‘Fracking’: America’s new gold rush
I was lucky enough to be in the United States for much of the final stages of the US presidential campaign and got to see all the presidential debates. Commentators noted that it was the first time since 1996 that the debates made no mention of climate change. Indeed the most notable reference to it was in Mitt Romney’s acceptance speech at the Republican convention when he lampooned Presidents Obama’s inauguration speech with its commitments to halting the rising of the oceans and starting to heal the planet.
One thing that struck me when I was there was the way in which shale gas ‘fracking’ has such prominence in the media. This is because there is a concerted campaign on TV and in the newspapers to portray ‘fracking’ as a really good solution to almost all of America’s problems. Prominent is ‘energy security’, but also comparing it favourably to other fossil fuels for its low CO2 emissions while at the same time linking it in peoples’s minds with everything from its job creation potential, to all kinds of motherhood-and-apple-pie causes from the relief of world poverty to the defeat of AIDS. Fracking is definitely on the political and economic agenda in the US and if the proposed shale gas subsidies set out in the Autumn Statement are anything to go by, it will be here, very soon. In this country, fracking is still in its infancy and the trial tests in Lancashire in 2011 both led to small earthquakes, which didn’t endear the technology to local people.
One of the major themes running through the presidential campaigns of both parties was the emphasis on ‘energy independence’. There is no doubt that the events in the Middle East over the past decade have reinforced the American view that the sooner they acquire energy independence the better. For a while under President Bush the focus was on bio-fuels, but they had unintended consequences, not least in terms of rising food prices. As recently as 2004 shale gas was barely known, largely because the technology hadn’t been developed enough to extract it. But by 2008 Pennsylvania was producing 1bn cu ft of natural gas from fracking and by 2012 the figure had jumped to 11 bn cu ft. The main player in the state, Chevron claims that this supports over 140,000 jobs, as well as running ads suggesting that link with curing AIDS. President Obama in this year’s State if the Union speech said fracking would support 600,000 jobs in the US by 2020. In just eight years shale gas has gone from nil to 30% of the market and the US reserves are estimated to be 100 years worth on current consumption patterns.
All this has huge geo-political implications, for the Middle East and for petro states like Russia, because it now seems quite likely that the US will become the world’s biggest oil and gas producer, through the exploitation of shale reserves, within five years. As for gas, the price has plummeted to $2 a unit this year, one fifth of the European price with implications for manufacturing competitiveness in Europe, causing the International Energy Agency to herald a ‘new global golden age of gas’. At first sight this may not look too alarming. After all gas emits a lot less CO2 than equivalent amounts of coal or oil. Indeed with the dramatic shift to gas, fracking had cut US greenhouse gas emissions to their lowest level for over 20 years. It may even enable America to meet its international climate change targets agreed at the 2009 Copenhagen Climate summit of a 17% reduction on 2005 levels by 2020.
But the wider and longer term implications of this dramatic shift, as well as worrying Russian oligarchs and assorted depots in the Middle East, is having a dramatic impact on the climate debate. Suddenly the economics of renewables look very shaky in the US. From emerging as the ‘go-to’ energy source, free after the cost of initial investment, which had been coming down enormously as fossil fuel prices rose, now with gas at $2, there is very little incentive to invest in renewables. Just as concerning is the impact on other countries CO2 emissions. As gas has replaced coal in electricity generation (shale gas now generates over 25% of US electricity) the newly excess US coal production has pushed prices down on world markets, sparking a bonanza in coal consumption world-wide. In 2011 coal had its ‘best’ year since the 1960’s, as its global share of primary energy consumption rose from the long term average of 25% to 30%, the highest level since 1969. The situation in the UK was particularly dramatic, with coal consumption rising by almost a quarter between the second quarter of 2011 and the second quarter of 2012.
So rather than helping bring down CO2 emissions as its American promoters claim, fracking shale gas is leading to a really serious climate crisis even more quickly than had been anticipated, while choking off the viability of renewable alternatives. America is being allowed to breathe a sigh of relief by its new source of cheap fossil fuel, no longer reliant on volatile parts of the world and able to take its eye off the ball on energy efficiency. It locks them and us, if George Osborne has his way with his proposed ‘dash for gas’, into a long-term high carbon future, with the short-term mirage of apparently reducing CO2 emissions and lower prices for consumers – gold dust for those operating on short term political time frames. Cheap coal gives a new lease of life to coal-fired infrastructure while at the same time demolishing the carefully constructed economics of renewable energy investment.
Will we voluntarily give up these short term ‘gains’ by leaving this newly discovered resource in the ground? Past experience strongly suggests not. And in contemplating the arrival of fracking in the UK, all we thought we had to worry about were some minor earthquakes in Lancashire!
This article first appeared in the December 2012 issue of Town and Country Planning