The government’s climate advisor has warned about the risks of investing in fracking.
Ministers could lift the fracking moratorium in the light of a scientific report due to be submitted tomorrow (30 June 2022).
But Lord Deben, chair of the Climate Change Committee (CCC), said at a briefing:
“We won’t be using gas for any major purposes except with carbon capture and storage after a point, at the very latest, in the middle of the 2030s.
“So if you’re going to invest in these circumstances, you have to realise that that is absolute. And so that will restrict what you might want to invest in.
“To invest in it in the way in which you think that somehow or other that will be changed, …. that would be a grave error of investment and would be misleading to the people who put up the money.”
The moratorium on fracking was imposed in November 2019 following a series of earthquakes caused by operations at Cuadrilla’s shale gas site at Preston New Road in Lancashire.
The business secretary, Kwasi Kwarteng, commissioned the British Geological Survey to review the science around fracking for shale gas, following the Russian invasion of Ukraine.
Lord Deben, speaking on the latest progress report to parliament on reducing carbon emissions, published today, said:
“The urgency of moving away from fossil fuels, securing energy supplies and cutting carbon emissions has never been clearer.”
He said the CCC had not opposed fracking, as long as it met three tests, set out in 2016, that still applied:
- Emissions must be strictly limited during shale gas development, production and decommissioning, requiring tight regulation, close monitoring and rapid action to address methane leaks
- Overall gas consumption must remain in line with UK carbon budgets, displacing imports, rather than increasing consumption
- Emissions from shale gas production must be accommodated within UK carbon budgets, offset by emissions reductions in other areas
Last week, the shale gas industry challenged the use of the third test during a meeting with MPs and said there could be 50 years’ worth of shale gas onshore. Yesterday, campaigners said shale gas companies could be eligible for tax breaks for investment in exploration if the moratorium on fracking were lifted.
Coal mine is “indefensible”
Lord Deben also strongly criticised the proposed new coal mine in Cumbria. He said:
“It is absolutely indefensible. 80% of what it produces will be exported. So it is not something largely for internal consumption.
“What it claims to do is that it will provide for a particular industry coal, which is, at the moment, imported from elsewhere. That doesn’t mean to say that that coal will not be produced elsewhere anyway, largely in America. So, it doesn’t reduce the amount of coal that is produced. All it means is that we create another example of Britain saying one thing and doing another.”
Friends of the Earth said government decisions on fracking and the Cumbrian coal mine represented two major tests of the government’s commitment to climate change. Mike Childs, the organisation’s head of policy, said:
“The government must seize the opportunity to show that its talk on climate change isn’t just hot air and that it really means business.
“It must reject calls to keep the economy locked into yet more costly and polluting fossil fuels, and build a clean, safe and affordable future.”
“Strategy won’t deliver net zero”
The 600-page CCC report, the largest of its kind, warned that the government’s current strategy would not deliver net zero emissions by 2050.
There were major failures in the delivery programmes for achieving the UK’s climate goals, the report said.
Policies were in place for most sectors of the economy but there was “scant evidence of delivery” against the headline goals so far. The CCC said:
“This is a high wire approach to net zero”.
The CCC said government had credible plans for more than a third of the UK’s required emissions cuts to meet the sixth carbon budget in the mid 2030s. Another quarter could be met “with a fair wind”. But more than a third could not be relied on to deliver the necessary emissions reductions.
Lord Deben said:
“The UK is a champion in setting new climate goals, now we must be world-beaters in delivering them.
“In the midst of a cost-of-living crisis, the country is crying out to end its dependence on expensive fossil fuels.
“I welcome the Government’s restated commitment to Net Zero, but holes must be plugged in its strategy urgently.
“The window to deliver real progress is short. We are eagle-eyed for the promised actions would not meet its emissions targets in 2030 or for the sixth carbon budget in the mid 2030s.”
The strongest progress has been on deployment of renewable electricity and adoption of electric cars, the report said.
Emissions from electricity generation have fallen by nearly 70% in the last decade, the CCC said. Offshore wind had shown that in the right conditions costs could be cut dramatically and low-carbon solutions deployed rapidly.
The rise in the use of electric cars was already ahead of CCC and government growth projections, the report said.
But the CCC said there was a “shocking gap” in the policy for better insulated homes. The UK continued to have some of the leakiest homes in Europe and insulation installations remained at rock bottom, the CCC said.
Progress in reducing farming emissions had been “glacial”, the report added.
Friends of the Earth’s head of policy, Mike Childs, said:
“it’s clear that the UK government is falling woefully short on both honouring international climate change commitments and meeting its legally binding carbon targets.
“But it’s not too late to act. The lack of investment in home energy efficiency must be urgently addressed – starting with a nationwide, council-led, street-by-street home insulation programme, focussing on those most in need first. This would reduce energy demand, slash bills and significantly reduce emissions.”
More reaction as we get it.
Another strange comment from Lord Deben. He does have a habit of trotting them out.
He must have missed the offer from INEOS to do it all at their own expense.
If anyone is going to take investment advice from someone else start from the beginning-what is the track record of those supplying the advice? Then, are they able to give advice adjusted for current circumstances?
Sorry, IMHO, this does not get past the first two hurdles.
Lord Deben (AKA John Gummer)….”.Let them eat burgers” …at least if the electricity isn’t too expensive or hasn’t been rationed.
I’m sure investors are not fools, shale gas is expensive to extract and unproven. INEOS’ “offer” was nothing more than a PR gesture. Ratcliffe only offered to test one site, one site does not make an industry.
“We won’t be using gas for any major purposes except with carbon capture and storage after a point, at the very latest, in the middle of the 2030s.“
This says it all.
The reality is, even if the moratorium is lifted, and they manage to extract gas, a shale gas industry is many years away, so is a dead duck before it even gets started. I think most understand Lord Deben’s warning perfectly.
Nope, it does not say it all, KatT. It says all you want to hear, which is different. It comes from a source that I do not see has been that accurate in saying it all before.
Do you honestly believe that if fracking in UK was allowed to be further explored it would be via a free for all?
Don’t think so. It would be via a controlled and relatively small start, ideally funded by a company who took the financial risk upon themselves.
Investors are indeed not fools. They recognise they do not invest in INEOS. INEOS do not have shareholders, they have owners who own a chunk each. They would take the risk expecting to gain the reward. They have a pretty decent track record of doing that, so I can understand a fox has entered the coup reaction, but that is what foxes do.
Oh Martin, don’t try to change the context of what I’ve said. Firstly I never implied in any way it would be a free for all, I simply stated the fact that the development of one site is all INEOS offered and that is a long way off an industry. Indeed, the fact I say a shale gas industry is many years away, shows the opposite of a free for all and that I understand it will take years to establish an industry. And that is the very point Lord Deben is making. Time is relevant to return on investment and risk, in the context of “ We won’t be using gas for any major purposes except with carbon capture and storage after a point, at the very latest, in the middle of the 2030s.”
There are clearly other companies, and not just INEOS, with licences and they will require investment.
You are splitting hairs. And in my humble opinion it is you that is choosing not to hear what Lord Deben said. As the Chair of the CCC, advising and working with government on the government’s legal obligations to Delivering Net Zero and the policies and timescales set out and agreed by government, I think most would accept he is well informed and in a position to make such statements. It may not be what you believe or want to hear, but most people can understand perfectly the sensible point Lord Deben is making.
No, I would not expect he is well informed, based upon previous comments which have shown exactly the opposite. Like most who are competing against a sector, it is necessary to remove the anti competition rhetoric, and focus upon the substance. Then he is stating things I hear but do not have to agree with. Some I do, some I do not. He is an advisor. So was Dominic Cummings. It does not make them right all of the time. When he states “we won’t” he actually has no control over that whatsoever, and certainly not the timescale.
Currently, around the world, there is a heck of a lot more fracking going on than there was, and this is likely to continue to be the case for many years to come. Lord Deben may not understand that, or his wishes overtake the reality. I noted that someone posted on DoD that when the war ends then oil and gas prices will revert to more normal levels. An equally nonsensical hope but hardly likely to happen. Would sanctions be lifted from Russia? Nope. Gas will be the transition fuel around the world for a long time to come and little of it, in big chunks of the world, will come from one previous major supplier so that will keep prices high.
Reference your point about other companies it excludes the standard industry practice. One company, if successful, looks to expand that success. Other companies looking on either join in, and then the investment is secured, or the company that found the success just says, “we will buy you out” if the others have an issue joining in. With a high gas price, and a discount on gas prices on offer against high gas prices, and no cost to the tax payer, Lord Deben can advise what he likes but I suspect many would find that advice difficult to define as sensible. They would probably remember his advice around Mad Cow Disease and others advice advocating buying diesel cars.
Ineos would be in a position to continue to import fracked gas into Europe, at higher environmental cost compared to local sources that would not require being turned into LNG, or say they can supply the gas locally sourced without those high environmental costs and at a discounted price. Now, I am no longer working in marketing, but I still recognise the easy sell and there seems to be a very easy one here.
Not saying the Government may buy, but they might end up with more of a problem with voters if they don’t compared to if they do. Windfall taxes run out pretty quickly and the silent majority do not stay silent when their cost of living is hurting them. They are likely to ask what is the logic around paying £2B out of their pockets to repair gas storage when many of them are sitting on top of stored gas. If someone had shown that could be taken out of storage successfully, I, for one, would not feel that a large marketing budget would be necessary.
The government’s Windfall Tax has provided a loophole whereby oil and gas exploration and development would receive a tax break of 91.5p in every pound. Fracking companies could benefit from this loophole meaning that contrary to the notion that private companies would be taking the risk it would be the tax payer who would be liable for 91.5% of the cost.
It’s a clear indication that when you have to resort to FRACKING.
FRACKING is energy intensive, dangerous to human and animal health, environmentally damaging , climate changing process . Which leaves a toxic and financial burden for future generations managing abandoned wells.
When you have to resort to such a process , you really are scraping the bottom of the fossil fuel barrel.
As far as the discount of 25% on Gas prices for those UNLUCKY residents living within the 5km-10km Fracking fall out zone ……. Well they will have to contend with a drop in the value of their homes , difficulty in obtaining buildings insurance, lower quality of health, noise, traffic and pollution..
Who on this earth with more than TWO brain cells in their head is going to think that 25% of their Gas bills is a Win , Win situation ?
I think the major flaw in his advice is the idea that We won’t be using gas for any major purposes except with carbon capture and storage after a point, at the very latest, in the middle of the 2030s.” This is clearly completely unrealistic. Like the transition to electric cars it is going to take decades longer. Which report that it costs 8p a mile more to top up an electric car on the motorway than using petrol. We can wish all we like for change but joe public always votes with his pocket..
We won’t be using gas for any major purposes except with carbon capture and storage after a point, at the very latest, in the middle of the 2030s.- Lord Deben! “You want to Bet!!”