The coalition's support for fracking is based on ideology, not evidence

The government's dash for gas will increase energy bills, not reduce them.

Today the temporary moratorium on fracking in Lancashire was lifted, completing a journey to redemption for the UK shale gas industry since Cuadrilla caused two small tremors in Blackpool last year. Fracking has been given a green light.

It’s the latest pro-shale move from a coalition government gone fracking crazy. The first two weeks of this month alone have seen George Osborne announce tax breaks for the shale gas industry, Boris Johnson compose a paean to fracking in his Telegraph column and David Cameron tell the House of Commons Liaison Committee that Britain must be part of a "shale gas revolution".

The enthusiasm for shale gas among many in the Conservative Party, and beyond, is partly based on the notion that it will bring down energy bills for consumers. In his Autumn Statement, Osborne justified his fracking tax break by arguing that: "we don't want British families and businesses to be left behind as gas prices tumble on the other side of the Atlantic”.

Fracking indeed caused gas prices to fall in the U.S (although they’ve since rebounded somewhat). And the hope of a similar nosedive has led to the Chancellor staking the future of the UK’s energy system, and the size of our energy bills, on natural gas.

So how likely is it that we’ll enjoy a US style fracking revolution here? Not very, say experts. Analysts at Deutsche Bank, the International Energy Agency (IEA), Ofgem, the European Commission, Chatham House and others, have all concluded that the fall in gas prices seen in the U.S. will not be replicated in Europe. Deutsche Bank, for example, concluded that “those waiting for a shale gas ‘revolution’ outside the US will likely be disappointed, in terms of both price and the speed at which high-volume production can be achieved”. While the IEA have outlined how European shale gas will be 50 per cent more expensive to extract.

Yet Osborne is betting the farm, and the UK’s energy future, on fracking bringing costs down enough to make it economic to run almost half our power supply off gas. At his behest, the Department for Energy and Climate Change last week published its Gas Generation Strategy, which aims to incentivise the construction of up to 40 new gas-fired power stations. Given that the UK already relies on gas for most of its heating and much of its electricity, this move to increase our reliance on an increasingly expensive fuel represents a considerable gamble with consumers’ money. It comes as government advisers, the committee on climate change, today warned that Osborne’s ‘dash for gas’ could increase our energy bills by £600 over the coming decades. The committee cast the low carbon route, which would see bills rise by only £100 by 2020, as an insurance policy against rising gas prices.

There is also the small matter of local opposition to fracking. One Conservative MP has described opposition to windfarms as being a "walk in the park" compared to shale gas. While recent analysis by Greenpeace found that over 60 per cent of England is currently under ‘license block’ consideration for the development of shale gas. Much of this gas is hidden under the Home Counties and, as the residents of Balcombe in West Sussex have demonstrated, fracking is not welcome in these parts.

Earlier this week, leading energy expert, Professor Paul Stevens of Chatham House, went as far as to describe George Osborne’s plan for a dash for gas as "misleading and dangerous" Misleading because it is based on the mirage of lower gas prices resulting from fracking; dangerous because the dash for gas threatens to pull much needed resources away from clean energy and thus poses a significant threat to our efforts to tackle climate change.

In fact, Osborne’s plans to incentivise the construction of 40 new gas power stations are predicated on dismantling key climate laws. Last month, a Greenpeace investigation revealed Osborne’s plans to unpick the Climate Change Act. These plans took a step forward with the publication of the Gas Generation Strategy, which outlines how “gas could play a more extensive role, with higher load factors, should the 4th Carbon Budget be revised upwards.” 

Precisely why Osborne has chosen to ignore the facts in order to pursue his dash for gas is for others to speculate. But for consumers up and down the UK, not to mention our attempts to tackle the urgent threat of climate change, it would be infinitely more reassuring if our energy policy was based on evidence rather than ideology.

Demonstrators protest against hydraulic fracturing for shale gas outside parliament in London on December 1, 2012. Photograph: Getty Images.

Lawrence Carter is a climate campaigner at Greenpeace

Photo: Getty Images
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Autumn Statement 2015: a test of competence as well as compassion

George Osborne's chickens may be coming home to roost.

The debate will be political and polarized, as you’d expect, when the Chancellor sets out the results of the Spending Review tomorrow and how his £20bn of savings will be realised. However my suspicion is that while many followers of the Westminster's circus are debating what it all means for compassionate or compassionless conservatism, the public will be more interested in a more straightforward question: one of competence. 

Strip away the hyperbole and the election in May was won on an assessment of which party was the more competent to govern. A huge part of the public’s judgment in this regard was to trust the track record of the Conservatives in balancing the books and that the £20bn in departmental savings earmarked was a reasonable and responsible ambition. 

This is the question in point because what the public did not endorse explicitly was significant change in the size and role of the state. The argument was made and won for a budget surplus, not necessarily for its consequences. As Paul Johnson of the IFS has been at pains to say after every recent budget.

We should acknowledge that one of the reasons the Chancellor does have the public’s confidence is that the cuts to public services so far have not been as damaging as many opponents predicted. The NHS is under-strain, but has not broken. Hard pushed local government leaders have managed to shield social care from the worst of the changes, and the majority of police officers lost were in the back-office not on the beat. So when pollsters ask the public whether they have noticed the effects of austerity, most say they haven't. 

Understanding what the implications are of further large reductions in areas in the firing line such as police forces or local government is hard to do. So the government has told the public "trust us". Now we are going to find out how well that trust was placed. The point is this though - if the public haven't yet felt the full affects of a smaller state they may not be so tolerant it if they do. That brings us to the Chancellor’s real test. The easy cuts have surely been made, after the long years of spending increases prior to 2010 you would expect the system to be able to tighten its belt. But with five years of austerity under that belt there is a risk that the additional cuts could push services too far. 

The public were told that £20bn of saving could be achieved without the kind of pain that will be felt if social care for the elderly really starts to fall over, if police officers become significantly more scarce, or if the NHS does need much more than the promised £8bn (as many believe it will). On this point they have trusted the Chancellor to understand the implications of what he is promising. So if the policy choices in the Spending Review turn out to show that he did not, it will be the Government's competence as much as its compassion that will concern the public.


Steve O'Neill was deputy head of policy for the Liberal Democrats until the election.