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U.K. Prime Minister David Cameron's hopes for a British-style shale gas revolution recently took a major hit.
Cameron has promised that his government will be "going all out" to develop Britain's shale gas resources, which he argues will create new jobs and cut dependence on imported gas.
But a committee made up of members of parliament (MPs) from several political parties issued a damning new report on the state of "fracking" in the United Kingdom. The Environmental Audit Committee published a report that called for a 30-month moratorium on fracking, citing "huge uncertainties" regarding the environmental fallout from widespread drilling. On top of the usual controversies over water supplies, the report says that allowing fracking will upend British climate change goals.
"Ultimately fracking cannot be compatible with our long-term commitments to cut climate-changing emissions unless full-scale carbon capture and storage technology is rolled out rapidly, which currently looks unlikely," MP and Committee Chair Joan Walley said. "There are also huge uncertainties around the impact that fracking could have on our water supplies, air quality and public health."
The committee report was a political bombshell in London, but the House of Commons overwhelmingly shot down an amendment – by a vote of 308 to 52 – on January 26 that would have banned fracking outright.
A separate amendment was put forward by the Labour Party that would add 13 conditions on fracking projects, which would put stricter environmental safeguards into place.
The amendments were added to a major infrastructure bill, a legislative vehicle that Prime Minister David Cameron hoped would grease the wheels for the gas industry.
But Cameron's shale agenda suffered a second significant setback after a leaked document was given to environmental group Friends of the Earth.
Obtained by reporters at The Guardian, the documents reveal that Chancellor George Osborne reportedly told cabinet ministers in a September 2014 letter to fast-track the "asks" of Cuadrilla, a major shale gas company. Osborne ordered his subordinates to make it a "personal priority" of theirs to intervene on the industry's behalf, including pressuring the Lancashire County Council to green light Cuadrilla's drilling project.
Osborne also said he wanted his ministers to figure out a way to centralize regulatory control, presumably to go over the head of localities to accelerate permitting. Moreover, Osborne sought to create a "network of neutral academic experts available to provide credible evidence-based views" in support of the government's approach. Finally, Osborne impressed upon his ministers the need to demonstrate the success of fracking, and suggested using public lands in "less contentious locations" to prove that fracking is safe.
The scoop from The Guardian shows a shocking level of collusion between the government and industry, environmental groups charge. The Guardian revelation, coupled with the influential report from the Environmental Audit Committee, has halted Prime Minister Cameron's shale gas campaign. Fearing defeat, Cameron accepted Labour's initiative to put environmental safeguards in place in order to keep some semblance of shale development alive. As a result, fracking will be banned near national parks, areas where water is collected, locations of natural beauty, and other sensitive ecological areas. This will rule out significant swathes of potential drilling territory.
Nevertheless, environmental groups have failed to achieve the blanket ban on fracking that they aimed for. But that does not mean the pathway has been cleared for drillers. In a complicated twist of events, the Lancashire County Council appeared poised on January 28 to reject Cuadrilla's proposal to drill two sites within its borders. However, after some last minute lobbying, including revisions by Cuadrilla to its drilling application, the council voted to defer the decision for two months. Several councilors who opposed Cuadrilla's plans cried foul.
Cuadrilla's quick thinking may have kept its drilling hopes alive for now, but after the missteps by the government, the public backlash is on.
Piling on, Scotland issued a moratorium on fracking on January 28, citing the need for a more extensive public health assessment.
David Cameron's shale gas dream just suffered an enormous blow.
By Nick Cunningham of Oilprice.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.