Shale Gas and Oil (EAC Report)

Lord Giddens Excerpts

Tuesday 4th November 2014 Lords Chamber

[Lord Giddens (Lab)]

My Lords, I congratulate the noble Lord, Lord MacGregor, and members of the committee on their report, and on using the term “fracking” only once in it, thereby skirting some of the corny humour that could otherwise ensue. Other noble Lords have not been quite so parsimonious in this respect.

We live in a world of huge risks, most of which we have created for ourselves. Irrevocable climate change is one of them. Yet at the same time this is a period of massive technological innovation, much of it positive and most of it global in implication. The shale gas revolution—and I would not hesitate to call it that—is a very interesting and consequential example. Its roots stretch back some 60 years. The Breakthrough Institute in the United States has demonstrated that it would not have come about without a history of federal intervention and support, just as in the case of the internet. George Mitchell’s extraordinary accomplishments would not have been possible without that.

The Breakthrough Institute pioneered the thinking that became the basis of President Obama’s climate change policy. It is one based more on technology than on any legal framework. Essentially, it is progressive replacement of coal as a source of energy by gas, with shale gas to the fore, and by renewables. The US, as the report notes, as a consequence has reduced its greenhouse gas emissions substantially in recent years.

I would dissent from very few of the points and recommendations made in this admirable and thorough report. I note the Government’s positive response to it. I would like, however, to add to it by mentioning further lessons to be taken from the American experience. These, I feel, are not stressed enough in the report, and I draw attention to three here.

First—this echoes partly what the noble Lord, Lord Shipley, said—the successful cultivation of shale gas need not and must not distract from investment in renewable energy. Here I disagree a bit with what the noble Lord, Lord Borwick, said. In the United States it has certainly not done so. Wind and solar have seen dramatic advances. More than 50% of the new US energy sources installed in the first half of 2014 consisted of renewables, including hydro. The cost of wind power has dropped, on average, by 40% in the United States over the past four years. Advances are being made in reducing the impact of intermittency. Texas is a pioneer in shale gas, but it is also a national leader in wind power—and why not?

Secondly, contrary to what many people here seem to think, “Not in my backyard” has been a major problem with shale gas in the United States, and we should reflect on that very carefully. Shale gas production has been implemented mainly in regions in the US where drilling for oil and gas or open-cast mining were already very familiar. Those are the regions in which it has been readily accepted. In other parts of the country, such as New York State, Michigan or California, and not only in prosperous areas, it has met with fierce resistance. I think the same or worse could happen here. After all, this is a small country, about the same size as California, which is only one state among 50 in the US. If we are not very careful, “Not in my backyard” could sink the whole show. The American experience on this, not just on a macro level but on a micro level, therefore, should be studied in detail and with great care.

Thirdly, the American experience shows that “Not in my backyard” so far as shale gas is concerned does not derive only from prejudice and misinformation, although there is a lot of that around. If successful, the American evidence shows, shale gas production changes the nature of local communities more than renewable energy. It can also expose them to a cycle of boom and bust. Providing economic incentives for local communities to accept shale gas exploration and production is therefore not enough. I do not think government policy in this area is sufficient. More rounded forms of community involvement and planning are needed. I strongly advise the Government to enrich their community policy on the basis of research available from the United States, which has to look in comparable areas to those which we have in this country. I would be pleased if the noble Baroness would respond to those three points.