EU Shale Gas Regulation? Frack it!

Posted by The Risk Monger on 22/02/13

The Risk-Monger attended an event in Brussels in December on proposals for EU shale gas regulation. He was expecting to sit back and enjoy some serious stakeholder mud wrestling. But it seemed like nobody really cared except for the small anti-shale environmental groups. This lobbyist vacuum frightened the Risk-Monger.

In the United States, fracking (hydraulic fracturing) has divided communities and stakeholders. If you ever want to see people in the coal or nuclear industry get spitting angry, don’t bother them with Greenpeace campaigns, just mention frackers. The gas industry (and the new industries the fracking process has spawned) has lobbied hard in Washington and at state levels, with communities and whole states being transformed. Despite the continued contention, America is benefiting from an energy revolution that that will not only give it a century-long competitive advantage of cheap energy, it may just lift the USA back up into the category of industrialised nations.

And in Europe? A few countries are conducting studies, measuring potential reserves and considering policies. Only Poland seems interested enough in the opportunities (enough to delay the fracking moratorium in the EP last autumn), but I suspect that US fracking lobbyists have planted stakes in Warsaw. European gas companies are not even excited (the idea of a natural gas price collapse similar to that which hit the US seems to have taken the spark out of their lobbyists). The business associations and chambers of commerce murmur things like the need to remain competitive (and look nervously as American business begins to reap the fruits from cheap energy), but many of their European members have set their sails on green energy commitments and it will take a while to turn those ships. European business seems to have accepted paying for over-priced energy.

It is astonishing that no one really cares about shale gas opportunities in Europe, especially given the annual December dance between Gazprom and the Ukrainian government that threatens European gas supplies just as the first snowflakes fly. Are Southern Corridor gas pipelines good solutions if local alternatives exist? Substantial unconventional gas reserves do exist in Europe, with several studies suggesting, for example, that the UK could enjoy centuries of energy security, as well as economic development and job creation. So we have an abundant, fairly clean, local energy source, and the only vocal voices in Brussels are those against it: the environmental NGOs, the coal and nuclear industries and the Member States with other interests. Without good regulation to ensure safe standards and practices in hydraulic fracturing, public fears, campaign scares and urban myths (like tap water catching fire) will proliferate. A lobbying vacuum failing to support a public good not only means bad or non-existent regulation, it also can only lead to one eventual result: moratorium.

Regulation doesn’t happen in a vacuum – it needs stakeholders driven by strong interests with regulators who can find some middle ground between those stakeholders. If the benefits are high, but there does not seem to be enough interest (except from those trying to introduce legislation that would stop the practice or industry), regulators have no reason to stick their necks out and support these silent benefits. Although the first attempt in the autumn failed, EU shale gas regulation seems to be on a one-way road towards moratorium. That is, unless those with interests start to get their act in gear and stop letting this issue float in a sea of opportunists.

This would not be the first case of a moratorium by default. Although I am simplifying things, in the 90s, GMOs provided great potential benefits, but there were no interest groups in Europe (outside of the seed producers) who had an interest in establishing good EU regulation on biotech safety. The farmers were not convinced (unlike the US, where GMOs were pushed through with the strong support of the farming lobby who were demanding reliable technologies to secure their livelihoods), the retailers and food manufacturers were concerned about public trust and the consumer groups were mixed and divided. There were no interest groups willing to stand up and support science against the vociferous attacks of Greenpeace. So a public good with enormous benefit was sent into a regulatory moratorium in Europe and the technology has never been able to de-purgatise itself.

The US profited nicely from the EU green biotech moratorium; a large number of European researchers voting with their feet, with Europeans today becoming dependant on large volumes of feed imports (particularly GM soy) for their livestock. The US is already profiting nicely from the benefits of shale gas and the competitive advantage cheap domestic energy is providing over European industry (pre-moratorium). Again, no one in Europe is interested enough to take a lead here – perhaps austerity has become a self-fulfilling perpetuity. Maybe we should all start focusing our investments in Poland.

What will it take for shale gas to become an issue people are driven to support, and demand to have a clear, positive regulatory policy to defend? Will someone please stand up? The Risk-Monger’s household energy bill went up 20% last year (and that after serious conservation measures and investments).

 

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