Shale Gas is bad news for renewables says leading think tank

Any focus on shale gas in the UK could have a negative impact on investment in renewables, according to a report published this week from UK think tank, Chatham House.

In an interview with the author, Professor Paul Stevens told edie that questions over the extent to which the thriving shale gas industry in the US can be replicated in the Western Europe has led to uncertainty in the renewable energy market.

“My concern is that with the prospects of cheap gas, people will stop investing in renewable.” He said.

“There was previously an assumption that shale gas would act as a substitute for coal, however, now there are increasing worries that it could act as a substitute for renewables.”

Mr Stevens said it has been argued that because renewables are an expensive way of solving climate change, in a time of economic downturn it makes more sense to utilise shale gas.

“[Shale gas] is a good thing if you believe in the dangers of climate change – and I certainly do. It is not a solution, however, because although using gas is better than coal, this would only signal a transition to a lower not low carbon economy.”

Mr Stevens also noted that there are growing environmental concerns over the amount of methane gas emissions during the drilling process.

The report, entitled ‘The shale Gas Revolution’: Developments and Changes, highlights the difficulties that shale gas is facing in Europe compared with the US mainly through stricter regulation and geological unsuitability.

Even in countries where shale gas was being produced such as the US, there is much greater scepticism of how much gas can be recovered, claimed the report. It states that newer estimates are almost all lower than previously claimed.

Such investor uncertainty over shale gas, which is seen by many as a transitional energy source that could lead to low carbon economy, could have a damaging effect on renewable energy, according to the report.

“The anticipation of cheap natural gas could inhibit investment in renewables. But again, if the revolution fails to deliver a lot of cheap gas, by the time this is realised it could well be too late to revert to a solution to climate change based upon renewables.”

Professor Stevens denied it was a no-win situation for renewables: “For me the only realistic way forward is to implement carbon pricing.”

Mr Stevens does not believe that the EU cap and trade system will work but instead favours a carbon tax.

However, the professor acknowledges that because carbon emissions is a global problem, it could turn into an uneven playing ground as countries that do not buy into the tax scheme increase their carbon emissions by capitalising on cheap energy.

For a successful carbon tax to take effect it would need to involve the main players which Mr Stevens named as the US, China and the EU. However, he conceded that the ability to achieve this was very thin.

Conor McGlone

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