UK Shale Gas Could Shake Government Coalition
“I need a miracle”. As rogue UBS trader Kweku Adoboli could probably tell you, it takes more than fervent wishes to get you out of trouble when you”re billions of dollars in debt. Sometimes, though, miracles do happen – as a lucky Englishman called George Osborne has just discovered. As Britain”s Chancellor of the Exchequer, Osborne currently suffers the misfortune of having to guide a struggling economy with an escalating deficit and debts estimated at lb4.8 trillion through the worst global economic crisis since the Great Depression.
How will he do it?
Until recently the challenge seemed impossible. But then last week, gas exploration company Cuadrilla Resources handed him the solution on a plate, with the shock announcement that it had found four times more shale gas than expected in England”s Bowland Shale; perhaps 200 trillion cubic feet (Tcf) of the stuff based on information from two wells. If just a fraction of the reserves prove recoverable it not only turns the UK gas market on its head it would overshadow Poland’s massive reserves (around 187 Tcf) and Norway’s Troll gasfield (33 Tcf). And, according to Cuadrilla’s American CEO Mark Miller, there’s “as much gas per square mile in Bowland as the successful North American shale plays”.
With its previous energy miracle – North Sea oil and gas – a fading memory, Britain has grown increasingly reliant on expensive imported energy:
“In 2010, the U.K. was Europe’s second largest importer of liquefied natural gas (LNG) from distant locations like West Africa and the Middle East. It also imports natural gas by pipeline from Europe, paying high prices which are indexed to the cost of oil.”
So, at a stroke, Britain would seem to have solved its “energy security” issues but also a fair proportion of its socio-economic problems too. After all, abundant, cheap energy means lower production costs, greater market competitiveness, better standards of living and lower inflation. A win, win, win, win, win situation, then. What could there possibly be not to like?
Perhaps the best person to answer this is the Coalition government”s Chris Huhne, Secretary of State for Energy and Climate Change – and a man unfortunately rather more interested in the second part of his job title than the first. Though green, left-leaning Huhne didn”t actually go so far as to cite the junk science propaganda movie Gasland, he is clearly no great friend of Shale Gas.
The UK”s “dash for gas” will be halted by the government because if unchecked it would break legally binding targets for carbon dioxide emissions, Chris Huhne, energy and climate change secretary, said on Monday evening. “We will not consent so much gas plant so as to endanger our carbon dioxide goals,” he told a fringe meeting at the Liberal Democrats party conference in Birmingham.
And so begins what promises to be a battle royal among Britain”s already fractured Coalition government. On one side, the pro-EU Liberal Democrats perceive any reneging on Britain”s “carbon reduction” commitments and its drive for “renewables” as a betrayal of their deepest principles. On the other, the more right-leaning Conservatives are likely to prove exasperated beyond measure by the rejection – on ideological grounds – of a cheap, job-creating, economy-transforming energy source.
Whatever happens, the solution won”t be easy. Under the terms of the 2010 Climate Act, Britain is the only country in the world legally bound to a program of carbon emissions reduction. Between now and 2050, the British taxpayer is expected to stump up lb18.3 billion every year, as part of an ambitious scheme to reduce CO2 emissions by 80 per cent.
On top of this, one of Prime Minister David Cameron”s first gestures on assuming power was to announce his intention of leading the “greenest government ever.” Shale gas is not, of course, as carbon unfriendly as coal. But “fracking” is very much a dirty word among vociferous environmental campaigners. They won”t let Britain turn into Gasland without a very bitter fight.
So who”s going to win? Ultimately, I predict, it will be a case of “follow the money.” If Britain”s economic prospects seem grim now, imagine how much worse they”re going to feel in six months” time as a battered population emerges from what is forecast to be another freezing winter, with less money in their pocket (energy bills recently rose, on average by 15 per cent), with wind farms popping up like Bubonic plague pustules on their favorite stretch of countryside, and an economy being dragged ever further downward by the European sovereign debt crisis.
At times like this, the government minister responsible for deciding whether or not Britain continues to commit energy suicide will not be the Minister in charge of Energy. It will be the Minister in charge of the purse strings: George Osborne – not Chris Huhne.