February 22nd, 2013

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The US hasn’t exactly been at the forefront of international climate policy in recent decades. Yet, according to the International Energy Agency (IEA), the US in the past five years has actually been a global leader in reducing carbon dioxide emissions. The primary reason: the US is rapidly replacing coal with cleaner burning shale gas. 

Now the shale gas debate is about to heat up in Europe, where a number of countries, including Denmark, will need to decide whether to make their shale gas reserves a part of their efforts to reduce the effects of climate change, reduce the price of energy and reduce their dependence on foreign suppliers. 

Shale gas, briefly described, is natural gas that formed as a result of being trapped in shale formations, instead of conventional thermal or geological processes. Only recently has shale gas become an attractive resource, as new developments have made it technologically and financially feasible to extract it. Traditional natural gas is found only under relatively rare geological conditions, but while shale is far more widespread it is only recently that the extraction technology was developed. 

In terms of climate change, natural gas emits less carbon dioxide than other fossil fuels. Provided the amount of methane released during extraction is kept to a minimum, the amount of greenhouse gas associated with natural gas is half that of coal and up to 30 percent less than oil per unit of energy.

In our report ‘Shale gas – good for the climate?’, CONCITO looked into whether shale gas extraction in Denmark and the rest of Europe would benefit the climate in any way. The report was written at a time when we need to come up with a quick, inexpensive and thorough reduction of greenhouse gas emissions, combined with the fact that the US – without being forced by federal or international agreements – has reduced its carbon dioxide emissions by eight percent in just five years. The primary cause has been the substitution of coal with shale gas, and for that reason it has been discussed whether Europe would also benefit from doing the same. In Denmark, the discussion is even more relevant, due to the relatively large shale gas deposits. Studies are currently underway to determine the actual size of these deposits. 

Shale gas, however, isn’t all good. It is connected to a number of threats to the environment and climate, such as whether the chemicals used in its extraction can pollute groundwater and the release of methane. Furthermore, shale gas is a fossil fuel, and using it only makes sense if it replaces fossil fuels that release more carbon dioxide. Finally, there’s a risk that increasing the supply of fossil fuels will make it less attractive to utilise renewable sources of energy, such as wind and solar.

Our report focuses on whether shale gas can be extracted under environmentally responsible conditions, and whether the gas extracted would replace oil and gas. The conclusion is incontrovertible: under current market conditions, shale gas will have no climate benefits. Only under certain political and market conditions that ensured that it replaced coal, would it be beneficial, but that would require either a significantly higher price for carbon quotas or coal, or lower gas prices. If none of these conditions are met, then shale gas would only result in a higher European consumption of fossil fuels and increased carbon emissions.

Our analysis of the individual risk factors associated with shale gas showed that:

It is essential to keep the amount of methane released during the extraction of any kind of natural gas to a minimum, if it is be significantly better than coal or oil. This is technically possible, but it must be written into law or into extraction licences. 

Environmental impact assessments must be carried out in order to ensure that drilling will not contaminate groundwater. CONCITO concludes that, in Denmark, there is sufficient distance between groundwater reservoirs and the layers of shale to ensure that contamination does not take place. It is beyond our capacity, however, to issue a blanket statement in this area. Individual projects must still be evaluated on a case-by-case basis. 

Shale gas extraction requires land for the construction of drilling structures and should be regulated in the same manner as other land-use activities.

At the global and EU levels, substitution can result in a significant short-term reduction in carbon dioxide emissions. In order for this to happen in the EU, it would require considerably higher carbon fees. In the short and medium term, there will continue to be no shortage of gas available for import. Shale gas is therefore unlikely to lead to a reduction in greenhouse gas emissions, since any shale gas extracted in the EU would to a large degree only be replacing imported natural gas. 

Given the current situation, the question of whether to extract shale gas then becomes a political decision based not on environmental considerations, but on foreign energy dependence and the potential financial gain from the sale of shale gas. At a time when scientists tell us that our fossil fuels must actually stay in the ground if we are to avoid catastrophic climate change, politicians would only be gambling with the planet’s future if they went ahead and decided to increase the availability of fossil fuels on the world market.

The author is the managing director of climate think-tank CONCITO