It’s been a while since I write a piece for Sustainability
Inc., 2 months to be exact, so I thought it time for another instalment,
particularly in light of the shale gas gold rush across the world and the
potential effects it could have on climate change and Government climate
reduction targets.
In this article I am going to look at the ramifications of
the shale gas bonanza on energy generation, paying particular attention to the implications
it could have on renewable energy.
The shale gas bonanza has already revolutionised the energy
industry in the US, with gas prices tumbling, due to the vast
reserves discovered. In
Europe the same discoveries of vast reserves of shale gas are being made, meaning potentially cheaper energy and more jobs. Also, very
importantly it is viewed as a potential new industry to help the global economy
kick start that much need growth.
All this adds up to an industry worth billions and highly
political, as it is viewed as a way to deal with energy poverty, economic growth,
both in terms on jobs and businesses and finally energy security for States for
the next 30 years or so. All in shale gas is very significant and just when you
thought it couldn't get anymore to complicated, what implications could it have
for climate change targets and specifically the adoption of renewable energy,
which is still in its infancy.
The answer to the first part of the question is significant,
all fossil fuels have high carbon emissions, even though shale gas is the
lowest emitter of them, and with it becoming cheaper, power stations will
convert to gas from other fossil fuels. Some commentators would say this is
good as it will encourage high carbon emitting power stations to emit less
through conversion, and therefore slow climate change. Not so because the spin
off from this is, that as energy companies make their revenues through how much
power they generate, particularly in light of a recent report from The Guardian
newspaper in the UK May 2012, stating that the EU was going to re- categories
shale gas a green source of energy, following intense lobbying from the gas
industry. Thus enabling the industry to promote itself as a cheaper form of
energy than solar and wind, diverting billions of Euros for research in
renewable energy towards gas.
This all make for rather stark reading, but in my view this is
not the end, for two reasons. Firstly, shale gas and renewable energy can work
together, with renewable energy generating the power during the day with gas
taking up the peak and during the night- time shale gas can generate the
energy. This theory is backed up by a report recent published by Citi Group
that discusses a symbiotic relationship between shale gas and renewable energy.
Where by gas is used as peaker plants and can be ramped up quickly, and reinforcing
this relationship is the experience Germany’s energy sector has where this
relationship can help renewables to take away energy generation from nuclear
and coal, particularly as more renewable energy plants come on line.
The second reason why shale gas does not signal the end of
renewable energy, is the comparative cost of renewables to shale gas is
falling, and it will continue to do so as the technology becomes cheaper to
produce and more efficient. Taking into account that energy plants generate
revenue by how much energy they produce, this will certainly be an incentive to
switch to renewables in the long- term.
Taking into account the view from Citi Group and other
consulting bodies the advice they are providing is to invest in shale gas in
the short-term and move to renewable energy in the medium term to long term.
Now, this is good news for renewables energy moving into the future, but this
does not mean that renewable energy will in the medium term become the energy
producer of choice, what it mean is that it is not guaranteed. To help
facilitate this Government still have a key role to play in enabling this
possible future to occur and where possible to speed up the shift entirely from
fossil to renewable energy as climate reduction targets still have to be met
and carbon footprints reduced and in EU has to meet target of 20% of energy to come from renewable sources by 2020, currently it stands at 7%, so there is still quite a long way to go.
So the question raised is what can Governments do to maintain
the move towards renewable technology or possibly speed it up to avoid the
worst of climate change?
Firstly, they should not give up on climate change targets
and hold onto target % of energy generated through renewable technology, otherwise
conversion to shale gas will mean the meeting of this target alone, taking the
pressure off States to meet their climate reduction targets.
Secondly, incentive schemes should be established for energy
companies to produce energy from renewables, and in the short- term they could
devise policy thought would encourage them to switch to shale gas and
renewables. This would help the first step in the move towards renewable
energy.
Thirdly, continuation of Feed In Tariff policies at the
micro generation level, to ensure take up by households continues. Also, that
policy’s are devised for commercial buildings to generate energy through micro
generation, through not just energy incentives or FITs, but through business
rates and taxes breaks.
Fourth, encourage or empower cities to implement more
policies and initiatives at the local level with businesses and communities.
Set up strategic partnerships with local authorities and energy companies, and
implement incentives for business to set up in those areas threw these
partnerships.
These are just some of the policy areas, which could be
implemented at a national and local level, there are others, but for now I
think that this is enough.
This piece has tried to explain why shale gas does not
signal the end of the move towards renewable energy, but could encourage it
further. While I agree with the majority of the view from commentators and the
report from Citi Group. I feel that it is a rather utopianistic view, which
paints a very optimistic picture of the market deciding, the invisible hand if
you like. Unfortunately, we also know that markets can be manipulated,
sometimes for the good and sometimes for the wrong reasons. As long as policy
makers do not take their eye off the ball and implement market-making policies
that will continue the move and encourage a quickening towards renewables, then
yes, this is a positive future where by shale gas can partner with renewable
energy to enable a full switch to green energy.
What this article does not look at are the other environmental challenges that shale gas and 'Fracking' (the extraction process used) pose. This is a discussion for another time and certainly one that cannot be dismissed lightly. My personally view on its on environmental impact is still out , I await more evidence, and then the pros and cons need to be weighed with long term strategies and needs. Basically a dispassionate debate will need to take place, where serious dialogue can be had, looking at ways to mitigate possible risk and impact.
Interesting Reading:
https://ir.citi.com/586mD+JRxPXd2OOZC6jt0ZhijqcxXiPTw4Ha0Q9dAjUW0gFnCIUTTA==
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