So we now know what the Conservative Party has in mind for fracking if they get re-elected in June. Or at least we know what they would like us to believe they will do, as a manifesto promises from the Conservative Party haven’t always been reliable.
Here is the passage from the manifesto dealing with shale gas:
Natural gas from shale
The discovery and extraction of shale gas in the United States has been a revolution. Gas prices have fallen, driving growth in the American economy and pushing down prices for consumers. The US has become less reliant on imported foreign energy and is more secure as a result. And because shale is cleaner than coal, it can also help reduce carbon emissions. We believe that shale energy has the potential to do the same thing in Britain, and could play a crucial role in rebalancing our economy.
We will therefore develop the shale industry in Britain. We will only be able to do so if we maintain public confidence in the process, if we uphold our rigorous environmental protections, and if we ensure the proceeds of the wealth generated by shale energy are shared with the communities affected.
We will legislate to change planning law for shale applications. Non-fracking drilling will be treated as permitted development, expert planning functions will be established to support local councils, and, when necessary, major shale planning decisions will be made the responsibility of the National Planning Regime.
We will set up a new Shale Environmental Regulator, which will assume the relevant functions of the Health and Safety Executive, the Environment Agency and the Department for Business, Energy and Industrial Strategy. This will provide clear governance and accountability, become a source of expertise, and allow decisions to be made fairly but swiftly.
Finally, we will change the proposed Shale Wealth Fund so a greater percentage of the tax revenues from shale gas directly benefit the communities that host the extraction sites. Where communities decide that it is right for them, we will allow payments to be made directly to local people themselves. A significant share of the remaining tax revenues will be invested for the benefit of the country at large.
So let’s look at what they say and see what it means shall we? The introductory paragraph paints a rosy picture of the US shale gas industry. Whilst is is indisputable that increased volume of natural gas in the USA has exerted downward pressure on prices, the narrative above totally ignores the huge influence that OPEC countries strategy over the last five years has had on oil and gas prices. It is generally accepted that, because the European gas market functions as a discrete entity that over here there will be no significant downward pressure on wholesale or consumer gas prices as a result of fracking. Even Cuadrilla themselves admit as much. Their ex-Corporate Development manager, Mark Linder, told Greenpeace in 2013 – “We’ve done an analysis and it’s a very small…at the most it’s a very small percentage…basically insignificant”. Lord Browne, ex chairman of Cuadrilla said broadly the same “”We are part of a well-connected European gas market and, unless it is a gigantic amount of gas, it is not going to have material impact on price“. Pinning an energy strategy strategy on the hope that, against all the evidence, UK produced shale gas will lower prices looks rather desperate, but that is clearly what the Conservatives are trying to do here.
Then we have the greenwash – “because shale is cleaner than coal, it can also help reduce carbon emissions“. It is indeed generally agreed that burning gas is cleaner than burning coal, but reducing carbon emissions is only part of the story as far as climate change mitigation is concerned. As has been frequently pointed out, the issue of fugitive methane emissions in the process of shale gas extraction and production means that shale gas’s much vaunted “cleaner” climate change profile may be very questionable indeed. The Conservatives’ apparent concern for this issue would be more credible if there were a single reference to “Carbon Capture and Storage” (CCS) somewhere in the document. Perhaps, though, this would have been a little embarrassing as they broke a previous manifesto pledge when they cancelled their £1bn competition for Carbon Capture and Storage (CCS) technology just six months before it was due to be awarded back in 2015.
So, based on the very shaky premises that UK shale gas production will result in US style price reductions, and that it will help to mitigate climate change in the absence of CCS, the Conservatives “will therefore develop the shale industry in Britain“. Note the the word “therefore“. Their reasoning is as clear as it is fallacious.
They admit next that there are severe challenges in achieving their goals
“We will only be able to do so if we maintain public confidence in the process, if we uphold our rigorous environmental protections, and if we ensure the proceeds of the wealth generated by shale energy are shared with the communities affected.”
Those difficulties are rather greater than might be assumed from the way the text is written. They are not in a position to “maintain” public confidence as it doesn’t exist at present. According to the government’s own polling half as many people again oppose fracking as support it. Equally they are not in a position to “uphold” rigorous environmental protections which don’t yet exist. Of the 10 recommendations made by the Royal Society and Royal Academy of Engineering only 1 (the seismic traffic light regulation) has been brought forward so far. They need to create the rigorous environmental protections before they can uphold them. As for sharing the proceeds of the wealth generated by shale energy, we know from the consultation in late 2016 that “The government is proposing a contribution of 10% of all shale gas tax revenues collected to be distributed under the Shale Wealth Fund“. However the same document tells us that “tax revenues are driven by profitability; the profitability of any site is dependent on fuel prices, operator costs and site-specific geology“. They still haven’t explained how, with UK extraction costs forecast to be between 46p and 102p a therm and futures prices for natural gas being consistently below 46p a therm in the foreseeable future, the industry will make any profit to pay any tax on. Without those profits there can and will be no “proceeds of the wealth generated by shale energy“.
Notwithstanding the logical fallacies above, the Conservatives now appear to be prepared to trample over their previous commitments to “localism” and are clearly intent on ensuring that no planning process can stand in the way of the shale gas juggernaut that they wish to unleash onto the North of England. Initial (pre-fracking) development applications will be waved through and local councils will have “expert planning functions” from central government standing behind them to ensure that they make the “right” decisions. It should also be noted that as the government was clever enough to redefine “associated hydraulic fracturing” based on the volumes of fluid used, certain hydraulic fracturing developments would now be classified as “non-fracking drilling” and so would be “treated as permitted development”. This policy appears to have more holes in it than a Swiss cheese!
In case this isn’t enough “major shale planning decisions will be made the responsibility of the National Planning Regime” which clearly implies that they will be treated as “nationally significant infrastructure projects“. This has two main implications – firstly the likelihood of such an application being turned down, say on the grounds of traffic disturbance or safety as at Roseacre Wood are very slim indeed, and secondly it means that the time-scales for determination are much more strictly defined, so no extended enquiries or appeals would be expected.
We will of course still be allowed to write in with our comments regarding the applications, but even the thousands of objections received for the applications submitted so far start to look futile, given the clear intention to override local impacts and force this industry onto unwilling communities by removing decision making from local councils.
The promise of a new Shale Environmental Regulator must have come as something of an embarrassment to our local MP here in the Fylde, Mark Menzies, as he has been congratulating himself since 2013 on having got us “a body to oversee the industry’s various regulators” (He was, of course, referring to OUGO.)
Even Mr Menzies seems to have realised by 2015 that OUGO was no real sort of independent regulatory body as he asked the following question in parliament
“To ask the Secretary of State for Energy and Climate Change, if he will bring forward legislative proposals to establish an independent (our emphasis) panel to oversee the regulation of the shale gas industry.”
The then Energy Minister, Matthew Hancock, refused to consider this stating: “The UK already has a strong regulatory system which provides a comprehensive regime for exploratory activities”. However, here we are with the Conservative party now belatedly accepting that the current regulatory regime isn’t fit for purpose (or maybe that should be “quick enough at passing decisions”). You should note that the rather important word “independent” used by Mr Menzies above does not feature anywhere in the description of this putative new regulator, so this looks as though it is yet another attempt to streamline regulation and promote the industry.
And finally, like a dog returning to its own vomit we see the Conservatives just can’t stop themselves appealing, for the second time in just this short passage, to the greed of potential voters by dangling the prospect of a bigger juicier bribe, to be paid directly to those that want it. (Although it should be noted that they are reserving the right to make the “desolate North” suffer but preserve a share of any benefits for “the country at large”). Of course a “greater percentage” of zero is still equal to zero, so, as we have pointed out above, unless they can work out how shale gas can be extracted at a profit in the UK then this is the emptiest of empty promises.
So all in all this is a prospectus for a disaster for large swathes of the North of England, built on false logic, bad economics and naked self-interest. If you live anywhere near the Bowland Shale then a vote for the Conservatives is a vote to suffer all of the potential impacts that have been identified with shale gas extraction, whilst the alleged “benefits” being dangled in front of us look very suspect and tawdry indeed.
Of course one good thing is that, as shale gas extraction will rather obviously make local housing less attractive and therefore less valuable, local people’s contribution towards the proposed “dementia tax” will be a little lower than it otherwise might have been. Every cloud as they say ….