Sunday, October 26, 2014

2030 Energy Security | Brussels | Dec 10th
EVENT: EAGC 2014 | DMG | Hope Grant | Paid one month
Drew EGC Report

Great Shale Debate: Europe Will Come Around

Britain's Global Warming Policy Foundation is no stranger to controversy in the organization's efforts to influence and counter-act what it sees as the "green agenda's" damaging impact on economic economic growth and policy. But, according to the Foundation's Director, Benny Peiser, that does not mean the organization denies the basic science of climate change, but believes there is a lack of debate about policies adopted by governments.

He explains, "The majority of our members think that the basic underlying science that CO2 is a greenhouse gas and if you pump enormous amounts of such a gas into the atmosphere it will have a warming effect - that most of our members would accept. Where they would differ from the conventional wisdom is a) we don't really know how strong that effect will be over long periods of time, because that depends on all the feedbacks which are not very well understood, but, more importantly, our main concern is not with the science, but with the policies adopted by governments in the name of saving the planet from global warming. We think that the policies are much worse than what we have experienced in terms of global warming and that they are undermining our economies."

Given that the Global Warming Policy has been an advocate for shale gas exploration in the UK, Mr. Peiser offered his views to Natural Gas Europe to preview his appearance the the European Unconventional Gas Summit happening in Vienna, Austria on 29-31 January 2013.

With the UK government's recent green light for explorers, you've had some very positive developments in terms of the prospects for developing unconventional gas there. What's the Foundation's reaction?

Obviously, we've been one of the very few organizations in Britain which have said that unconventional gas is one of the few good stories in the fairly bad economic situation that Europe is facing. And it's good, not only for the troubling economies, but, as we can see in the US, it also has a significantly positive effect on CO2 emissions. I think the US is the only large industrial country where emissions have actually dropped significantly over the last few years as a direct result of the shale revolution, whereas in Europe, ironically, with all its climate targets and legally binding agreements emissions are rising, not least because Europe's whole energy policy is a complete fiasco and has led to a growing renaissance in coal fired power stations.

So, Europe, despite all of its green ambition, is actually going in the exact opposite direction, against natural and shale gas, and is banking on renewables, which is causing all sorts of unintended consequences, including what the International Energy Agency is calling "The Golden Age of Coal." It's an irony, but that is the reality of European energy policies.

Do you believe that the intentions of these policies, however, were good?

Whether the intentions were good all along remains questionable, because behind the green agenda lurk protectionist strategies - protecting Europe from cheap imports from abroad, and also the idea that eventually Europe would become the world's largest exporter of renewable energy technology was another hope of the green agenda that hasn't materialized.

The consequences certainly are contrary to what was expected and hoped for.

How would you evaluate public sentiment today towards unconventional gas in the UK?

There has been a significant shift in public opinion over the last 2-3 years. The hysteria about global warming has damped down; people are much less concerned about these issues and much more concerned about the economy and the recession. In terms of shale gas, the public opinion has shifted somewhat, mainly because there now seems to be an all party consensus that shale might be very good for Britain. After all there's a growing realization that we might be sitting on a huge gold mine of shale reserves. We are waiting for a new estimate from the British Geological Survey, but it would appear that some of the shale plays in Britain are much bigger than the average shale plays in the US, which are already quite massive, but it would appear that some of the shale formations go much deeper - up to 5-6 times deeper than the biggest American shale plays.

So there's a hope that this might generate huge returns, both for the government treasury as well as the introduction of an entirely new industry with all of the knock-on effects on industry as a whole.

Presumably, Britain would still largely rely on other sources of gas.

Yes, for the time being it will rely mainly on Norwegian gas, but who knows what would happen if huge amounts of unconventional gas eventually flow. Britain has conventional gas and oil from the North Sea, but that in itself isn't enough. The country also imports coal, because it's much cheaper than domestic coal. Britain also wants to build new nuclear stations, but it remains doubtful whether the economics will be viable.

How surprised were you that the government gave fraccing careful study and, eventually, the green light given the minor seismic activity that occurred?

The government is of two minds on this. Part of the coalition government - the Liberal Democratics - isn't too keen on shale and has been playing it down for a long time. They are much more in favor of renewable energy and see shale as a potential competitor.

Nevertheless, the risk assessment that was done by government agencies and also one done by the Royal Society, the country's leading science academy, have come to the conclusion that the risks are relatively small and, with adequate regulation, can be handled in such a way that they are unlikely to cause any harm.

So I would say this has created an environment in Britain in which shale gas extraction can be discussed in a non-hysterical and a realistic way, not least because at least some of the media have been hugely supportive of shale. I think that's one of the big difference to the other European countries. We have very vigorous, strong and diverse media and some media players have been supportive and see it as a solution to many of Britain's economic and energy problems, rather than a burden.

The support of some of the very influential media players has helped inform policymakers and ministers to come to a more positive view.

In some way's the UK government blessing of exploration could mean that shale development there could rapidly overtake what's going on in Poland.

That remains to be seen. We've been criticizing the government - it's been very slow in many respects and could've done much better. I do think that Britain is sending out all the right signals and really it will soon be up to the companies. We've had far too few test drillings, which could also be said of Poland, to give a better estimate of what's available and how viable the shale plays are.

But in terms of government support and the potential for an almost game changing shale policy, Britain might become a more important player. I don't know why exactly it's become so difficult for Poland to get going.

One of the big advantages Britain has compared to Poland is that it has a very developed infrastructure - everywhere where the big shale plays are in Britain, you have pipelines very close, roads close by. The infrastructure is already there, something which may be a challenge for Poland.

Are you surprised by the slow pace of development in Poland?

I am surprised. I don't know the underlying reasons, whether they are political, economic, technological or geological - but I am very surprised given the full support the government has given shale exploration, and that a lot of American companies have invested in Poland.

What's your take on the rest of Europe in regards to shale gas, taking into consideration public opposition and hydraulic fracturing bans?

The green mantra is a European obsession. It's a quasi-religious belief system that is very difficult to shift, very entrenched, in some countries more than others, and it is holding back development, not just in shale gas but for many other issues like genetically modified agriculture, etc.

My feeling is, given Europe's economic crisis and the potential economic benefit of shale, it's only a question of time that the Continent will also exploit its resources. It might take one country to lead, but once the shale gas is coming out of the ground in big enough volumes and countries start benefiting from it, others will follow - it's inevitable.

You see similar problems in the US, with New York's hesitancy, yet they are struggling with economic problems, want to revive their economy, but still they are not sure whether they should go for it, whereas other states are happily fraccing and benefiting hugely.

Another important discussion is going on among environmentalists in that some of them have begun to realize that shale gas, unconventional gas is a solution to environmental issues rather than a problem, and particularly where one can shift from coal to gas, but also a lot of the renewable energy technologies are extremely damaging to the environment, like wind turbines that are spoiling the countryside and killing a lot of birds.

So there's a strong case to be made that natural gas is actually very beneficial to the environment in general compared to other forms of generation, a debate going on about the environmental benefits of using clean and relatively low carbon gas, which is important for some of the opponents of shale gas.

With the release of their studies it seems EU policymakers are becoming more familiar and coming to terms with unconventional gas. How important do you think it is to have an overall policy and regulation of exploration at the EU level?

The debate in the European Parliament and the EU Commission has been whether there has to be some kind of overriding European regulation rather than national regulation, and I think the interesting development at the end of last year was the majority of MEPs actually voted down attempts by green parties to essentially hamper national developments by introducing some kind of European regulation. I think as things currently stand, Europe is delegating that form of regulation to the individual member states, which is a bit similar to the debate in the US whether federal regulation is needed or if state regulation is sufficient.

My own view is that all attempts to enforce some kind of federal or European forms of regulation are only meant to slow down and hamper any development.

How do you envision the role of unconventional gas in Europe going forward?

Europe will be a latecomer to shale, but once a country gets lucky and reaps the benefits others will become jealous and will very quickly follow suit. The opposition to shale is fragmenting and I doubt governments will be able to sustain the "wait and see" approach for good. There is a clear economic argument and problem that will drive these policies.

Let's not forget that European energy policy as a whole is in a deep crisis - there's no agreement on any of the policies Europe has advocated over the last 10-15 years. The renewable energy agenda turns out to be very expensive and hugely unpopular - there's a public backlash against the renewable agenda because of the enormous costs that are now becoming obvious.

And unconventional gas is a huge game changer in the US. European heavy industry and pharmaceutical and chemical industries are already telling policymakers and governments that they won't be able to compete internationally and more companies are investing in the US because of competitive energy prices. So there's an additional pressure emerging in recent months from industry, saying that energy prices will play an increasingly significant role in investment decisions and competitiveness.

Europe is becoming a high energy cost location, whereas other parts of the world are driving down energy prices. That will have a huge influence on decision makers.

Rarely a peep is heard these days about 'Gasland' but now there's a feature film about shale gas coming to rural America starring Matt Damon has recently come out. In light of such popular cultural offerings, how do you think it's possible to bring civil society on board to the benefits of shale gas?

I have only read some reviews of Promised Land, but even if it were a good movie it's coming far too late and will have no effect whatsover. In my view, the shale revolution is inevitable and won't be stopped. The environmental movement has lost the argument. In some countries they might hold it off for a few years, preventing governments from going ahead, but eventually governments will give in to an energy that will determine the 21st century. It's inevitable because it's available almost universally. The US started the trend, but other countries are following very very quickly and eventually the green opposition will fragment and more environmentalists will come aboard.

The environmental movement originally was very much in favor of natural gas as a transitional energy, because they hoped that it would replace coal as it has in the US and could in China.

Increasingly, governments are no longer listening to protesters but are considering the windfall that they could reap from shale gas, so I'm quite optimistic that shale will also become a reality in Europe, but will likely take much longer than in other parts of the world because of its green obsession.

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