Saturday, 20 July 2013

UK Announces Tax Breaks for Fracking Companies

from a UK Parliamentary report
Yesterday the UK Chancellor of the Exchequer  announced that companies prospecting for and producing shale gas will be entitled to the same tax breaks as those prospecting in the smaller and more difficult offshore oil fields.  Following in the footsteps of the USA, which has dramatically reduced wholesale gas prices by subsidizing shale gas production, the UK government is planning to do the same. 

So UK residents can look forward to wide swathes of the UK countryside being covered with drilling and production sites, which will rapidly be established in the unfortunate areas where this will take place.  Those people unlucky enough to live nearby can expect falling property prices, contaminated aquifers, polluted watercourses, many heavy vehicle movements, noise, atmospheric pollution and even minor earthquakes. As the price of gas falls, and consumption increases to fuel economic growth, the rest of us can all expect an increase in carbon dioxide levels in the atmosphere and consequent effects on climate change.

Fracking's effect on water resources
The hydraulic fracturing process pumps large volumes of water underground at high pressure, which reappears contaminated with many pollutants, both from the addition of chemicals to assist fracturing and the extraction of heavy metals locked in the shale.   UK water companies are already warning of the potential problems that this will cause, not just in satisfying the volumes of water required but also in treating the waste water.  Smaller sewage treatment plants risk their biological treatment stages being adversely affected and the sludge produced by the treatment process being rendered unsuitable for disposal to agricultural land.  Water companies are not obligated to accept and treat industrial effluents and are allowed to charge for doing so.

In the US operators are refusing to fully disclose all the chemicals used in fracking but I hope that the UK Environment Agency is strong enough, and sufficiently independent from government, to apply its stated policy of full disclosure and then, as a condition for issuing the appropriate permits, only allow companies to use chemicals which the EA considers to be safe for the environment. This might limit the damage to aquifers. Once an aquifer is contaminated there is no going back and to use water from such a contaminated source would require extensive additional treatment facilities to remove the contaminants.

Why subsidize fracking?
So if shale gas production is considered by governments to be such an economic "no-brainer" then why subsidize the operators? The truth is that the wells are productive only for short periods, with production peaking early and then tailing off rapidly.  So the production costs can only be recovered over a short time for each site, and the operators need to maintain a rolling programme of new sites creating progressively more ongoing environmental impact. In the US, however, they have found that, even with tax subsidies, the reduction of gas prices caused by the rapid increase in overall gas production has made natural gas profitable but not shale gas, due to its greater production costs. 

Shale gas is a very short term, highly environmentally damaging solution to the problem of peak oil and declining fossil fuel stocks. Encouraging the burning of yet more fossil fuels with subsidies is folly.  The unrestricted burning of fossil fuels has recently caused the concentration of atmospheric carbon dioxide to exceed 400ppm, a level not seen for 3-5 million years, long before homo sapiens existed.

France has recently stated that the law passed in 2011 banning fracking will remain. France is much less dependent on gas due to its investment in nuclear power.  The French population is also much better organised when it comes to protesting and getting people out on the streets.

A risky political quick fix?
UK politicians, who only ever think as far as the next election, should be ashamed of themselves for going for this quick fix approach to energy policy, and using our money to do so. Those Tories MPs, who are likely to find themselves having to support drilling in Sussex and Surrey, will find that their decision will rebound on them later because the environmental effects and the industrialization of the countryside will not go away for decades. In the north there are no Tory MPs, so there's not much hope for the residents of Lancashire, where drilling has already started and has caused minor earth tremors.

Shale gas production from fracking is an environmental disaster waiting to happen and I am angry and ashamed that the UK is planning to subsidize its production.  It should be investing in research into long term sustainable energy sources and 4th generation nuclear power plant designs, to replace and extend the UK's ageing fleet of nuclear power stations. 

This video uploaded by Danielle Spears deals specifically with the UK situation.