As UK coal use increases significantly and the chair of the government’s Committee on Climate Change (CCC), Conservative peer Lord Debden endorses investment into shale gas, is fracking in the UK part of the answer to tackling climate change?
The argument that it might be is fairly straight forward – if a little counter intuitive for those who think the way to tackling climate change is not to extract and burn fossil fuels.
Gas emits less carbon dioxide when burnt than coal. Extracting more gas may help to reduce the price – so ensuring we burn less coal.
In some scenarios this logic may make sense, but is it realistic?
The available evidence suggests that in a policy environment of action to stop climate change – at least in the UK and EU – fracking is more likely to be part of the problem not the solution.
It takes too
long…
Information provided to Poyry by Cuadrilla suggests
that even the most explored of the UK’s shale gas reserves - the Lancashire or
Bowland shales - will not reach full production until 2035 (after kicking off in the mid 2020s), assuming all goes
to the firm’s best laid plans.
In its recent energy outlook oil giant BP saw significant increases in shale production – but not in the UK or Europe.
Speaking to
the Telegraph BP’s chief economist Christof Rühl said shale gas would only play a role in
Europe closer to 2030 and then “only to a very small extent”.
Yet if the UK follows the advice of its independent climate advisors – The CCC -
it will have decarbonised it’s power sector by 2030 and will be
well on the way to the decarbonisation of heating by 2050.
The problems we currently face phasing out coal over the next five to ten years cannot be solved by a glint in shale gas investor Lord Brown’s eye.
With the government’s plans for Carbon Capture and Storage (CCS) currently stalled that means that shale gas will come onto the system as our gas demand is falling rapidly and will remain in production as UK gas use falls to nominal levels.
New
fracking in the UK could have the effect of 'locking in' new gas
production, discouraging investment in alternative energy sources.
That isn’t to say the UK won’t need some gas, but from a climate point of view
it may make more sense to get this from fields that are conventional, low cost,
and already producing.
Figures from the IEA’s latest global outlook and BP’s energy statistics suggest Norwegian production by 2035 (113 bcm) will be higher than our current demand – let alone our needs in the late 2030’s and 40’s.
One option would be to export UK gas to Europe but European leaders are themselves currently negotiating ambitious 2030 climate targets which would see coal phased out in Europe before shale production had reached meaningful levels.
The International Energy Agency (IEA) which generally supports shale gas extraction is sceptical of its benefit to Europe on climate change grounds, noting in its recent World Energy Outlook that:
“In countries where the average greenhouse-gas intensity of power generation is already close to that of natural gas, as for example in Europe, the addition of extra natural gas to the fuel mix has relatively little impact on the overall emissions trajectory”.
It’s too expensive…
The argument in favour of shale gas extraction in the UK is essentially economic.
The
hope is that even if we don’t need the gas simply having more gas production
will help drive down the global price and so make it competitive with coal in
places which may still be using it – such as China & India.
But analysis by the IEA suggests that shale gas extraction in Europe will be 50% more expensive than the
US .
Furthermore the agency has calculated exporting shale gas from the US – for example - would add an extra 50% to the price.
Expensive exports of expensive shale gas from Europe would therefore be extremely unlikely to displace coal elsewhere in the world on economic grounds - even if carbon costs were imposed in overseas markets.
Instead they would depress the price of gas in a region no longer burning coal and which already has access to substantial unconventional gas reserves from the North (Norway), East (Russia) and South (Qatar).
There is already enough gas..
The IEA estimates current
proven reserves of gas are at 208tcm – most of this is conventional but it also
includes a large chunk of quite cheap US shale.
The Paris based agency has
developed a scenario which allows the world to limit global warming to around 2
degrees, through significant drops in coal use and increases in clean energy.
Under that scenario global gas demand increases from 3.7 to 3.9 tcm a year (as
gas and renewables displace coal).
What that means is that even if no new reserves are discovered the world already has between 50 and 60 years of proven reserves.
But our current reserves are likely to be added to significantly before any new UK gas comes on stream.
BP estimates that global shale gas production will more than triple by 2030 with very little coming from Europe. The firm’s energy outlook estimates that Asia alone has 57Tcm of recoverable shale gas – more than North America.
The IEA – like BP - envisages significant new production - and
proven reserves - from the US and China over the coming years, increasing
global gas supplies still further.
So trying to get as much gas as possible – simply because it is cleaner than
coal, appears to make limited sense at least from a climate perspective. As the
IEA observe “in total, natural gas resources amount to 790 tcm, or more than
230 years of production at current rates”.
Indeed the agency’s ‘Golden rules for a golden
age of gas’ scenario - which predicts higher gas demand thanks
to the global development of unconventional gas also predicts the world will
fail to avoid catastrophic global warming.
As the IEA’s chief economist put it at the time "We are not saying that it will be a golden age for humanity -- we are saying it will be a golden age for gas."
Indeed in their report the IEA note that one author of a French government study into fracking suggested it be banned simply on climate grounds.
Unless…
Advocates of gas, including oil giants such as Shell, have argued that significant new gas production is not incompatible with climate change on the grounds that emissions from gas plants can – in future – be captured and stored.
Because no large scale and commercial example of Carbon Capture and Storage applied to the production of electricity from gas exists it is hard to judge whether or not this is the case.
The IEA does envisage the development of Carbon Capture technology, yet still envisages catastrophic climate age in it’s ‘golden age’ of gas scenario.
There is one scenario however where pursuing fracking may be advantageous for the climate – a scenario in which policy makers entirely give up on meeting current climate targets.
In such a scenario, where European coal continues into the 2030’s, the UK’s power plants are never shut and renewable and nuclear technologies stall advocates of fracking in the UK on climate grounds may find their arguments come to fruition.
