House of Lords - The Economic Impact on UK Energy Policy of Shale Gas and Oil

The Economic Impact on UK Energy Policy of Shale Gas and Oil - Economic Affairs Committee Contents

Chapter 6: Shale gas and climate change

108. The UK is committed to achieving a number of climate change objectives. National[194] and local organisations[195] expressed to us concerns that greenhouse gas emissions from extraction and use of the UK's shale gas might not be compatible with these objectives. This chapter examines the issues.

Greenhouse gas emissions of shale gas

CARBON FOOTPRINT COMPARED TO CONVENTIONAL GAS AND LNG

109. In December 2012 DECC commissioned a study (the 'MacKay' report) into the greenhouse gas emissions associated with shale gas extraction and use. This was published in September 2013.[196] The MacKay report found that the carbon footprint[197] of shale gas extraction and use is comparable to gas extracted from conventional sources and lower than the carbon footprint of liquefied natural gas (LNG).[198] E.ON told us that the "emissions when burning [shale gas or oil] are no different to any other form of gas or oil … transport emissions would be lower when using domestic sources of gas and oil rather than LNG/oil imports."[199]

110. The MacKay report found that shale gas would produce a "significantly lower" carbon footprint when used for electricity generation than coal.[200] Professor Muller wrote that for the "same energy produced, carbon (the main component of coal) produces twice the carbon dioxide that does methane (the main component of natural gas)".[201]

FUGITIVE METHANE

111. Methane itself is also greenhouse gas. The UK Energy Research Centre note that "methane … can leak from wellheads during the extraction process and during transportation."[202] Methane escaping in this way is commonly referred to as 'fugitive methane'.

LEVEL OF FUGITIVE METHANE EMISSIONS REQUIRED TO NEGATE BENEFITS OF SHALE GAS OVER COAL

112. WWF, Greenpeace and Friends of the Earth told us that research from Princeton University suggested that for shale gas to maintain a lower carbon footprint than coal, cumulative fugitive methane emissions should not exceed 3.2 per cent of the gas produced.[203] Professor Muller disagreed and told us that the 3.2 per cent figure was "misinformation … based on a simple calculation you can do that is mistaken … 15 per cent to 18 per cent has to leak before it is as bad as coal."[204] He referred us to his explanatory article in the New York Times.[205]

Levels of fugitive methane emissions during shale gas operations

113. Estimates of cumulative fugitive methane emissions from shale gas production range from 0.4 per cent to 9 per cent of the gas produced.[206] WWF, Greenpeace and Friends of the Earth drew attention to studies from the US which suggest that fugitive emissions are "significantly higher" than those reported by the industry,[207] citing research from Cornell University[208] and the US National Oceanic and Atmospheric Administration (NOAA)[209] in support. The Frack Free Balcombe Residents Association (FFBRA) also referred to these studies as "powerful evidence" that "threatened" the argument that shale gas could be used as a transitional fuel to a low carbon future.[210] They added that this US evidence was "completely ignored" by the MacKay report.[211]

114. The MacKay report acknowledges that "the current evidence base originates mainly from the USA"[212] and analysed the Cornell and NOAA studies. It noted that the calculations made in the Cornell study had been "strongly criticised" by other experts, many of whom regard its findings as an outlier.[213] Professor MacKay's report also noted that the authors of the NOAA study had acknowledged the difficulties of attributing their results to an exact source and had pointed out that new regulations were now in place in the area assessed by the study.[214] The MacKay report also referred to a more detailed study being undertaken by the University of Texas (this study was published after the MacKay report was issued). Professor Muller told us this Texas study had measured emissions at 190 wells in the US and the average level of fugitive emissions was found to be low.[215]

115. Professor MacKay told us that large fugitive emissions would be "extremely unlikely to occur in the UK because of the much stronger regulation",[216] for example, unlike in the US, the venting of methane would not be permitted in the UK except in an emergency. Mr Egan said he thought it was recognised in the US that the largest source of methane emissions was flowback water stored in open pits on the sites.[217] He said that this practice would not happen in the UK as flowback water would be held in a closed tank and taken to an offsite treatment plant.[218] Dr Grayling told us that the Environment Agency "would not allow waste fracking fluids to be stored in open pits or lagoons."[219]

116. Professor MacKay told us that his report's estimate of the carbon emissions of shale gas took account of estimates for shale gas emissions based on US studies.[220] His report warns that "actual emissions will vary according to circumstances and that we must be cautious when extrapolating results."[221] Professor Robert Mair, University of Cambridge, told us that "the jury is still out" on the precise quantities of methane emissions during operations and that careful measurements of methane escape needed to be made.[222] Professor MacKay agreed: "We think it is essential that monitoring and baselining should take place before the substantial production of shale gas in any location."[223] The MacKay report recommended a "detailed scientific programme of methane measurement" that should be independent and managed jointly between Government and industry.[224] Sir David King told us that the Environmental Protection Agency in the US is planning an extensive programme of monitoring methane emissions.[225]

117. We find persuasive Professor MacKay's conclusion that the carbon footprint of shale gas, including fugitive methane emissions, is similar to that of conventional gas production and substantially less than coal. We endorse the recommendation in his report for a monitoring programme, jointly managed by the Government and the industry, to measure the level of fugitive methane when shale gas extraction begins in the UK.

Compatibility with UK climate change objectives

UK'S CURRENT COMMITMENTS

118. The Climate Change Act 2008 requires that "the net UK carbon account for the year 2050 is at least 80% lower than the 1990 baseline."[226] To ensure that regular progress is made towards this target, the Act established a system of five-yearly carbon budgets.[227] The Committee on Climate Change was set up by the Act to advise the Government on the carbon budgets. Four budgets have been announced to date, the latest covering the period 2023 to 2027. The Committee on Climate Change has also recommended extensive decarbonisation of power generation by 2030 to ensure the UK is on track to meet the 2050 target.[228] The Government did not include this target in the Energy Act 2013 and Parliament voted against proposed amendments to introduce it.[229]

COMPATIBILITY OF SHALE GAS DEVELOPMENT WITH CURRENT COMMITMENTS

119. Mr Molho of WWF-UK told us that increased reliance on gas infrastructure "risks creating a breach of our carbon budgets."[230] He described a "false choice between either burning lots of shale gas or burning lots of coal, when fundamentally we have another possibility ahead of us … which is to make a rapid move towards an efficient and low-carbon energy system."[231] The UK Energy Research Centre (UKERC) wrote that "significant amounts of unabated gas-fired generation in the UK power generation mix in the 2020s and beyond would make it very difficult to comply with the UK's legally binding carbon targets."[232]

120. Professor Muller told us that environmental protection activists opposed shale gas development because "if we have a cheap alternative then there will be less of an incentive to develop [renewables]."[233] His answer was that, "if we do not develop natural gas then it will be coal that will come in."[234] Mr Cronin said that "the facts are that we will need low-carbon forms of energy for the future, whether that is wind or nuclear. They are quite expensive at the moment, and we need to have a transition. The transition has to be gas".[235] The renewables industry should not fear shale gas as it "will give the opportunity for a transition to enable renewable energy to become cost-competitive."[236]

121. The Minister for Energy told us that "new gas is consistent with the decarbonisation of the power sector and it will help us to meet some of these targets."[237] The Government have set aside £1 billion for commercial development of carbon capture and storage.[238] Mr Figueira said that "there will be a continued need for gas in the decarbonisation efforts … it is potentially a destination fuel if we can get [carbon capture and storage] working".[239]

122. Chapter 2 describes the role of gas in the UK energy's mix.[240] The recent report of the Committee on Climate Change that recommended extensive decarbonisation of power generation by 2030 acknowledged a continuing role for gas: "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."[241]

PROBLEM OF "LOCK-IN"

123. The Tyndall Centre for Climate Change feared that a "golden age" of gas might "turn out to be a gilded cage, locking the UK into a high carbon future."[242] Professor Dieter Helm disagreed; "lock-in" was a problem especially associated with coal, "the difference between gas stations, coal stations, nuclear stations … is that gas stations are very cheap to build relative to other technologies and they can be built very quickly. Therefore they can be depreciated very fast, so you get your economic return back pretty early on in the cycle".[243] Mr Rogers said that the "very nature of shale gas militates against [lock-in] … the wells decline very quickly … the degree of lock-in is not really an issue to be too concerned about."[244]

124. We consider that development of shale gas in the UK is compatible with the UK's commitments to reduce greenhouse gas emissions. There is an acknowledged role for gas in the UK's energy mix as it moves towards fulfilment of its commitments. The carbon footprint of home-produced shale gas would be smaller than that of imported LNG (which needs to be processed and transported). Substitution of home produced shale gas for imported LNG should therefore make a positive contribution to achievement of the UK's commitments on climate change.

194 WWF, Greenpeace and Friends of the Earth. Back

195 Residents Action on Fylde Fracking (RAFF) and Frack Free Balcombe Residents Association (FFBRA). Back

196 MacKay, D. and Stone, T. (2013) Potential Greenhouse Gas Emissions Associated with Shale Gas Extraction and Use, DECC, 9 September. Back

197 Ibid. The carbon footprint includes the carbon dioxide emissions associated with the combustion of shale gas and the methane that can be released into the atmosphere as a result of shale gas extraction (known as 'fugitive methane'). Back

198 Ibid. The report found that the carbon footprint of shale gas extraction and use is likely to be in the range 200-253 g CO2e per kWh of chemical energy, which makes shale gas's overall carbon footprint comparable to gas extracted from conventional sources (199-207 g CO2e/kWh(th)), and lower than the carbon footprint of Liquefied Natural Gas (233-270g CO2e/kWh(th)). Back

199 E.ON. Back

200 MacKay, D. and Stone, T. (2013), Op. Cit. The report found that when shale gas is used for electricity generation, its carbon footprint is likely to be in the range 423-535 g CO2e/kWh(e), compared to 837-1130g CO2e/kWh(e) for coal. Back

201 Professor Richard Muller. Back

202 UK Energy Research Centre. Back

203 WWF, Greenpeace and Friends of the Earth. Back

204 Q 48. Back

205 Published in a New York Times blog which is available at: http://dotearth.blogs.nytimes.com/2013/08/01/two-climate-analysts-fault-gas-leaks-but-not-as-a-big-warming-threat/?_php=true&_type=blogs&_r=0. In the New York Times post, Professor Muller refers to an explanatory paper on his own website which can be found here: http://static.berkeleyearth.org/memos/fugitive-methane-and-greenhouse-warming.pdf Back