8 November 2016
Statement by Paul Wheelhouse, Minister for Business, Innovation and Energy, Scottish National Party, South Scotland
I would like to take this opportunity to update Parliament on the progress of our research into unconventional oil and gas in Scotland. The Scottish Government has adopted a clear and consistent approach to emerging technologies that could develop Scotland’s onshore hydrocarbon resources. Our approach to unconventional oil and gas is one of caution while we gather and consider evidence on the new technologies that industry has proposed. That process has already resulted in the decision last month not to proceed with underground coal gasification in Scotland.
Against the backdrop of our cautious, evidenced approach, there are some, such as the United Kingdom Government, who wish to pursue a gung-ho approach to support the industry, and there are others who seek an immediate ban. They do not want to wait for research and evidence and have put forward their views without concern for the differing interests or the views of those who would be affected across Scotland. I have no doubt that both are sincere in their views and beliefs, but it is the job of Government to base our decisions on evidence, taking proper account of public opinions, and to seek a collective way forward. We are deeply sceptical of the UK Government’s approach.
There is much heat on the issue, but our intention is to go through a process that sheds light. In doing so, we must also remember that shale resources in Scotland are located across the central belt in the midland valley—one of the most densely populated areas of Scotland. Communities in those areas would be directly affected by any unconventional oil and gas development, and they must be given genuine opportunities to explore and discuss the evidence and issues in depth and at length.
Our precautionary, consultative approach is the right one and it has been widely supported by communities, industry and other interested parties. To allow us to gather a comprehensive body of evidence and prepare for an inclusive debate and consultation, we put in place a moratorium on unconventional oil and gas in January 2015. That means that no such projects can take place. For the avoidance of any doubt, I note that the moratorium covers hydraulic fracturing, which is also known as fracking, and coal-bed methane technologies.
Today, we have reached a major milestone in the process, and I can confirm that the research reports have now been published in full. The research was carried out by leading independent experts in their respective fields, and the findings will deepen our understanding of the issues. At this stage, the Scottish Government is not making any judgments on the findings. As we set out when we established the moratorium, the publication of the research will now be followed by a period where we and the public can scrutinise, question, challenge and discuss the findings before we begin a public consultation. We have provided the Parliament with hard copies of the executive summaries of the research, and I encourage all members to read the reports at their leisure.
I would now like to draw attention to some of the main aspects of the research that I believe demonstrate the value and significance of the work that we have published today. Central to the work is the economic impact research that KPMG carried out. It identified a number of potential industry development profiles in Scotland, which have informed the other studies. Those scenarios are based on estimates of potential oil and gas resources that have been informed by discussions with stakeholders, including those who represent industry and environmental interests.
That study has quantified the associated economic impacts on the Scottish economy of any prospective activity, using a range of measures including expenditure, gross value added, tax revenues and employment. A number of projections of economic benefit and employment have been put forward previously. This report presents an impartial assessment of the potential impact of an industry in Scotland. KPMG concludes that, under its central scenario, 20 well pads of 15 wells each could lead to cumulative direct expenditure of £2.2 billion in Scotland over the period through to 2062, which would create supply chain impacts and other induced economic impacts amounting to an additional £1.2 billion over the period, and be responsible for supporting up to 1,400 direct, indirect and induced jobs in Scotland at its peak. To put those economic impacts in context, the report states that, on an annual basis, that represents “on average, 0.1% of Scottish GDP in our Central scenario”.
The report also discusses a number of other potential economic considerations including the use of gas as a feedstock in the petrochemical industry, the impact on local house prices, road use, agriculture, visual amenity, environmental costs and health costs. Given our commitments to carbon reduction and climate change, those impacts must be considered alongside any economic impact.
The Committee on Climate Change was asked to examine the impacts on territorial carbon emissions of unconventional oil and gas activities in Scotland and how those impacts might vary over time. The study sets out three tests that would need to be met for the development of unconventional oil and gas to be compatible with Scottish climate change targets. The tests are emissions being limited through tight regulation, Scottish unconventional oil and gas production displacing imports rather than increasing domestic consumption, and emissions from the production of unconventional oil and gas being offset through reductions in emissions elsewhere in the Scottish economy.
The study also provides a quantitative analysis of potential emissions under a number of regulatory and production scenarios. The committee estimates that, under a high production scenario, CO2 equivalent emissions in 2035 could be between 1.1 and 2.6 megatonnes per year, depending on the strength of regulation. It is estimated that, under the central production scenario, emissions will be 0.6 megatonnes a year in 2035 if the minimum necessary regulation is adopted.
The overall conclusion of the health impact assessment that Health Protection Scotland conducted is:
“the evidence considered was ‘inadequate’ as a basis to determine whether development of shale oil and gas or coal bed methane would pose a risk to public health, if permitted in Scotland”.
If an industry were to proceed, the report discusses a precautionary approach that would be proportionate to the scale of the hazards and the potential health impacts. Health Protection Scotland notes that that “could be based on a range of mitigation measures involving operational best practice, regulatory frameworks and community engagement.”
The study that examined transport impacts, which was carried out by Ricardo Energy and Environment, estimates that an individual well pad could require traffic movements to be sustained at around 190 a week for a period of approximately two years during the development phase. Ricardo notes that the main factor that affects traffic flows is the water transportation requirement. It concludes that, if that can be avoided—for example, by using pipelines or reusing waste water—the impacts can be significantly reduced.
Ricardo also observes that any increase in vehicle movements could result in an increase in noise, vehicle emissions, road damage or traffic accident risks. It notes: “Provided the planning and EIA”— that is, environmental impact assessment — system is properly implemented, any significant impacts would be avoided through the use of appropriate mitigation measures.”
However, the report also states: “local communities would nevertheless experience an increase in traffic numbers, potentially for an extended period of a number of years.”
The decommissioning study that was carried out by AECOM and the seismicity study that was carried out by the British Geological Survey each reviewed international literature and practice to draw conclusions on potential hazards and what, if any, steps could be taken to mitigate those hazards, including regulatory actions. AECOM concludes: “There is a low risk of post-decommissioning well failure”.
It also notes that there is potential for improvement in existing regulatory provisions.
The study that the British Geological Survey undertook concludes that hydraulic fracturing is generally accompanied by microseismicity and “the probability of felt earthquakes caused by hydraulic fracturing for recovery of hydrocarbons is very small.”
The study also observes that improved understanding of the hazard from induced seismicity and the successful implementation of regulatory measures to mitigate the risk of induced seismicity are likely to require additional data from a number of sources, including improved monitoring capabilities.
As we committed to do as part of the moratorium, the Scottish Government has hosted a workshop with regulators. A record of that meeting is now available to view on the Scottish Government’s website.
To ensure that the full range of environmental issues is given due consideration, a full strategic environmental assessment will be prepared and considered before a final decision is taken.
I am confident that the reports that we have published today deepen our knowledge of the evidence and shed light on the issues and choices that the industry presents. I hope that members can tell from the summary of the research that no one study can give a conclusive view on the industry and whether it has a place in Scotland’s energy mix. Some will say that the research shows that the economic impact is low and that the risks are too great; others will say that the risks can be managed and that the potential economic gain cannot be ignored.
The reports rightly do not make recommendations on whether unconventional oil and gas should be permitted. The science and evidence inform the debate, and it is now time for that debate to take place.
I can confirm today that our consultation on unconventional oil and gas will launch on schedule early in the new year. In view of the importance of discussing unconventional oil and gas in the context of both wider energy use and climate change matters, I can also confirm that the launch of the consultation will be co-ordinated with the publication of our climate change plan and the consultation on Scotland’s draft energy strategy.
The consultation, which will cover hydraulic fracturing and coal-bed methane, will not simply be an opinion poll—that would not do justice to the broad and complex range of issues that people care about and which need to be debated. It will continue the process of presenting evidence and encouraging discourse, and it will allow the public and stakeholders to set out their views. Our consultation will give everyone who has an interest in the issue an opportunity to express their view. That is what the public and stakeholders expect, and that is what we are delivering.
Once the consultation closes and the results have been independently analysed and published, we will make our recommendation on the future of unconventional oil and gas, and allow Parliament to vote on it. After that, the Scottish Government will come to a considered judgment on the future of unconventional oil and gas in Scotland.
I know that everyone in the chamber recognises the different opinions that exist on the development or otherwise of unconventional oil and gas. The Government has maintained a consistently sceptical and precautionary approach throughout. In reaching a final decision as a Government and as a Parliament, it is imperative that, at every step, we take a careful, considered and evidence-based approach alongside an informed public debate. Given the significance of the issue, that is the right and proper way to proceed.
Speech by Alexander Burnett, Energy Spokesperson, Conservative, Aberdeenshire West
I thank the minister for advance sight of his statement.
As an Aberdeenshire MSP, I first congratulate Colin Clark and Iain Taylor on winning their respective council by-elections in Inverurie and Banff last Thursday.
No wonder they won, after the raiding of our fossil fuel industry in the north-east to fund an economy that is missing out on fracking.
Dr Stuart Paton recently said that there are “a number of contradictions” in the Scottish Government’s energy policy. Nowhere is that contradiction more evident than in this morning’s “Scottish Energy News”, where we see the cabinet secretary posing with his minister and with a company that has just been awarded a quarter of a million pounds to improve onshore fracking technology. It is simply breathtaking that, just hours after that publication came out, the minister can come to the chamber and talk about
“a clear and consistent approach” yet still give no timescale for a decision on fracking. Scotland, the industry and consumers need direction, so why has the minister once again failed to deliver and when will we get a decision?
Intervention by The Deputy Presiding Officer
Before you get up, minister, I will say to Alexander Burnett that to use time for questions in that way is inappropriate.
On timing, I am not sure whether Alexander Burnett was not listening or did not read my statement beforehand. I have set out that we will, in the new year, launch the public consultation. Fracking is an extremely important issue for Scotland to debate and to get right as a policy area.
Unlike the UK Government, we are not taking a gung-ho approach by supporting an industry when there are significant concerns among the public and stakeholders about the success, or otherwise, of that industry.
We feel that it is vital, particularly given the concentration of population in the midland valley—the main area where fracking would be likely to take place, if it were to go ahead—that we listen to the views of communities and of wider stakeholders, and take soundings on the strength of the evidence that we have presented today. We are not taking it for granted that the research will not be challenged by stakeholders in the industry. We think that it is important to listen, which the Conservative Party would perhaps do well to do—not just on energy policy, but on wider issues.
On support for the oil and gas industry, I hope that Mr Burnett studies closely the economic impact study by KPMG. I know that the Conservative Party has made great claims about shale gas and other technologies providing an alternative route to safety for the oil and gas industry. I will leave it to Mr Burnett to judge whether the figures that are presented in the KPMG study match up to his expectations.
Speech by Claudia Beamish, Environment Spokesperson, Labour, South Scotland
I thank the minister for prior sight of his statement and the range of reports. It is disappointing that the Scottish Government has not gone for a public consultation on an outright ban on onshore fracking today, especially as the minister stated on 6 October that underground coal gasification would not be part of Scotland’s energy mix.
As the 22nd conference of the parties—COP22—opens in Marrakech, does the minister agree that the climate change science is irrefutable and was irrefutable before the reports were even commissioned? Does he agree that for our communities, our children and grandchildren and for jobs in clean energy, now and in the future, we should not lock into another fossil fuel? If he agrees, why does he not announce a public consultation on an outright ban on fracking, as I have done in my proposed ban fracking in Scotland bill?
There were a number of issues in that question. On reviewing the evidence on underground coal gasification, it became clear that very significant health and safety issues exist about that industry. If we are taking an evidence-based approach, we have to take account of the work that has been done. We said in advance in our manifesto that we would and have stood on a platform saying we would consult, following publication of evidence. We are maintaining our commitment to doing exactly that. It is for others, including Claudia Beamish—who I am sure will be active in the Scottish Government consultation in the new year—to submit their views on the research.
Aspects of the research may be supported and aspects may be challenged. We think that it is right to put the research that we have commissioned out there and to invite the public to engage in the debate and, ultimately, to give Parliament a vote on the recommended approach that we will put to it.
We are trying to be inclusive and we are giving all the parties in Parliament the opportunity to give their verdicts on our recommendation, based on evidence and the consultation. We will then take it from there.
I assure Claudia Beamish that the Cabinet Secretary for Environment, Climate Change and Land Reform, Roseanna Cunningham, intends to attend the Marrakech COP22 to give the Scottish perspective. We take extremely seriously the impact on global climate emissions of our actions as a country. The Committee on Climate Change’s work informs us of its estimate of the climate change impacts of the industry. Again, without passing judgment on the figures, I invite others to comment on the research that we have published today on the climate change impact.
Joan McAlpine, Scottish National Party, South Scotland
Is the minister aware of the recent University of Stirling report by Professor Andrew Watterson and Dr William Dinan on the public health implications of fracking, which notes that “the evidence base for robust regulation and good industry practice is currently absent”, and found “multiple serious challenges surrounding location, scale, monitoring and data deficits facing regulators overseeing onshore UGE and fracking in the UK”?
We are aware of the research that Joan McAlpine has referred to. Health Protection Scotland has, on our behalf, looked at the health impact information and carried out a review of primary research, and it has published its report today. I am aware that the University of Stirling study also involved a literature review that looked at secondary and primary data sources. I encourage all those who have a view, whether it challenges the information that has been presented by Health Protection Scotland or supplements it—as in the case of the work that Joan McAlpine referred to—to submit it when the consultation begins in January. There is an opportunity for all stakeholders, regardless of their view, to feed in so that we ensure that we have access to the fullest range of views and information on the subject.
Murdo Fraser, Conservative, Mid Scotland and Fife
The minister did not answer my colleague Alexander Burnett’s question, so I will try again. We know that the consultation is to be published early in the new year. When will the consultation close and when will the Scottish Government reach a decision?
I tried to answer Alexander Burnett’s question by saying that I set out in the statement the launch of the consultation. We are looking to do that over about a four-month period initially, to take the findings and produce feedback. As I said, that will tie in with the climate change plan and the energy strategy, which will be developed in the course of next year. We hope to complete both documents in the second half of 2017, having formed a view on development or otherwise of onshore oil and gas.
Jackie Baillie, Labour, Dumbarton
The minister will be aware that many people point to the economic benefits of fracking as justification for it. I therefore draw to his attention table 1.2 in the assessment of economic impact, which sets out the impact over 40 years. It shows that, under the central scenario, spending in Scotland would amount to £55 million per annum and that, in the low scenario, the figure would be £12.5 million per annum. Does the minister believe that those relatively low figures justify a risk to our environment and public health?
As I said in my statement, I am trying to avoid giving a Government view on the figures, but I note for the record the figures that Jackie Baillie mentioned. I merely suggest to stakeholders, including colleagues across the chamber, that they should look at the balance of the factors that we have outlined today—the economic, climate change, health, decommissioning and transport impacts—to ensure that we take a rounded view on the impact across all those issues. That is what the Government has to do. If we were to focus on one or another, that would perhaps be a false position. We need to let the people tell us which one they think is more important and feed into our consultation during the course of the winter. I accept that the figures are in the report but—with apologies to Jackie Baillie—I will not pass judgment on them today.
Mark Ruskell, Green, Mid Scotland and Fife
The Parliament has a legislative duty to scrutinise the climate action plan that the minister’s Government is producing. That has been delayed and will now be out in January, as the minister said, alongside the energy strategy. What will appear under the headline “Fracking” in those documents? Will there just be a giant question mark? What are people meant to think of that? Will the minister at least release the strategic environmental assessment ahead of the public consultation in January on unconventional gas? Will he also commit to including full liability on clean-up costs in any decision making?
I certainly recognise the importance of the issue’s linkage to our climate change plan, on which Roseanna Cunningham is leading for the Government, and the energy strategy, which I will take forward on behalf of the Government. Those documents will be published in January.
People can look at all the documents in the round—the consultation on unconventional oil and gas, the energy strategy and the climate change plan. As I outlined to Murdo Fraser, if we can do so in the course of the year, we will take on board those points for the finalised documents.
I am sure that there will be a healthy debate on the role for unconventional oil and gas under the consultation. I commit to the member that we are looking to take on board the findings of that consultation for the finalised energy strategy. I am sure that the Cabinet Secretary for Environment, Climate Change and Land Reform will take heed of the consultation, too.
Willie Rennie, Liberal Democrat, Mid Scotland and Fife
I thank the minister for the advance copy of his statement and for the voluminous reports that he supplied. I have to admit that I have not read them all yet.
It is pretty clear that the Government is on a long journey to saying no to fracking. It is good news that it has not given the go-ahead to fracking today. To follow on from what Murdo Fraser asked, will we get a final conclusion and a decision by the Government on the issue by the end of 2017?
As the minister with responsibility for the energy strategy, I intend to ensure—if it is at all possible—that we take on board the Parliament’s view in what we propose to do in relation to unconventional oil and gas in our finalised energy strategy next year. The draft will be published in parallel with the climate change plan, and the debate that Parliament will have on unconventional oil and gas will have an impact on our consideration of both key documents.
However, I cannot predict how Parliament will vote. We will put a recommendation to Parliament and, for protocol reasons, I do not want to prejudge Parliament’s view. I expect that we will have a lively debate followed by a vote on the position and that the Government will reflect on the Parliament’s vote at that time.
To answer Mr Rennie’s sedentary question, I intend to do that by the end of 2017.
Angus MacDonald, Scottish National Party, Falkirk East
Given the significant local interest, I am sure that the vast majority of my constituents in Falkirk East will welcome the publication of the research report and the minister’s confirmation that the full public consultation is to go ahead at the turn of the year. What weighting will the Scottish Government give to the findings of the public health impact study when it reviews the submissions to the consultation prior to making its final decision?
There will be a lot of public interest in the health impact alongside the other issues that I flagged up. I will make a similar point to Angus MacDonald, who has a strong interest in the issue from a constituency perspective, as I made in response to Jackie Baillie.
We need to put the information out there and to invite communities across Scotland to give us their view on which of the factors that we present to them are the most important. There are issues regarding the health impact, the economic impact, the decommissioning impact and so on. All the different studies are important in their own right and we do not intend to assign a particular value to them. Instead, we invite the communities of Scotland and wider stakeholders to tell us what they think are the most important things for us to take into account when forming our recommendation to Parliament. I will listen carefully to views from Falkirk, too.
Maurice Golden, Conservative, West Scotland
Given that climate change has no borders, does the minister agree that, by embracing the technology, Scotland could decrease global carbon emissions by reducing the requirement to import foreign fossil fuels?
I do not want to sound like a broken record, but I invite Maurice Golden and anyone else who shares his view that that factor is important to make a submission to the consultation. We are not prejudging the importance of any one factor, including climate change, as all the studies are important. I hope that they will inform the debate, shed more light on the subject and enable all across Scottish society to come to a less heated, more enlightened and more considered view of the debate.
KPMG has highlighted the point that substances that can be extracted through fracking or coal-bed methane technology could be used as feedstock for Grangemouth or other petrochemical plants. We have to factor into that the scenario in which consumption increases, which would mean additional overall emissions. I leave it to members to review the evidence and give their view on the important messages to take from that.
John Mason, Scottish National Party, Glasgow
To follow on from the previous question, does the minister agree that we are concerned about our climate change targets and that allowing fracking would in all probability make it more difficult for the Scottish Government to achieve its greenhouse gas emission targets?
The study that has been produced by the Committee on Climate Change, which I referred to in my statement, gives estimates for some potential scenarios for impact across Scotland, according to the likely degree of regulation and the degree of extraction that is undertaken. Because Scotland’s legislative targets for climate change have been established without sectoral targets, an increase in emissions in one part of the economy must be borne across the rest of the economy. We are not prejudging how that would be dealt with. If that happened, given the requirement to meet our existing climate change targets and our desire to increase our ambition on climate change in due course, we would have to find some way of mitigating those emissions. The Government would have to take that into account when it made a recommendation to Parliament.
Richard Leonard, Labour, Central Scotland
To recap, once the consultation closes, the results will be independently analysed—by whom we know not—and the Government will make a recommendation to Parliament on fracking and allow Parliament to vote on it, although, once again, the Government might or might not pay any attention to that vote whatsoever. Will the minister tell us why we should believe that his Government will accept Parliament’s verdict next time when it did not accept Parliament’s verdict last time? Further, will he confirm that none of this will be concluded in time for next May, when people will go to the polls for the local elections?
I say without seeking to find a division with the Labour Party on the issue that the last point shows the member’s motivation. He is more interested in local government elections than in getting the decision right.
You are putting off the decision—
I invite Mr Leonard to listen. We are trying to get the decision right for the people of Scotland and in the public interest. We will listen to Mr Leonard and others who make submissions to the consultation.
The reason why members of the Parliament can be confident that we will do exactly what we said—that we will bring the issue to the Parliament to vote on and then reflect on that vote—is that we have kept our promises every step of the way on the process so far. We gave a commitment that we would commission research in light of the gaps that were identified in the expert scientific panel’s study and we have given a commitment to have a consultation with the public, which we are publishing details of today. I give a commitment to the member and the chamber that we will bring the issue back to Parliament for a vote and that we will listen to Parliament’s view at that time.
Ivan McKee, Scottish National Party, Glasgow Provan
Does the minister agree that the negative impacts of fracking would affect all parts of Scotland and not just the areas where shale reserves are located?
As members have indicated, issues such as climate change and the wider economic impact—whether positive or negative—concern not only the midland valley, which straddles the central belt of Scotland, but the wider communities of Scotland.
The issue is important, whether from the point of view of a contribution to our energy mix or our economic development or from the point of view of climate change impacts. As I said in response to Mr Mason, any additional emissions would have to be borne by the whole economy, which is of course distributed across the whole country.