Fracking gets the green light from the coalition

Energy Secretary Ed Davey says drilling for shale gas can resume subject to controls "to mitigate the risks of seismic activity".

Energy Secretary Ed Davey has just given the go-ahead for fracking, the technique used to extract shale gas, to resume in the UK, subject to controls "to mitigate the risks of seismic activity". Exploration was previously halted after test-drilling by the company Cuadrilla caused two minor earthquakes in Lancashire.

Davey said: "Shale gas represents a promising new potential energy resource for the UK. It could contribute significantly to our energy security, reducing our reliance on imported gas, as we move to a low-carbon economy. My decision is based on the evidence. It comes after detailed study of the latest scientific research available and advice from leading experts in the field."

However, he cautioned that "We are still in the very early stages of shale gas exploration in the UK and it is likely to develop slowly. It is essential that its development should not come at the expense of local communities or the environment. Fracking must be safe and the public must be confident that it is safe."

New controls to limit seismic risk include:

  • A prior review before fracking begins must be carried out to assess seismic risk and the existence of faults;
  • A fracking plan must be submitted to DECC showing how seismic risks will be addressed;
  • Seismic monitoring must be carried out before, during and after fracking;
  •  A new traffic light system to categorise seismic activity and direct appropriate responses. A trigger mechanism will stop fracking operations in certain conditions.

In addition, Davey announced that he was commissioning a study of the possible effects of shale gas development on greenhouse gas emissions and climate change, although green campaigners are questioning why this was not held before the latest annoucement.

Greenpeace's energy campaigner Leila Deen said: "George Osborne's dream of building Dallas in Lancashire is dangerous fantasy. He is not JR Ewing and this is not the US. Energy analysts agree the UK cannot replicate the American experience of fracking, and that shale gas will do little or nothing to lower bills. Pinning the UK's energy hopes on an unsubstantiated, polluting fuel is a massive gamble and consumers and the climate will end up paying the price."

It became clear that ministers were preparing to give fracking the green light after George Osborne's Autumn Statement promised tax incentives for shale gas industry and announced the establishment of the "Office for Unconventional Gas".

Labour has said that fracking should only go ahead "if it is shown to be safe and environmentally sound" and that it will "look carefully" at the government's proposals. Shadow energy secretary Caroline Flint added: "The idea that this form of gas extraction can have the same impact here in the UK as it has had on gas prices in the United States is considered wishful thinking by most experts."

We'll have more response to the announcement later on The Staggers.

General views of the Cuadrilla shale fracking facility in Preston, Lancashire. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump