.The Impact of Shale Gas on Energy Markets
Shale and unconventional UK gas reserves can diversify supply, improving security
and providing downward pressure on prices
Gas provides the flexibility for power generation working alongside renewables to
“keep the lights on”.
Gas is cleaner than coal and oil producing less carbon emissions.
Domestic heating requirements in the UK require gas as a back-up fuel, even on best
use of renewable scenarios.
Shale gas can generate substantial tax revenues and employment opportunities for
Shale can quickly supply the grid and comparatively secure compared to LNG
Energy and Utilities Alliance is a not-for-profit trade association that provides a leading
industry voice to help shape the future policy direction within the sector. Using our wealth of
expertise and over 100 years of experience, we act to further the best interests of our
members and the wider community in working towards a sustainable, energy secure and
efficient future. We are grateful for the opportunity to comment on this inquiry.
1. We believe that shale and other “unconventional gas reserves” in the UK have the
potential to diversify gas supply to strengthen security of UK supply but also to
impact upon market prices. We do not believe, in the Committee’s words “it is a
game-changer” as in the US, but its potential impact should not be ignored and can
only provide downward pressure on gas prices.
2. To meet its climate change obligations, the UK must continue to support the drive for
increased renewable and low carbon energy production, in terms of power
generation and domestic heating. However, many of these technologies provide
intermittent energy supplies without the necessary flexibility needed to meet UK
energy demand. Therefore fossil fuel back-up is required, and to achieve lower
carbon emissions gas is the fuel of choice.
3. Gas is also cleaner than both coal (power generation by 50 per cent) and oil
(transportation by 25 per cent) so its use will enhance the ability of the UK to achieve
its climate change obligations.
EUA Policy Position
Date: September 2012
EUA, Camden House, Warwick Road, Kenilworth, Warwickshire CV8 1TH
01926 513777 www.eua.org.uk
4. Natural gas has a key role to play in the future, alongside renewables, in the
domestic heating market. The UK does not have, or plan to have, sufficient electricity
generation capacity to meet peak heating demand. In fact, to do so would be
economically prohibitive and create huge problems surrounding the location of power
generation. Therefore it will rely on an energy distribution network that consumers
know and trust to heat their homes. Gas will be the fuel of choice, albeit working
alongside renewable technologies that in theory can provide the heating
requirements for base levels. We do not believe that shale gas production would
damage the demand for renewable technologies in the domestic heating sector.
5. UK produced shale gas has the benefit of being liable for taxation levied to support
the Exchequer and therefore wider UK priorities. Potentially, revenue could be used
to support investment in renewables; reduce fuel poverty levels through energy
efficiency programmes or further develop new clean technologies. UK production
would also be a boost to employment prospects, especially in Lancashire. In turn this
also provides a boost to the Exchequer with higher tax revenues and lower welfare
6. Shale gas could be brought into production reasonably quickly due to its proximity to
the National Transmission System. It would provide greater security of supplier
compared to reliance on LNG tankers navigating the insecure waters around the
Straits of Hormuz, close to Iran.
Mike Foster – Chief Executive,