WWF Climate & Energy Blog

This blog post was first published on www.utilityweek.co.uk

Regardless of one’s views on fracking, the shale gas hype should not distract the UK away from its decarbonisation goals says Nick Molho, head of climate and energy policy at WWF-UK.

This week’s announcements on fracking, including David Cameron’s pledge to “go all out on shale gas”, triggered yet another shale gas frenzy in the UK media. Yet, despite all the hype and the announcement of better benefits for communities hosting shale gas projects, nothing has fundamentally changed when it comes to the likely impacts of shale gas on the UK’s energy market.

While the UK may have some important reserves of shale gas according to the British Geological Survey, evidence from the likes of Bloomberg, Ernst & Young,Deutsche Bank and the International Energy Agencysuggest that it is unlikely that these reserves could be extracted fast enough, cheaply enough and in enough volume to materially offset the UK’s dependence on gas imports or materially reduce the price of gas in the UK.

What’s more, even under its optimistic ‘Golden Rules’ scenario for the deployment of shale gas in Europe, the International Energy Agency still predicts an increase in both the price of gas and the level of net gas imports in Europe out to 2035, an issue that is relevant as the UK is an integral part of the European gas market.

From an environmental perspective, while gas has a transitional role to play in the UK’s energy system, its role will have to diminish over the next 20 years if the UK is to remain on a cost-effective pathway to meeting its long-term emission reduction goals under the Climate Change Act.

Regardless of one’s views on the actual process of fracking, the current shale gas hype should therefore not be used as a pretext for increasing the UK’s dependence on gas. Doing so would risk prolonging the UK’s gas import dependency at prices that are unlikely to be cheap and making it harder for the UK to cost-effectively meet its emission reduction goals over time.

Instead, now is a critical time, both economically and in terms of international climate policy, for the UK to show it is still committed to rapidly decarbonising its energy system. Economically speaking, it is those countries that make an early transition towards an efficient and low-carbon energy system that will ultimately be the most competitive in a world where carbon becomes a gradually more expensive commodity and future fossil fuel prices are uncertain and likely to increase. Analysis by the Committee on Climate Change found for instance that rapidly decarbonising the UK’s power sector over the next 20 years “could result in cost savings of £25 to £45 billion relative to a focus on investment in gas-fired generation in the 2020s”.

Countries that make an early move towards a low-carbon energy system could also stand to benefit from substantial export opportunities in the low-carbon sector, an issue which the UK should take seriously. Latest figures from the Department of Business show that the UK’s ‘low-carbon environmental goods and services sector’ currently employs close to a million people and generated sales of £128.1bn in 2011-2012, growing 4.8% from the previous year.

As the country with the world’s first Climate Change Act and the one that is currently pushing for the highest level of ambition to cut emissions in the EU, it is also key that the shale gas hype does not undermine the UK’s climate policy objectives. The Government will shortly have to make a decision on the so-called ‘Fourth Carbon Budget review’, which essentially governs the rate at which emissions of greenhouse gases need to go down during the 2020s for the UK to cost-effectively meet its goal of reducing emissions by at least 80% by 2050 compared to 1990 levels.

A decision not to follow the independent advice of the Committee on Climate Change and weaken the UK’s commitment under the Fourth Carbon Budget would not only send a negative signal to investors in the UK’s burgeoning low-carbon industries, it would also undermine much needed momentum towards robust EU and international climate agreements.

One has to hope that in the months to come, the Government will show itself just as enthused by the prospect of decarbonising its energy system as it has been of late with shale gas. Regardless of one’s views on fracking, a rapid decarbonisation of its energy system remains the best bet for Britain.


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