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Week Ending 24th March 2013

2013 Spring Budget Boost For Frackers

The big UK fracking story of the week was on 20th March, the budget speech by George Osborne. After exempting the pottery industry amongst others from the Climate Change Levy, and announcing more subsidies for the declining North Sea industry he said:
But I also want Britain to tap into new sources of low cost energy like shale gas. So I am introducing a generous new tax regime, including a shale gas field allowance, to promote early investment. And by the summer, new planning guidance will be available alongside specific proposals to allow local communities to benefit. Shale gas is part of the future. And we will make it happen.”

When the industry has repeatedly said they do not need financial incentives, only a clear government policy, we are left to wonder why Osborne continues to squander taxpayers’ money.

Regarding local communities, what Osborne said reinforced what minister John Hayes had trailered earlier, that local communities would be bribed to encourage them to “host” fracking. There could be no clearer indication that firstly the government accepts that there is local opposition. And rather than rely on good sense and argument, they want to just buy their way through the problem. Moreover the ploy is an admission that fracking WILL damage local communities.
Throwing money at the problem is, of course, exactly what Lord Browne promised he would do the previous week.

In a well-argued article Bridgend Greens declared Osborne had thrown down the Fracking gauntlet and the gloves were now off. The article pointed out that in 2010 gas, oil and coal prices were subsidised by 3.63bn, according to OECD. This compared with 0.7bn for on- and off-shore wind and only 1.4bn in total for all renewables.

Thomas McCaffrey, secretary of the Fermanagh Fracking Awareness Network (FFAN), dismissed proposals for tax relief to encourage shale gas extraction as ill-conceived and unfairly weighted over other energy forms.
In Belfast environment minister Alex Attwood, was less moderate, blustering that the Treasury did not determine what planning and environmental requirements are in Northern Ireland., which were entirely for NI to assess, and he had earlier made it clear there would be no “headlong rush into fracking”. He pointed out that many research projects were in progress, both in Europe and the USA, which needed completion and evaluation before any thought was given as to how or whether to proceed.

Davey's Green Light For Nuclear

The day before the budget it had been announced that EDF - the company which suffered a humiliating climbdown when it backed away from the highly unpopular threat of legal action against anti-gas development protestors (who still have not been sentenced by the court as expected on 20th March because of industrial action) - had been granted its planning application by Ed Davey, Secretary of State for the Environment, for development of a further two nuclear power reactors at Hinkley Point in Somerset. Observers noted that this was not an immediate green light for the project, because any go-ahead would be dependent on a negotiated financial agreement between EDF and the government - EDF are asking for up to 90 billion pounds over the lifetime of the project, according to some reports. The Guardian went with a figure of 50bn in support for EDF from the government over four decades for Hinkley.
After the Cumbria fiasco, the government still has no plans in place for nuclear waste disposal. The Sellafield conversion plant was shut down on the 22nd March due to adverse weather conditions. The future for Britain’s nuclear industry is hardly assured. The Independent reported that Areva, who would build the two new reactors, had been publicly demanding reductions in renewable energy subsidies whilst quietly lobbying the European Commission for financial help for new nuclear power stations. An Areva spokesman denied the charges.

Bridgend Green party issued a telling attack on not just the Tories, but the Labour Party which had in a statement by shadow energy secretary Caroline Flint applauded the go-ahead to Hinkley Point. Hinkley point is a mere 15 miles from Cardiff and 25 miles from Bridgend
The analysis of news reports and Hansard noted new road infrastructure would be needed, compulsory purchase orders would be issued, and a package of measures introduce to compensate the local community for what Ed Davey had described “disruption” to their daily lives. Davey had described the nuclear policy as being “affordable”. The Bridgend Greens flagged up that Newport West Labour MP had asked questions leading Davey to admit that nuclear was expensive. However Davey refused to admit the potential size of subsidy that would eventually be required.

Why Osborne and Davey Are Wrong. Very Wrong.

Green MP Caroline Lucas pointed out the potential impact of Davey’s announcement on energy prices, reminding him that the only two nuclear power stations under construction in Europe currently were billions of pounds and years over budget. The only benefit would be to French taxpayers, at the expense of British (EDF, of course, is French nationally owned) - a damning indictment of Britian’s anti-Europe posturing, and one which the UKIP should consider.

She said a Government which really cared about bringing energy bills under control and improving energy security would put its money on renewables where the costs are predictable and falling and agree to recycle carbon tax revenue into a jobs-rich energy efficiency programme, rather than deepening our dependence on gas, where prices are set to keep rising. Going all-out for offshore wind, for example, instead would save 20bn by 2030, create 70,000 more jobs, and lead to both lower climate emissions and lower fuel bills. She pointed out that the UK’s green economy was now worth over 120bn, 9% of GDP, providing nearly a million jobs and generating a third of our most recent economic growth according to the CBI. This had been entirely overlooked by the chancellor. Opponents of fracking tended to pass off the Budget announcement as expectedly foolish, and said it was business as normal. RAFF said it would only increase their resolve in the Fylde.

OUGO States its Mission

The mission statement of OUGO (Office of Unconventional Gas) was published and confirmed the simple fact that the UK government is absolutely determined to push ahead with shale gas and other unconventional gas and oil development at any cost. The brief included:
Making the most of our natural resources, Enabling development, protecting the environment and safeguarding the public, Making sure local communities benefit from development in their area, Supporting public engagement, Building our knowledge base.” The order of priorities is significant. Number one, to develop the industry. Last down the line, to develop a policy accumulated through knowledge which is NOT there at the moment.

OUGO signals a fracking disaster waiting to happen. Nothing could be further from precautionary principles, nor can we imagine there is any strategy more incredibly irresponsible than going ahead with shale gas development and learning by mistakes.

Lights Out????

The continued unusually cold weather conditions also prompted so-called “experts” to renew their scaremongering about Britain’s gas running out. We were given two weeks of continuing cold weather before rationing was implemented.
Earlier in the week OFGEM had reported that the 'Big Six' energy companies will make a record profit in 2013 - despite the cost of energy on the wholesale market dropping.
Two days later the CEO and MD of one of the big six - SSE - were raising the spectre of the “lights out” scenario, in an obvious attack on the government and its failure to implement a clear energy strategy.
The industry was not, however, slow to muscle in on an opportunity and add to their profits when on the 15th a pipleine problem between Belgium and the UK, although temporary, forced wholesale prices up by 50%, according to the Telegraph, to a record high, before settling back down. The paper reported that Britain had less than 36 hours of gas reserves remaining.
Apart from remarking that this sort of report (23rd March) is inaccurate, I suggest this saga indicates the central problem. That the current government’s strategy is overdependent on gas, and that it has failed even there to ensure security of supply (Britain exports a substantial amount of its gas, and does not have the storage capacity expected to accompany gas dependence - France and Germany are said to have storage capacity for 100 days of demand, whilst Britain has only one fifth of that).
The government, and the National Grid, were quick to counter the suggestions that gas supplies would run out, or need rationing.

Other UK News

On Monday 18th it was confirmed that the government was planning as part of its National Curriculum changes to drop teaching about climate change for pupils under the age of 14. Understandably, this, and many other proposals, came under fire from educationalists as well as environmentalists.
On the same day a new report was published by the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science, the Grantham Institute for Climate Change at Imperial College London, and the Centre for Climate Change Economics and Policy at the University of Leeds and the London School of Economics and Political Science. It was entitled “A UK ‘dash’ for smart gas”, with emphasis on the smart. The report was widely taken as saying that unconventional gas could play a part in replacing coal and reducing carbon emissions. There was a proviso, that new gas production should have CCS technology, which the government is still not committed to, despite a mention by Osborne in his budget speech. The report also says that in the medium to long term. reliance on gas would hinder the decarbonisation of the UK power sector. And relying too heavily on gas could be inconsistent with the aim of avoiding energy cost rises by diversifying supply. It was risky to assume gas prices will be low in the coming years or that the UK has extensive shale gas supplies available.

In West Lancashire REAF revealed the scale of exclusion of the community from what it described as a “fracking risk assessment sham”. DECC is consulting experts from Cranfield University to assist in the development of ERA (Environmental Risk Assessment) guidance for shale gas projects.
The Local Liaison Group (LLG) set up as part of that process is undemocratic and lacking transparency in member selection. No public meetings were held before two meetings of the LLG, resulting in those meetings representing only members’ interests, not the general public’s nor those of residents most closely affected by fracking plans. Cuadrilla and Cranfield are therefore failing in proper engagement with the public. In particular Cranfield University, employed to offer best practice on ERA, have failed to meet their main objectives of ensuring that the local community fully understands all aspects of the ERA process, are aware of key technical issues, and can provide input that will inform decisions on shale gas exploration.

Media continued the story of UKIP’s success in losing the recent Eastleigh by-election. The Guardian published a timely reminder of the anti-green policies of these extremists. “The party's official energy policy is an incoherent mixture of anti-environmentalism and a disregard for scientific evidence”.

In Scotland FoE announced a new survey by YouGov, carried out on behalf of Scottish Renewables, had shown unconventional gas exploration was deeply unpopular, even more so than nuclear power. The majority supported wind power and did not believe it would deter tourism. Only 1% wanted their energy to come from shale gas.

In Northern Ireland the BBC put out a “spotlight” programme about fracking. Both sides of the argument were examined in both NI and Pennsylvania, where the BBC managed to dig up Irish filmmaker Phelim McAleer. His contribution showed to be an extremist anti-fracking bigot.
Fortunately there was some slight encouragement as to the official view from NI. Michael Young, Director of the Geological Survey Northern Ireland, said:
“I don't think we know enough now, and that is the purpose of the research which is going on, to determine what the characterisitics are, of the process, to ensure that it is safe.” Alex Attwood, MLA NI Environment Minister, was blunter:
“For me, there is very much a red light, currently, on the issue of fracking in Northern Ireland.”

At the tail-end of the week, a gem. On BBC's Sunday Politics Cuadrilla's boss Francis Egan, looking for once a little strained, was punched into a corner by Andrew Neil and was forced to admit:
“I don’t think it will transform the UK economy, certainly in the short term, in the way that it has in the US”.
Finally we have it from the horse's mouth.

US Snippets

From the US this week came news that a Pennsylvania court decision had reversed an earlier Washington County court judgement and decided that details should be revealed of a settlement between Marcellus Shale development companies and a family that claimed the drilling operations damaged their health. The judgement opens up the possibility of more openness about settlements in US courts. The family was paid $750,000 for adverse health effects they had suffered.
Also more reports from the US of how shale is not the revolution it’s made out to be. In RT William Engdahl declares it another “Ponzi fraud”. Engdhal says new evidence emerging of the extraction rates declining at an exponential rate has led to a “fire sale” by major US gas players to “gullible” Chinese, Japanese, French and other investors. Chesapeake Energy has seen its shares fall from $80 in 2008 to just above $20. It is selling shale assets to pay down debt.
From California came news that legislation in process could make a halt, even if temporary, to fracking. One bill in circulation calls for regulation, procedural changes and disclosures, another for studies which would require a moritorium until 2018.
Another accident hit the headlines when a gas pipeline in Marshall County, West Virginia exploded. Area residents were evacuated from their homes as a precaution.

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