this debate has explored a number of arguments in this critical policy area. I look forward to those debates, but let us bring them forward as debates on fact, not on ideology. We need to reduce our dependency on external energy sources and ensure that the people of the UK have affordable energy and energy security but understand that the sector is properly regulated, can deliver all those things and can contribute towards our economic growth.

This has been an interesting debate. I am grateful to my noble friend Lord Borwick for raising it. I suspect that we will have many more debates on the issue.

Committee adjourned at 7.18 pm.