UK energy dependence – five hidden costs expose truth about fracking | Business |

UK energy dependence – five hidden costs expose truth about fracking

The shale boom is a bubble waiting to burst as economics of extraction falter and the trickle of bad environmental news starts to swell

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Wells at an oilfield near McKittrick, California. Critics have concerns over water usage and possible chemical pollution of groundwater. Photograph: David Mcnew/Getty Images

The vision of an energy-independent Britain, free of the clear and growing problems of overseas fuel dependency, is deeply alluring. That is one of the reasons I set up a solar energy company 15 years ago. Today, Putin’s Russia, Islamic State’s Iraq, and a host of other actual and potential fossil-fuel addiction downsides mean we would be well advised to strive hard for that vision. What is becoming clearer with each passing month, however, is that the route to delivering energy independence is not the fracking of domestic gas and oil from shale. Indeed, it could be a route to derailing the vision.

Five sets of problems are emerging with the shale narrative: economic risk; local environmental cost; global environmental cost; social cost, and opportunity cost.

First, the economic risk. The US “shale boom” looks increasingly as though it will turn into one of those bubbles that we humans seem so good at inflating and then bursting. The oil-and-gas industry has been losing cash by the tens of billions, because high drilling costs mean most companies are spending more than they are earning from low-price fracked gas, even when high-price fracked oil is added to the equation. Wider US industry may have benefited from cheap gas in the short term, but production from all shale gas regions – save the Marcellus of Pennsylvania – has peaked already, and many of us reading the detail now see little prospect of the gas industry delivering growing production for many years more. Rather, the reverse.

Second, the local environmental cost. Once Dick Cheney freed fracking from scrutiny under America’s Safe Drinking Water Act (the so-called “Halliburton Loophole”), back in the kick-off days for shale in the Bush years, bad news about contamination and health impacts should have been predictable. It has been slow to emerge, in part because of widespread use of gagging orders by the industry as part of compensation payments for wrecked farms and impaired health. But now a regular drip of bad news has started, soon likely to snowball as ever more people realise the reality behind the industry’s mantras about all being well.

Third, the global environmental cost. Gas industry operations can and do leak methane, a potent greenhouse gas, from wellhead to hob. The question is, how much? Early research on fracking-related emissions by the rare university teams not cowed by oil-industry funding are worrying. Fracked gas may well prove to be worse than coal in greenhouse terms, over the full-life-cycle. And British shale basins are far more faulted than US shale basins.

Fourth, the social cost. It is likely that few British people as yet fully appreciate the tight well spacings, industrial infrastructure, water profligacy, toxic waste-disposal challenges, and lorry movements that are required for a typical US shale “sweet spot”, and what the social cost of that would be if superimposed on rural Britain. Yet already local opposition is severe, even against single vertical unfracked test wells, which entail little waste, and few lorry movements. Planning for the first such was rejected by a council for the first time recently, in Sussex, with objectors “weeping with relief” in the chamber on hearing the decision.

Many such objectors are Conservative voters. The prime minister says he wants to deliver sufficient shale gas to drive down the gas price so far that large-scale manufacturing returns to the UK. He has little or no chance of getting that past his own voter base without committing political suicide, even if much of that gas proves extractable by fracking – which the British Geological Survey clearly has doubts about.

Fifth, the opportunity cost. There is a shovel-ready alternative to gas that can be developed surprisingly quickly, given the collective will: renewable energy and energy efficiency. Among this broad family is a star duo that the energy incumbency increasingly fears as an existential threat: solar and storage. Solar is a power source that is infinite and easy to tap, as opposed to finite and increasingly difficult to tap. Politically, the government’s own opinion polls show that solar is outstandingly the most popular energy technology with the British public, year after year, miles ahead of fracking, even now, so early in the game. In the most recent poll, for DECC itself, support for fracking was down at just 24%.

The opportunity cost is that many leaders in the oil and gas industry, and their supporters in government, want actively to suppress this fast-growing global industry, with its fast-falling cost base – along with all the other clean-energy industries – so as to not put investors in gas off.

The fact that the oil-and-gas incumbency views solar as such a threat to their business models should tell us everything we need to know.

• Jeremy Leggett is the founding chairman of Solarcentury, the UK’s largest solar solutions company, and charity SolarAid. Before that, as an academic and oil industry consultant in the 1980s, he took research funding from Shell, BP, and other companies, for work on such areas as shale energy. He is author of The Carbon War and Half Gone.

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