On November 4th, the House of Lords debated a report on the economic impact on UK energy policy of shale gas and oil. The report was the outcome of an enquiry by the Lords’ Economic Affairs Committee. Below are extracts of the debate in the order that the peers spoke
Lord MacGregor of Pulham Market (Conservative)
Government response to the report’s recommendations on regulation While the Government’s response points out what they are doing on this front, many complexities remain; despite the attempts at co-ordination, many responsibilities are divided between different agencies. Are local authorities sufficiently resourced and geared up with the skills for the necessary technical challenges?
Speeding up shale extraction We want a more strongly co-ordinated government campaign, and one given higher priority to put over the message constantly repeated and speed up the process. That is why we recommended in our report as one of our conclusions that, “since several Departments share responsibility for policy on shale gas, the Government should take measures to improve coordination, clarity and speed of policy making and its implementation”.
Exploration and appraisal of our shale resource has been too slow. Here is a potential economic prize which we should grasp without further delay. We need to get on with it.
Lord Hollick (Labour)
Benefits of shale gas If shale gas can be developed in the UK it could play a valuable role in our energy mix, to the benefit of consumers and the overall economy. It will help to fill the gap as North Sea gas declines; it will halve emissions by replacing coal; and it will provide a home-produced source of energy which can help us to transition to affordable renewable sources of energy.
Barriers to shale gas What, then, stands in the way of rapid development of this promising natural resource? In a word, it is bureaucracy. The regulatory regime is complex, unwieldy and slow with many government agencies sharing responsibility for approving fracking applications. The process is bedevilled by complexity; it lacks transparency, accountability and consistency.
Lead regulator We recommended that the Government appoint a lead regulator to address these shortcomings. To get an overall grip and provide authoritative leadership of this important opportunity, we also recommended that the Chancellor chairs a sub-committee of the Cabinet to turn the Government’s enthusiasm into action. The Department of Energy and Climate Change’s frankly flaccid, complacent response to our report provides ample evidence of why that leadership is so badly needed.
Lord Shipley (Liberal Democrat)
Public acceptance We say in our report that the development of shale gas cannot go ahead without public acceptance. We say that shale development has to be properly regulated and that we must reduce or eliminate risk, and I agree. But I want to express support for the rights of local people in areas that have been or could be subject to licensing applications. Such local concerns are understandable and must be clearly answered because fracking must be safe.
Public concerns Public concerns relate to issues around ground-water contamination, flow-back water, tremors, noise, traffic, fugitive methane and destruction of the countryside. These all need clear answers. Fugitive methane, as the report indicates, can leap from well-heads during the extraction process or when being transported. As we say in the report, this will need to be monitored, even though levels of fugitive methane emissions are estimated to be similar to conventional gas production.
Independent well examiners There should be an explicit recognition in the regulations that well examiners must be independent of the well operator—not appointed by the operator. This would create a more robust and more transparent regulatory system, because nothing less will build public confidence.
Lord Lawson of Blaby (Conservative)
Co-ordination of shale developments If anything needs co-ordination, this does. People used to talk about joined-up Government. How about joining up the governance of shale? Nothing could be less joined up than it is at present. People have decided that it is not worth investing in UK shale if you cannot even get to the exploration stage. Other countries, such as China and Argentina, are going ahead with it—America is by no means the only one although it was first in the field—and we are left languishing behind.
Make shale a national priority Many people recognise that there is a malaise in this country. It might not exist exclusively in this country but it is certainly here. There is a great gulf between the people and the elites. Elites are needed, but they are needed to provide leadership in the interest of the people, and the people do not feel that they are acting in their interest at present. We could make a start in changing that by making the development of UK shale “an urgent national priority”, to quite the concluding words of our report—and we did not say that lightly. Action, not words, is needed, and not just for the economy. It might restore a sense of optimism in place of the debilitating pessimism that is so prevalent in our country at present.
Baroness Blackstone (Labour)
Resourcing strong regulation It is vital that we have a strong regulatory system in place. Everything that I have said about the environment requires this. This may mean that in a few areas the existing environmental regulations and voluntary measures from industry need some strengthening, if only to reassure the public. The Environment Agency will in any case have to take on additional work to regulate the industry. Will the Minister reassure us that it will have adequate resources to do so, and will the principle of full cost recovery from the industry be applied?
Lord Tugendhat (Conservative)
Protests by “prosperous people in prosperous areas” One of the most disagreeable things about many of the protests against the development of shale gas is that they come from prosperous people in prosperous areas, and these people may very well prejudice the development of a resource that would help less prosperous people in less prosperous areas. I agree that the regime must safeguard as far as possible the quality of life of the people in the areas concerned, but it would be quite intolerable if a small minority of people in the most well-to-do parts of the country was allowed to prevent the development of a resource which could have such a very great and beneficial impact on the country as a whole.
National disservice If we do not get ahead with exploiting this possibility we will be doing a great disservice to the nation.
Lord Smith of Clifton (Liberal Democrat)
“Ministerial irresponsibility” The very feeble response from the Government to our report revealed a lack of urgency bordering on irresponsibility by Ministers that is frankly unacceptable.
Nimbyism There is likely to be a strong element of nimbyism among the public, which will be played upon by pressure groups who – in principle and never mind the evidence – are totally opposed to shale exploitation whatever the safeguards imposed. The Government and their successors should offer the necessary guarantees to rebut nimbyism and encourage the creation of a fracking industry to exploit the use of shale as a new source of energy.
Lord Borwick (Conservative)
Community benefits It just seems to me that the local authority need not be the conduit for those benefits, as I am not convinced that the proposed methods will actually benefit people as much as they should.
Lord Giddens (Labour)
US experience If we are not very careful, “Not in my backyard” could sink the whole show. The American experience on this, not just on a macro level but on a micro level, therefore, should be studied in detail and with great care.
Viscount Ridley (Conservative)
Exaggerated harm We have twiddled our thumbs and listened to every discredited theory about environmental harm from shale, including fugitive emissions, flaming taps, aquifer pollution, damaging earthquakes, radioactivity and heavy water use. As the noble Baroness, Lady Blackstone, said, these have been greatly exaggerated.
Lord Griffiths of Fforestfach (Conservative)
Lacking enthusiasm The US people involved in the industry showed an enthusiasm, urgency and intensity which, I have to say, was lacking in colleagues from this country.
Cautions bureaucracy The Government have made very clear that they support fracking. However, their intention has become mired in a cautious bureaucracy. There is a great prize to be won, as so many people have said. I think that now, as a matter of urgency, the process of exploration and development must be made quicker, simpler and easier.
Baroness Worthington (Labour)
Review regulatory framework The key thing for me is that we are relying on a fairly old regulatory framework. Old is perhaps a relative term but regulations were passed in 1996 that cover “Offshore Installations and Wells”. The title slightly gives it away; they were focused on the offshore industry. It might have been sensible for the Government to look again at those regulations and consider whether, in moving forward on fracking, we did not need a comprehensive review of the regulatory framework and to have had government time given to bringing in those regulations.
Monitoring emissions It would be a shame if the detractors of shale gas were continually able to say, “Oh but it’s going to be worse than coal”, purely because we do not have the information. It would seem sensible to ensure that that monitoring is there, and that it is well resourced and developed in an independent manner.
Baroness Verma (Conservative)
Defending government The Government have not been, and are not, complacent about responding quickly and being able to ensure that realising the potential for shale oil and gas is not hindered by unnecessary regulations.
Public engagement Planning permission underscores the need to engage the public. Noble Lords have rightly pointed out that by properly engaging we will gain support and take communities with us. That is why the Government believe that a social licence is key to operate, so we are ensuring that there is access to evidence-based information that can address any questions the public may have.
Viscount Ridley (Conservative)
Win public trust by drilling We often say that we have to win public trust before we can do this, but the best way of winning public trust turns out to be to drill a well. I was told this about Poland. People’s reaction is: is that all there is? Is that little box of tricks behind that hedge all that is needed?
Baroness Verma (Conservative)
Real engagement I accept my noble friend’s comment but evidence has also shown that real engagement, right from the start of the process, explaining what will happen within those communities, how it will impact on those communities and the benefits that come with the exploration ensures that you have public opinion on side before anything has to take place. That evidence is perhaps slightly more informed than the example my noble friend gave.