Page 106 - Respond 2014 | RTCC Publications

fracKing:

to driLL or

not to driLL? Photo: © greensefa.

Like so many energy debates, the furore over fracking sees
louder and louder shouts from implacable opponents about the
terrible risks/glorious opportunities the new technology offers By Simon Moore

The media both feeds and feeds off this. As one news producer recently told me, moved to a position that demands answers before
he’d rather have a “disco” between extreme pro and anti positions than air a middle- they can be given. Any centrally-planned system (and
ground position. The degree of uncertainty in the shale debate appears too great for that is what the forthcoming UK Electricity Market
most of the media and the campaigners to handle. More worrying is how government Reform programme is) requires far more information
policy reacts to such huge uncertainties about both shale and its alternatives. that offcials can conceivably possess and assess.
It demands that government be able to weigh the
Rising demand costs of a variety of energy technologies, for decades
First, let’s review a couple of things we can be reasonably confdent of. The frst is into the future, alongside understanding of demand
that there will be demand for gas in the future. Even in the UK Committee on Climate patterns, climate policy, carbon prices and the rest.
Change’s most aggressive decarbonisation strategy, there is still at least 40GW of gas
capacity on the power system in 2030 (a recent report from Greenpeace and WWF had Crystal balls
42GW of gas capacity in 2020, going to 36W in 2030.) It is this incessant need to predict and to forecast
that obliges government ministers, NGOs, industry
Gas-fred power stations will be needed, at minimum to fll in gaps when weather- and everyone else who has weighed in on fracking
dependent renewables aren’t generating. It will also be used for the things like heating, over the past months to argue not for a process of
cooking, and industrial applications for several decades. A second one is that, if shale discovery to fnd out more, but instead to argue that
is produced commercially in the UK, it is displacing some more expensive source, at shale should either be ruled out for good or is going
the moment LNG imports. In other words, if it’s more expensive than any other way of to save the day. Neither side can possibly know what
getting gas, then it won’t be produced. So, in that sense, shale gas production will lower they claim. Shale gas may transform the UK energy
prices, at least compared to what they would otherwise have been. equation. It may not. For many, this uncertainty is
unsatisfactory.
Business case
The impossible questions are by how much and whether shale can be “produced The best way we have for exploring the uncertainties
commercially”. It rests on resolving a number of uncertainties: about geology; about of the future is a market, with a proper carbon pricing
the economics (both of production and compliance with environmental regulation); strategy. We need additional support for new low
about energy and climate policy; and increasingly, about public opinion. That is the carbon technologies, but it should not undermine
point of the exploration process – to learn about the opportunities and the costs of the ability of the market to explore the future and
potential production. whether new technologies can change prices.
Instead, the move away from markets in electricity
The British Geological Survey have given an estimate of the scale of the resource in and toward central-planning means that persuading
the ground, in one part of the country, but fnding out how much can be extracted, civil servants of the correctness of your forecasts is
and what it’ll cost to get the gas out of there requires test drilling and time. Right now, far more valuable than the ability to demonstrate it in
the only sensible answer to the question of what impact shale will have on UK energy competition with rivals.
supplies is to say “I don’t know”.
Simon Moore is an Environment & Energy Research
The answer is the same for almost any energy technology. The question is how you Fellow at the London-based Policy Exchange think
cope with that uncertainty. Unfortunately, in recent years, energy policy in the UK has tank. Follow him on twitter @SMoore1984
104 www.rtcc.org