Gold rush for shale gas or false dawn?
by Dr Benny Peiser
09 May 2011
A spectre is haunting Europe — the shale gas revolution that promises to shake up green energy and climate policies, writes Dr Benny Peiser.
The abundance of shale gas and other forms of unconventional gas discovered and extracted in the United States has prompted a new American energy boom and a global shale rush. It has also caused a dramatic drop in gas prices. Could the same happen in Europe?
At the European Union's energy summit in February, no other item on the agenda was as controversial as the impact of shale exploration. Despite protests from the green lobby, EU energy ministers agreed that the potentially game-changing nature of shale would be carefully considered in the next few months.
Unconventional gas is embedded in shale rock formations deep below the earth's surface. These geological strata hold vast deposits of shale gas. To exploit these resources, energy companies drill several kilometres deep into the rock and then horizontally in several directions. According to estimates of the International Energy Agency, supplies of unconventional gas could provide humankind with cheap and relatively clean energy for more than 250 years.
Recent studies estimate that there are huge deposits of shale gas in Europe too. Poland, France and the Ukraine alone may have supplies sufficient to last for 200 or 300 years. No wonder then that many European countries see shale as a golden opportunity to generate cheap energy as well as reduce their reliance on imports from Russia and the Middle East. Already, Germany is set for the conversion of its energy mix away from nuclear and towards gas. Berlin announced only last week that its new energy policy will now focus on building more gas-fired power stations to fill to looming gap caused by Germany's accelerated nuclear phase-out.
What is more, the financial crisis is forcing European governments to cut subsidies and incentives for green energy programmes which are not sustainable, let alone during a prolonged period of austerity. Companies too are reducing their green energy investments as natural gas is becoming ever more attractive, increasingly shifting investment away from renewables.
A new report for the Global Warming Policy Foundation by Matt Ridley "The Shale Gas Shock" highlights that unconventional gas is not only abundant and relatively cheap, but promises to cut into the market share from more costly nuclear, renewable energy and even coal. According to Ridley, the shale revolution "indefinitely postpones the exhaustion of fossil fuels and makes reducing emissions of carbon dioxide possible without raising energy prices."
While the price of oil has gone up in recent months, shale gas promises the start of an new era of cheap, abundant and relatively clean energy. In a growing number of European countries, energy companies have begun to drill rigs to explore potential shale deposits and its commercial extraction. Advocates of renewable, coal and nuclear power sources are increasingly concerned about this new and cheap competitor.
Faced with a looming shale boom, the EU's green lobby is seeking ways to protect Europe's frail and heavily subsidised green energy sector. In sharp contrast, the shale revolution has progressed without any taxpayer-funded subsidies, government targets or tariffs. It is driven exclusively by new technologies that make shale exploration profitable.
Due to massive shale gas finds and steadily increasing supply, gas prices have dropped dramatically which is having positive knock-on effects for industry, households and energy security at the same time. Europe's conventional climate and energy strategy now faces a huge challenge. Governments would be well advised not to squander this golden shale gas opportunity. Yet, as Ridley points out, in Europe the jury on the shale revolution is still out: "Shale gas will encounter formidable opposition from entrenched and powerful interests in the environmental pressure groups, in the coal, nuclear and renewable industries, and from political inertia. Ultimately, it will be a matter of whether over-borrowed European governments, businesses and people will be able to resist such a hefty source of new revenue and a clean energy source requiring no subsidy."
Dr Benny Peiser is director of the Global Warming Policy Foundation
The abundance of shale gas and other forms of unconventional gas discovered and extracted in the United States has prompted a new American energy boom and a global shale rush. It has also caused a dramatic drop in gas prices. Could the same happen in Europe?
At the European Union's energy summit in February, no other item on the agenda was as controversial as the impact of shale exploration. Despite protests from the green lobby, EU energy ministers agreed that the potentially game-changing nature of shale would be carefully considered in the next few months.
Unconventional gas is embedded in shale rock formations deep below the earth's surface. These geological strata hold vast deposits of shale gas. To exploit these resources, energy companies drill several kilometres deep into the rock and then horizontally in several directions. According to estimates of the International Energy Agency, supplies of unconventional gas could provide humankind with cheap and relatively clean energy for more than 250 years.
Recent studies estimate that there are huge deposits of shale gas in Europe too. Poland, France and the Ukraine alone may have supplies sufficient to last for 200 or 300 years. No wonder then that many European countries see shale as a golden opportunity to generate cheap energy as well as reduce their reliance on imports from Russia and the Middle East. Already, Germany is set for the conversion of its energy mix away from nuclear and towards gas. Berlin announced only last week that its new energy policy will now focus on building more gas-fired power stations to fill to looming gap caused by Germany's accelerated nuclear phase-out.
What is more, the financial crisis is forcing European governments to cut subsidies and incentives for green energy programmes which are not sustainable, let alone during a prolonged period of austerity. Companies too are reducing their green energy investments as natural gas is becoming ever more attractive, increasingly shifting investment away from renewables.
A new report for the Global Warming Policy Foundation by Matt Ridley "The Shale Gas Shock" highlights that unconventional gas is not only abundant and relatively cheap, but promises to cut into the market share from more costly nuclear, renewable energy and even coal. According to Ridley, the shale revolution "indefinitely postpones the exhaustion of fossil fuels and makes reducing emissions of carbon dioxide possible without raising energy prices."
While the price of oil has gone up in recent months, shale gas promises the start of an new era of cheap, abundant and relatively clean energy. In a growing number of European countries, energy companies have begun to drill rigs to explore potential shale deposits and its commercial extraction. Advocates of renewable, coal and nuclear power sources are increasingly concerned about this new and cheap competitor.
Faced with a looming shale boom, the EU's green lobby is seeking ways to protect Europe's frail and heavily subsidised green energy sector. In sharp contrast, the shale revolution has progressed without any taxpayer-funded subsidies, government targets or tariffs. It is driven exclusively by new technologies that make shale exploration profitable.
Due to massive shale gas finds and steadily increasing supply, gas prices have dropped dramatically which is having positive knock-on effects for industry, households and energy security at the same time. Europe's conventional climate and energy strategy now faces a huge challenge. Governments would be well advised not to squander this golden shale gas opportunity. Yet, as Ridley points out, in Europe the jury on the shale revolution is still out: "Shale gas will encounter formidable opposition from entrenched and powerful interests in the environmental pressure groups, in the coal, nuclear and renewable industries, and from political inertia. Ultimately, it will be a matter of whether over-borrowed European governments, businesses and people will be able to resist such a hefty source of new revenue and a clean energy source requiring no subsidy."
Dr Benny Peiser is director of the Global Warming Policy Foundation
COMMENTS
Shale gas is obtained through fracturing shale - known as fracking. Ecological and environmental concerns have been raised about possible pollution of water supplies by a variety of 'dangerous' chemicals used in the fracking process.
There is an interesting 'documentary' about this process and hazardous side effects on a Pennsylvanian town, in the US - see the film 'Gasland', film by Josh Fox. Shale gas may not be as benign as its proponents claim.
I saw a brief report that a department in southern France has recently banned shale gas exploration by fracking.
Yan Tomlinson - Ilminster, Somerset, UK
It will be "God bless" when it comes to Germany this shale gas revolution. Finally, end the eco-madness of C02 reduction, which Merkel and co do.
Erich Richter - EIKE
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