Hill+Knowlton Strategies

Day 2 at H+K’s Energy and Industrials team and yesterday I found myself at the Policy Exchange’s lunchtime debate on one of the industry’s current top hot topics: shale gas.

Armed with a colleague’s business cards (mine are yet to be ordered!) I arrived with preconceptions based on limited industry knowledge and a series of questions: Is it as bad for the environment as the media would have us believe? What about the local impact? Is shale gas a transitional solution to our energy challenges? Are there sizeable economic benefits to be realised? What can be learnt from the US’s boom?

The first to speak was Andrew Austin, Chief Executive Officer of IGas, sharing with us the industry perspective. As you might expect Austin is a big fan of shale gas. Sitting on what he believes to be enough coal bed methane to provide 50% of the UK’s energy needs for the next 50 years, IGas has an established and vested interest in the industry. Austin’s argument was centred on the proposition that shale gas is much less harmful for the environment than coal. Stating that the UK’s strong history of regulation thwarted concerns arising from the US’s experience, he also noted the industry’s potential to lower energy bills, reduce concerns over energy security, and provide thousands of jobs, contributing to economic growth. Whilst these points are strong and indeed timely, Austin didn’t provide sound economic data to support his argument: something picked up on later in the Q&A. 

Next up was a very different perspective: Doug Parr, Chief Scientist at Greenpeace UK, discussing the environmental concerns. Here too was an unsurprising position: Parr was of the view that shale gas provided a transitional fuel, but one that should not be exploited at the expense of the environment. He pointed to notable Environment Agency failures on regulation (incineration gas, water policy, common fisheries policy) as a reminder that just because shale gas can be extracted safely doesn’t mean it always will be. Parr refuted Austin’s key argument of the benefits of gas over coal, stating that “the straight replacement of gas for coal simply doesn’t deliver the [CO₂] cuts we need.” He also noted that reputable sources, including Deutsche Bank, have concluded that shale gas won’t have any significant cost benefits. Parr left us with a sombre conclusion that shale gas “isn’t and shouldn’t be considered a nirvana for our energy system.”

Dr Pierre Noel, Director of EPRG Energy Policy Forum at the University of Cambridge, followed with his insight based on rigorous research. Dr Noel took the somewhat unpopular position that concerns over the environment should not be considered energy issues, and lie outside of the industry’s scope; not a view I can admit to sharing. He stated that shale gas was “potentially but not necessarily” a good thing for climate change – dependent upon a credible carbon reduction policy. Regarding the economics, Dr Noel noted that since the beginning of the recession, gas consumption has consistently fallen in Europe, so “it would be foolish to have a decarbonisation policy based on cheap gas only.”

Finally Tom Greatrex MP, Shadow Minister for Energy and Climate Change, shared with us Labour’s political standpoint. His position was one of pragmatism over ideology, in the form of regulation. A rather dry speech ensued, focused wholly on the importance of sound regulatory policy. What I found most surprising was that it took until this point of the debate to hear the F word: fracking. Up until now no speaker had dared utter it. Greatrex showed dismay that the Environment Agency has only one person working on shale gas, but largely skirted over the environmental issues and gave a slow summary of the importance of sound regulation, transparency and rigour. His, and presumably Labour’s position, was cautiously in favour, so long as the regulation is in place.

So as the debate drew to a close, what had I learnt about this contentious energy prospect? Forgive the stereotyping, but my lunchtime learning concludes that: the industry is pro-shale gas, environmental NGOs are concerned, academics are unsure, and politicians are cautiously pragmatic with a focus on regulation. Much as I had presupposed from my uneducated beginnings only an hour prior!

And my own view? Shale gas certainly isn’t a panacea to our energy future, but it does offer the promise of (potential) cost benefits and (potential) reduced environmental impact vis-à-vis coal. It’s unlikely the UK will see a revolution like the one underway across the Atlantic, but if we learn from their experiences and apply rigorous regulation, it certainly offers an interesting addition to our energy mix.