Economic Impact on UK Energy Policy of Shale Gas and Oil

The Committee fully supports the Government's commitment to 'go all out for shale'. It says the UK is 'exceptionally fortunate' to have substantial shale gas and oil resources and that exploration and appraisal is urgently needed to establish their economic potential. However the exploratory drilling with hydraulic fracturing (fracking) needed for shale gas development has hardly begun. Since the lifting of a moratorium on hydraulic fracturing in 2012, the Environment Agency has not received or approved a single application for the permits necessary for exploratory drilling. This report calls for a simplified and clear regulatory regime to encourage development of shale and reassure communities that risks of harm to the environment or human health are low. The Committee expresses concern that complex regulation may be causing unnecessary delays. The benefits cannot be quantified however until exploratory drilling and appraisal establishes the UK's economically recoverable reserves of shale gas and paves the way for development. The Committee also welcomes the community benefit schemes announced by the industry for localities where fracking takes place.The positive contribution of shale gas development would also help achieve the UK's commitments on climate change. The carbon footprint of shale gas extraction and use is estimated to be around half that of coal and lower than that of liquefied natural gas (LNG). Although some concerns such as earth tremors have been much exaggerated, legitimate concerns raised by opponents of fracking about possible harm to the environment and health should be taken seriously. The Committee concludes, however, that with appropriate regulation, the risks are low.