BANNED: "Experts agree - fracking won't cut our energy bills"

by Search Gate staff. Published Wed 06 May 2015 14:54, Last updated: 2015-05-06
Line-up of experts agree: Fracking will not cut the UK's energy bills
Line-up of experts agree: Fracking will not cut the UK's energy bills

The Advertising Standards Authority (ASA) has this week banned a Greenpeace anti-fracking advert after ruling it is misleading because it claimed that fracking "won't cut our energy bills".

Despite ruling that the statement can never be repeated in the form of an advert, it can be repeated as editorial here in the form of the 22 statements from experts and commentators submitted to the ASA to back up the claim…

1. Lord Browne, chairman of Cuadrilla: "We are part of a well-connected European gas market and, unless it is a gigantic amount of gas, it is not going to have material impact on price."

2. Mark Linder, Bell Pottinger executive, former Cuadrilla PR spokesman: “We've done an analysis and it's a very small…at the most it's a very small percentage… basically insignificant.”

3. A Cuadrilla spokesman: “Cuadrilla's never said it [shale] will bring down prices…We don't think it will bring down prices, although it does have the potential to.”

4. Ed Davey, Secretary of State for Energy, Department of Energy and Climate Change (DECC): “North Sea gas didn’t significantly move UK prices – so we can’t expect UK shale production alone to have any effect."

He added it was "far from clear that UK shale gas production could ever replicate the price effects seen in the US."

5. David Kennedy, former head of the Committee on Climate Change: "People are very worried about the energy bills and it's tempting to look across to America and say, 'look what shale gas has done there, it's caused gas prices to plummet, we would love that to happen here', and then to say 'well it will happen here'," he said. "It is highly unlikely to happen here. There isn't enough shale gas in the UK and in Europe to change the European market price."

He added: "The economic argument is that you would expect prices not to go down because of shale gas.

"Let's not confuse this by saying it is going solve the affordability problem - it probably isn't.

"We would expect to see a price that is largely unchanged because of shale gas in the future - unless there is a lot more shale gas in this country and in Europe ... and it becomes the dominant form of supply. I don't think anyone is thinking that."

6. Lord Stern, Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics (LSE), author of the Stern Review on the Economics of Climate Change: “I do think it’s a bit odd to say you know that it will bring the price of gas down. That doesn’t look like sound economics to me. It’s baseless economics.”

Gas is a commodity that can be traded on the international market, meaning that it will be sold to the highest bidder, whether inside or outside the UK. As a result, any shale gas boom in the UK would be unlikely to have an impact on the world price, Lord Stern said.

7. Charles Hendry MP, former Energy Minister: “Shale gas can make a contribution (although not without community backlashes, I suspect), but cannot bring the UK the same benefits as in America, where consents are much easier and prices are kept artificially low by the lack of export facilities. As the International Energy Agency says, we may face a golden age for gas, but don't assume it will be cheap. Last year's energy price rises owed more to rising global wholesale gas prices than anything else, so betting the farm on shale brings serious risks of future price rises.”

8. Professor Jim Watson, Director, UK Energy Research Centre: Researchers from the UK Energy Research Centre (UKERC): “It is very frustrating to keep hearing that shale gas is going to solve our energy problems – there’s no evidence for that whatsoever... it's hype.

“It’s extraordinary that ministers keep making these statements. They clearly want to create a narrative. But we are researchers – we deal in facts, not narratives. And at the moment there is no evidence on how shale gas will develop in the UK.

“Shale gas has been completely oversold. Where ministers got this rhetoric from I have absolutely no idea. It’s very misleading for the public.

“Where the government has gone wrong is just talking this whole thing up… as if it was going to reduce consumer bills and tackle our energy security problems in a substantial way any time soon. I think that was very premature. The framing of it was oversold.”

9. Professor Mike Bradshaw, Warwick Business School: "There is huge uncertainty about all these things,” he said. "Only one thing is virtually certain – in Europe shale gas is not going to be a game-changer.”

10. Dr Christophe McGlade, Research Associate at University College London: “There is really no evidence that there will be a huge boom in the UK. Where the government got its rhetoric from I’ve no idea. Absolutely explore, but stop banking on this idea that shale is going to be plentiful and cheap.”

“You’re selling quite a small amount of gas into this broad European market,” Prof Watson said, describing industry claims that shale gas would put a cap on gas price rises as “unconvincing”.

11. Dr Kevin Anderson, Professor of energy and climate change at the University of Manchester: "Everyone who understands the fossil fuel industry and is engaged in a more deep and meaningful manner over shale gas knows that [Prime Minister] Cameron is incorrect.

“His comment, when he suggests that UK shale gas will affect at least significantly the price to the consumer, is misleading to the public."

12. Bloomberg New Energy Finance: “The reliance on continued imports will ensure that UK gas prices remain tied to European and world markets and so the direct impact of shale on the cost of electricity in the UK will be limited.”

13. Guy Turner, head of economics and commodity research at Bloomberg New Energy Finance: “Shale gas might seem to offer a new dawn of low energy prices for the UK. Our analysis suggests such hopes should be treated as wishful thinking. The UK imports half of its natural gas, a proportion set to grow. Shale gas may help replace some of our declining conventional production, but it is unlikely to arrive quickly enough in sufficient volume to drive UK prices below international levels.”

14. Oxford Institute for Energy Studies: “The levels of UK shale gas production… are highly unlikely to influence UK wholesale gas prices, given the physical linkage of the UK to international gas markets. They are also unlikely to reduce gas import requirements from present day levels.”

15. E3G: EU Shale Gas Revolution: Facts vs Fiction – infographic produced by E3G states: “Fiction - shale gas is cheap and will reduce energy prices”.

It added: “In summary, there are very significant barriers to extraction that make it unlikely a scale of production could be reached that would meaningfully impact on EU energy prices.”

16 & 17 Professor David Mackay (Chief Scientific Advisor, Department of Energy and Climate Change) and Dr Timothy Stone, Senior Advisor to the Secretary of State, DECC

“Because the UK is well connected to the Western European gas market, the effect of UK shale gas production on gas prices is likely to be small, and the principal effect of UK shale gas production and use will be that it displaces imported LNG, or possibly piped gas from outside Europe.”

18. John Ashton, Special Representative for Climate Change at the Foreign and Commonwealth Office 2006-2017 : Shale gas “is not going to have a material impact on prices” in the UK.

19. Tom Greatrex MP, Shadow Minister for Energy: “They argue, without any basis in fact, that shale gas is cheap, clean and imminent. They are wrong on every count.

“In his Autumn Statement, the Chancellor once again claimed that shale gas extraction will lead to ‘lower energy bills’, a myth so thoroughly debunked that for about six months the Tories were too embarrassed to wheel it out. Those projections for the cost of extraction in the UK extrapolate directly from the US experience in a way that is completely misleading and fails to take account of the geological, regulatory and market differences.”

20. Paul Stevens - Distinguished Fellow at the Energy, Environment and Resources Department at Chatham House in London: “Unlike in the United States, a shale gas revolution will not bring down prices in Britain. In Britain, proponents of increased drilling, including Prime Minister David Cameron, like to point to the success of expanded shale gas production in America.

“But America’s shale gas revolution, which was over 25 years in the making, occurred in a context that would be very difficult to replicate in today’s Britain.

“Moreover, without major government intervention in the domestic gas market, greater shale gas production will simply enable the big British companies to send more gas through the interconnector pipeline to Belgium, taking advantage of higher prices on the Continent. They would not leave money on the table for British consumers.Although Britain does appear to have significant technically recoverable resources of shale gas, a revolution along American lines is therefore unlikely.

“But even if the public relations campaign can be won, the British government is ultimately likely to be disappointed because a shift to shale will not bring down domestic gas prices.”

21. Scientists for Global Responsibility, Shale gas and fracking: examining the evidence, July 2014: "Virtually all economic analysts refute the claim that fracking will reduce energy bills in the UK."

22. Tim Yeo, chair of the Energy and Climate Change committee: “Although the US shale gas has seen a dramatic fall in domestic gas prices, a similar 'revolution' here is not certain.

"Ministers should be careful, though, not to base energy policy on an assumption that gas prices will fall in future as a result of shale gas production. Rising global demand for gas, particularly from Asia, could limit any potential price reductions."

In its ruling banning the advert, the ASA stated: "We told Greenpeace to ensure they did not use claims that misleadingly implied their views were universally accepted if a significant division of informed opinion existed."

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