Why shale gas could be the saviour of Britain’s environmental targets

THE debate around shale gas has been dominated by the economic benefits of production and the perceived risks of hydraulic fracturing. But we shouldn’t lose sight of the wider environmental picture. Developing shale gas in this country can benefit the natural world in several ways.

First, it can reduce carbon emissions by replacing gas imports. A recent report for the European Commission found that emissions from well-regulated shale gas production are up to 10 per cent lower than from gas imported by pipeline or liquefied natural gas from outside Europe. And as the Committee on Climate Change concluded last week, UK shale gas development is consistent with our emissions targets.

Yes, that’s right. Despite claims by a number of environmental propagandists, the body set up to make sure we actually meet our carbon reduction objectives has concluded that shale gas does not stand in the way. And the Committee’s conclusion is not surprising. However successful we are at decarbonising electricity generation, gas will still be needed in large quantities to heat homes for many years to come.

Second, shale gas can support manufacturing, by providing secure energy supplies and raw materials for the chemical industry. And this would benefit the environment as well as the economy. UK industry is more energy-efficient than in many parts of the world, so making more in this country rather than overseas will reduce global emissions.

Third, using natural gas in place of diesel and petrol in road transport not only means less CO2 but also far fewer emissions of particulates and other nasty air pollutants. In the US, natural gas now powers nearly one in five buses, and the chief executive of FedEx has predicted that up to 30 per cent of US long-distance trucking will be fuelled by compressed or liquefied natural gas within a decade. Gas as a transport fuel can complement the development of hybrid and electric vehicles, helping to reduce the estimated 5,000 premature deaths each year from road pollution.

But perhaps the most significant environmental benefit of shale gas is the replacement of coal. As Lord Smith, the head of the Environment Agency, pointed out yesterday, the UK burned a lot more coal in 2012 than in 2011, and coal is now accounting for 40 per cent of electricity generation. That’s far too high, and it means that emissions of both carbon and sulphur actually rose last year.

As our report last week found, shale gas has helped to cut electricity generation from coal by a quarter in the US. The impact has been so great that, between 2005 and 2010, CO2 emissions fell by a larger amount in America than in Europe. This has prompted some to argue that shale gas just displaced emissions overseas, as a glut of US coal drove down prices worldwide.

But there is a major flaw in that argument. Over the same period, US wind power grew more than six-fold, and the shale gas producing states now account for more than half of all US wind generation. So to argue that shale gas displaces emissions overseas is also to argue that wind and other renewables do the same thing. Burning less coal in one country will, of course, make more coal available for other countries to burn. But if we used that as a serious argument, we’d never get anywhere.

In the UK, we have two related energy problems. First, the long-term trend is of declining North Sea production. Although the next few years may well see a slight rise in offshore output as a consequence of recent high investment, in the medium term we are likely to be importing a much greater share of our natural gas. Second, a shortfall in electricity generating capacity is looming, with real risks to the new nuclear programme. Less secure gas supply and insufficient electricity generation capacity to meet peak demand would be a toxic combination.

And this is why shale gas couldn’t come at a more important time. If it’s a choice between the lights going out and keeping the coal-fired power stations running beyond the deadlines set out in the Large Combustion Plant Directive and Industrial Emissions Directive, it’s a pretty safe bet that politicians will choose the latter. That would be environmentally disastrous.

But if there is a more secure supply of gas, with shale production adding to North Sea output, then it becomes much easier to get off the coal hook for good. And with gas providing vital back-up to renewables, a much cleaner power system is also in sight.

Corin Taylor is a senior economic adviser at the Institute of Directors. www.iod.com