Thursday, 18 June 2015

Medact Report Gets the Treatment it Deserves

A few months ago I didn't discuss a report by the charity Medact on the public health implications of shale gas - it simply wasn't of sufficient quality to be worth bothering with (although a detailed rebuttal from UKOOG is available here).

This report formed a major part of opposition group objections to Cuadrilla's proposed operations in Lancashire. The views of the Lancashire County Council Development Control Committee officers on the Medact report make for interesting reading (p311):
"The Medact report has not produced new epidemiological research but has reviewed published literature and has requested short papers from relevant experts in particular subject areas. It has also interviewed academics and experts."
"Unfortunately, one of the contributors (contributing to three of the report's six chapters – chapters 2, 4 and 5) has led a high profile campaign in the Fylde related to shale gas. Another contributor to the report (chapter 3) has previously expressed firm views on shale gas and has objected to this application. This has led to questions from some quarters about the report's objectivity."
"In light of these uncertainties it is not clear how much weight the County Council should attach to the report."
In other words, it's bunkum, and it's been given the treatment it deserves. More generally, on public health in general the Development Control Committee found that:
"While much research exists, and is growing in volume each year, it is difficult to gain an objective view of the veracity of the research. Anti-fracking campaigners frequently point to studies that indicate increased health risks (e.g. elevated risks of cancer or birth defects) as a result of shale gas activity in North America. Conversely, pro-fracking campaigners point to numerous methodological flaws in the research. It is also difficult to translate the findings of research from North America into the UK environment. Operating and regulatory practices are very different."
"PHE highlight significant methodological flaws in the research that has been cited to the County Council."
"Moreover, one study frequently cited by objectors (McKenzie, 2014) has been publically criticised by the Chief Medical Officer and Executive Director of the Colorado Department of Public Health and Environment in the USA as follows: "we disagree with many of the specific associations with the occurrence of birth defects noted within the study. Therefore, a reader of the study could easily be misled to become overly concerned.”"
"PHE state that direct application of the North American research to the UK situation is impossible because of the wide differences between the two countries."

And they conclude that (my emphases):
"Nevertheless, from the modelling, audit checks and sensitivity analysis conducted by the Environment Agency it is expected there will be no exceedance of standards that protect public health. Public Health England is satisfied the currently available evidence indicates that the potential risks to public health from exposure to the emissions associated with such extraction are low if the operations are properly run and regulated."



Wednesday, 17 June 2015

Scotland's Got Gas: Royal Society of Edinburgh Report

The Royal Society of Edinburgh have released a new report into Scotland's future gas use and supply today.

It outlines the importance of natural gas to Scotland's economy. Compared to the rest of the UK (rUK), gas isn't much used for electricity generation - only 10%, but it is vital for domestic heating and as an industrial feedstock. Even in the best-case scenario, Scotland will need 39,400GWh of gas per year in 2035. This demand can either be met by increasing offshore production, extracting unconventional gas from onshore, or by importing gas from abroad. Each poses its own technical, economic and social challenges.

Focussing on onshore unconventional gas, the report concludes (my emphases):
"Onshore production of unconventional gas would allow Scotland control over all regulation surrounding extraction and production. The impact of unconventional gas production on the environment is considered to be comparable to conventional gas. The areas of health, wellbeing and safety surrounding an onshore industry do not appear to present significant risks, although a degree of uncertainty is present. Domestic production onshore could improve energy security, create jobs and ensure Scotland takes responsibility for its energy consumption."
"Public opinion relating to onshore unconventional gas development, particularly surrounding safety, in Scotland is often negative and this could make developing an industry difficult. The characteristics of onshore production are notably different from the offshore industry with which the country is familiar. Increased traffic and noise and light pollution occur during early stages of development." 
Meanwhile, it is critical of the alternative option of relying more and more on gas imports from abroad:
"Relying on imported gas from abroad appears inconsistent with Scotland taking responsibility for its energy use. While such reliance may serve to decrease the recorded carbon emissions attributed to Scotland and respond to public desire not to develop gas onshore, it would do so at a cost. Health and safety regulations and environmental regulations in supplying countries may not be at the standard they would be in Scotland, with a higher risk of injury and death to workers and a higher risk of environmental impacts local to production
"The transport of gas via pipeline or tanker across the globe also results in fugitive emissions, leaks and a considerable use of energy which add to the global carbon footprint. Hence, the global carbon footprint of the gas that Scotland consumes, and the impacts at the point of production, are likely to be far higher for imported gas than for Scottish onshore or offshore production."

There is one section, however, where I think this report gets things wrong, and that is in conflating, taxes, subsidies and investment. The report concludes that:
"Considerable uncertainty exists over potential reserves of unconventional gas, meaning the significant government expenditure that would be required to kick-start a fledgling industry could be for nought."
Which is surprising to me, because governments (either Scottish or rUK) are not making any significant expenditure to develop this industry. Sure, they have funded a few reports and a few research projects, but this could hardly be described as remotely "significant".

The investment for shale gas development - the geophysical surveys, the exploratory boreholes, the nursing of project applications through the planning system - is all being paid for by the operators themselves, funded either by private capital or their shareholders. This is as it should be, and I'm not aware of any operators saying anything different. This is an important difference between domestic shale gas and other options like offshore wind and/or nuclear, in that shale gas development doesn't really need any government subsidies or investments.

Digging into the detail of the report, it says the following:
"Like most fledgling industries, unconventional gas would require substantial government support, most likely in the form of tax incentives, in order to develop.  Even with investment from the government, the geological risk (i.e. the size of resource and/or the cost of extraction) is significant and an unconventional gas industry may simply fail to take off, creating no jobs or return on that investment."
So the only "investment" from the government is a tax break. Firstly, it's worth noting that if an operator does successfully produce shale gas, it'll be paying tax at a rate of 32%. Most non-oil-and-gas companies pay corporation tax at 20%. The major producing fields of the North Sea pay tax at 62%. So although shale operators are getting a tax break relative to some North Sea producers, they'll still be paying more tax than most companies in most other sectors, so it's all relative.

More importantly, this only matters if operators are making significant profits. If it does turn out that the geological conditions aren't quite right and shale gas can't be extracted profitably in the UK, then the tax level set by the government is completely irrelevant, because you only pay tax on your profit, not your turnover. The government would receive no tax, regardless of whether the tax rate is 32% or 62%. From the government's perspective, it has nothing to lose, it can only gain. The only people who stand to lose if a UK shale industry is unsuccessful are the private investors with shares in the onshore operating companies, and I don't think the general public will be too worried about those "bankers".

So to conclude, the report is very strong on the science and technical aspects, and the environmental side of things. But probably needs to brush up a little on the economics side of things.


Saturday, 6 June 2015

Andy Burnham gets it all wrong on fracking

If I were to write a blog post every time someone got things wrong about shale gas, I'd have little time for anything else. However, when that person is Andy Burnham, currently front-runner in the Labour leadership race, and therefore someone who could possibly be in charge of the country one day, I'm prepared to make an exception.

His comments on shale gas have been reported in the Guardian, and I thought I'd share my thoughts on what he's said.

"These things [fracking licences] just seem to be handed out like confetti"
Which is news to me, and most of the UK's operators I presume, because no licences to conduct fracking have been granted since the moratorium was lifted in 2012. Moreover Petroleum Exploration and Development Licences (PEDLs) were last awarded in the 13th licensing round, in 2008. At which time Andy Burnham was himself in the Cabinet under Gordon Brown's government. So if he has an issue with the number of PEDLs granted, it's the fault of a government of which he was himself a key member.

Moreover, crucially PEDLs do not grant a company the right to conduct fracking. They grant a company the right to explore for shale gas - to drill rock cores from exploratory boreholes, conduct seismic surveys, etc. However, a whole range of additional permissions, from the EA, DECC and others are required before an operator is allowed to perform hydraulic fracturing. No operator has sought such permissions since the moratorium was lifted in 2012*. So it seems that "handed out like confetti" actually means "not handed out at all".

*onshore, that is. There's still plenty of fracking going on in the North Sea.

"In my area, we are riddled with mine shafts as a former mining area"
Which would be why any operator working in an area where coal seams are present has to seek a permit from the Coal Authority before it undertakes any activities (see this guidance from DECC).

"Where is the evidence that it is safe to come and frack a place like this? No fracking should go ahead until we have much clearer evidence on the environmental impact."
Andy Burnham couldn't really have chosen worse timing to make this statement, coming as it does literally days after the release of a major report by the US's EPA showing no widespread pollution from shale extraction, and that fracking can be done safely and responsibly. In answer to your question Mr Burnham, the evidence is available on the EPA's website, as well as in the reports commissioned by the Royal Society and Public Health England.

"How can we justify in this day and age allowing a multinational to frack a local community without their say so? The next step, beyond the moratorium, would be to give local people a much bigger say in whether or not it can proceed."
Shale gas extraction is subject to the same planning rules as any other development activity. The local county council must grant planning permission for a well site to be constructed. So local people already do have a say in whether shale gas can proceed, via the planning system. Also note that I'm not aware of any multinationals planning to frack "a local community". They are planning to frack rocks, which are 2 - 3km underground. This sloppy use of language in order to inflame opinion is worrying.

"If we are going to carry on with fossil fuels we are basically sending a message that renewables aren’t where we want to be."
That, in a nutshell, is the essence of the problem. Renewables ARE NOT where we want them to be, regardless of the "message" that we choose to send. Hopefully at some point in the future, with technological improvements, they will get there. Yes, having the political willpower is important, but ultimately the reason we can't rely on renewables is a technological one, not political.

"The Guardian campaign has got quite a lot of traction and is quite powerful"
As per the last point, the Guardian campaign has no doubt been successful within its own remit - to develop a talking point, and to sell newspapers. It may indeed have got a lot of people talking, and it may have got a lot of political traction. However, it won't make much impact in the real world.

The issue at hand is to reduce the amount of fossil fuels we burn. Yet renewables are no more effective and efficient, and no less intermittent, than they were before the Guardian's campaign began. No improvements in energy storage have been made because of it. Only increased investment in R&D will achieve this. A far more effective policy would be one that allowed a shale industry to develop, and taxed it appropriately, ring-fencing these revenues to be spend on renewables/efficiency/nuclear R&D. 

"I am pitching this as part of a pro-business, new economy move"
Personally, I don't see investment in renewables as pro-business. Yes, investment in this sector will of course boost jobs in this sector. However, if this investment is derived from increased energy bill surcharges, then it poses a cost, and therefore an economic drag, on most other industry sectors. It's at best a re-arrangement of the economy, not an overall boost.