Caroline Lucas (Brighton, Pavilion) (Green): It is a pleasure to serve under your chairmanship, Mr Bone. I thank the Backbench Business Committee for allowing this debate and colleagues from across the House for supporting it. It gives us an opportunity to examine some of the measures that the Government are putting in place to promote shale gas, and to explore the implications of fracking for our constituents, our countryside and our climate. I read with interest the Hansardreport of Tuesday’s debate, which focused in particular on the details of community benefit packages but also touched on some issues that I am sure we will return to and explore further in this debate.
Before I discuss those questions, in light of recent lobbying scandals and concerns about inappropriate corporate influence on politics and policy making, I will declare my relevant interests. I am a proud, albeit small, shareholder in Brighton Energy Co-operative, which invests in community-owned solar power in Brighton and Hove and whose vision for community-owned renewables at the heart of our energy system I openly support. I have a similar very small interest in the Westmill Wind Farm co-operative in south Oxfordshire. I hope that other Members speaking today will agree that in the interests of transparency and rebuilding trust in the political process, it would be beneficial if all of us declared fully all interests relating to the energy sector or energy companies.
As part of the spending review, the Government set out their commitment to put in place the conditions to allow the shale industry to “reach its full potential”: new planning guidance, community benefits and tax breaks. The planning document was to be published by 18 July, in the depressingly common pattern of waiting until just before the summer recess to publish unpopular policies, but I was told this morning by the Department for Communities and Local Government that it would, after all, be published not today but “very soon”. That is even worse for the House’s ability to examine the details and hold Ministers to account on behalf of our constituents. I am sure that we would all like to hear from the Minister the reasons for the delay. It is hard to avoid concluding that his colleagues in the DCLG are scared of scrutiny.
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It is also pretty appalling that the new planning guidelines are set to come into force without public consultation, denying communities that stand to be affected by fracking any say in the new process. It is clear that Ministers and the fracking firms, which are, sadly, increasingly indistinguishable, are keen to press on rapidly, but it is wrong to refuse to consult on new planning guidance aimed at making it easier for developers to cast aside community concerns.
Even from a perspective of due procedure, I cannot see how the decision to deny communities a say in their new planning rules is remotely in line with the Government’s own definition of circumstances in which consultation is unnecessary. The relevant Cabinet Office principle makes it clear that that is appropriate only in the case of
“minor or technical amendments to regulation or existing policy frameworks, where the measure is necessary to deal with a court judgment or where adequate consultation has taken place at an earlier stage”.
Many of my constituents have e-mailed me over the past few weeks to call for a full public consultation, as well as for new planning rules that are strong on tackling climate change and follow the precautionary principle when it comes to issues such as groundwater contamination.
Another spending review measure is the consultation on tax incentives to encourage companies to press on with shale gas exploration. The Treasury is proposing reducing the tax payable on income from 62% to 30%. One of my concerns is that tax breaks for fracking amount to an additional fossil fuel subsidy, which is exactly what the UK and other G20 nations pledged to phase out three years ago. It looks like a backward step. Fossil fuel subsidies, which amounted to $500 billion worldwide in 2011, are effectively an incentive to pollute. Earlier this year, the chief economist of the International Energy Agency, Fatih Birol, called them
“public enemy No. 1 for sustainable energy development”.
Mr Peter Lilley (Hitchin and Harpenden) (Con): Will the hon. Lady make it clear that what she calls a fossil fuel subsidy in the case of the UK is, overwhelmingly, simply a lower rate of VAT on all energy use? Is she calling for a higher rate of VAT on all energy use, or just a higher rate on fossil fuels? To describe it as a subsidy is surely nonsense.
Caroline Lucas: I do not think that it is nonsense. The Environmental Audit Committee, of which I am a member, is in the middle of an inquiry into fossil fuel subsidies, and it is clear from some of the evidence that we have received that many people think that the Government’s definition of subsidy, which is narrow and does not include tax breaks, is wrong. I am happy to say that I do not think that fossil fuels should have tax breaks. Whether or not we want to call that a subsidy, I am clear that I think it is, and I am against it.
Charles Perry said in evidence to the Committee:
“The media in this country…would like us all to believe that we are paying a lot more for renewable energy as consumers, but if you compare what we are paying for renewable energy versus fossil fuels, it is six times more for fossil fuels as a taxpayer than it is for renewables.”
That sums up what I am saying.
— Later —
Barbara Keeley (Worsley and Eccles South) (Lab): It is a pleasure to speak in this Backbench Business Committee debate with you in the Chair, Mr Bone. I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate and on the way in which she opened it. I have a potential site for fracking for shale gas at Barton Moss in my constituency, and I want to talk about constituency concerns, as the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) has just done. My constituents have a number of concerns, and they are building by the week and month. I want to talk about those concerns over the potential impact of fracking for shale gas on their quality of life, because that is the key issue for me.
First, even the suggestion of fracking for shale gas moving into the area is bringing house prices down. I had a quick look before I came to the debate, and found various articles talking about a house price downturn of up to 30% in various parts of Manchester and the north-west. When major projects such as large rail schemes are introduced into an area, they bring house prices down. Such a loss would mean a cost running into millions of pounds for all the local people affected by a house price downturn.
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Graham Stringer (Blackley and Broughton) (Lab): Will my hon. Friend give way?
Barbara Keeley: Will my hon. Friend wait until I complete this point? I will come to him in a moment. His constituency is at the other end of Salford from mine, and I know that he will disagree with what I say.
As we heard extensively from the hon. Member for Lancaster and Fleetwood, there is talk of a community bonus of £100,000 per well. The difficulty is that it is out of scale with the potential loss in house values that people will see. The 1% of any revenue will also come along far too late. If someone’s house has lost value and they have become fed up and moved away, they will not be helped by 1% of revenue.
Graham Stringer: Outside London and the south-east, the highest house prices in the country are in Aberdeen, due to the benefit of the oil industry in the North sea. Eventually, the improvements in the economy if shale gas is exploited are likely to lead to a rebalancing of the UK economy and higher house prices.
Barbara Keeley: My hon. Friend is entitled to that view, but I do not agree with him.
There are serious concerns about the impact of fracking on communities. I want to quote from the International Energy Agency’s “Golden Rules for a Golden Age of Gas: World Energy Outlook Special Report on Unconventional Gas”:
“Producing unconventional gas is an intensive industrial process, generally imposing a larger environmental footprint than conventional gas development. More wells are often needed…The scale of development can have major implications for local communities, land use and water resources. Serious hazards, including the potential for air pollution and for contamination of surface and groundwater, must be successfully addressed.”
Those are the issues and concerns that are starting to bear down on my constituents, and the notion that anyone living in an area where such things were being contemplated would see house price increases is just not realistic.
I want also to quote from a report by the Tyndall Centre for Climate Change Research produced by local academics at the university of Manchester:
“The depth of shale gas extraction gives rise to major challenges in identifying categorically pathways of contamination of groundwater by chemicals used in the extraction process. An analysis of these substances suggests that many have toxic, carcinogenic or other hazardous properties. There is considerable anecdotal evidence from the US that contamination of both ground and surface water has occurred in a range of cases.”
The report also states that
“there are a number of documented examples of pollution events owing to poor construction and operator error. There are reports of incidents involving contamination of ground and surface waters with contaminants such as brine, unidentified chemicals, natural gas, sulphates, and hydrocarbons”.
Government Members appear to be saying “Nonsense.” I think I heard the Minister say it too, so I hope he can give me information that I can pass on to my constituents that will help to settle their minds.
Mr Lilley: There have been some 2 million wells fracked in the United States and not a single person has suffered from water contamination as a result.
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Barbara Keeley: That is interesting, and if the right hon. Gentleman has references that he wants to pass on for me to use in my constituency, he is welcome to do so.
We have read the various reports, and it is clear that there are things that need to be borne in mind, not least the potential effect of the shale gas industry’s environmental impact on my constituents. There are many points in the process at which groundwater contamination could occur, due to fracturing fluids or contaminants being mobilised from migration under the surface. There is also the contamination of land and surface water, and potentially groundwater via the surface route, arising from any kind of spillage. Right hon. and hon. Members who have lived in the vicinity of chemical processing industry plants—we have a number in the north-west—know that such things happen. I used to work alongside someone who had worked for ICI, who constantly told me about the evil soup they would get rid of on one particular day. Such things have happened, and people remember them.
The key point is that there will clearly be impacts on the land and the landscape from the drill rig, the well pads, storage ponds or tanks and access roads. People will experience noise and light pollution during the well drilling, and local traffic will be affected. All those impacts are not uncertain; they are certain.
We also know that seismic impacts are possible, and the hon. Member for Lancaster and Fleetwood has touched on that issue. The western part of Salford was previously mined for coal and has many quarries—unlike the eastern part, which my hon. Friend the Member for Blackley and Broughton (Graham Stringer)represents. I have already had experience in my constituency of part of a street of newly built houses falling backwards—subsidence is a hazard for home owners throughout the area. We have come across a study by geologists at Columbia university, who feel that large earthquakes can trigger, even from a great distance, smaller seismic reactions near waste water injection well pads. People read the studies and take away that fear.
It would be helpful if the Minister could tell me, so that I can pass the information on to my constituents, what research has been conducted into that domino effect. If, as we get into shale gas development in various places—not, I hope, in my constituency—there are further seismic impacts, will areas such as mine be affected?
Dan Byles: The hon. Lady is absolutely right about the report, but it was, as she said, about geological waste water disposal, not about hydraulic fracturing. I believe that geological waste water disposal is already not permitted in this country, under a number of EU regulations. Last year’s Royal Society report considered closely the issue of induced seismicity and declared the risk of it to be very low.
Barbara Keeley: Those are interesting points, but I can assure the hon. Gentleman that if he was at meetings with constituents of mine who have these fears, he would realise that it is very hard to persuade people who are personally affected by living next to a site.
I want to mention the Lancashire Wildlife Trust, because it is a key stakeholder in any proposals for gas exploration and exploitation at the site. The trust has a role in protecting and restoring the precious mosslands
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resource in Salford, which is adjacent to the site in question. The area of raised peat bog has suffered for decades from peat extraction, but we have just won council approval to refuse a licence for peat extraction—in which the trust played a key role—and people were feeling that things might get back to normal and calm down. The trust gave me the following statement:
“The Wildlife Trust for Lancashire considers that the most significant local issues for biodiversity are the impact of the footprint of the physical development (e.g. buildings, parking areas, waste water storage tanks and well-heads)”
on adjacent wildlife sites on the mosslands,
“and the safe disposal of the waste water. Any proposal for shale gas extraction should go through the full planning process including public consultation, compliance with EU Directives and a full Environmental Impact Assessment.”
I have concerns about planning, which I will come to. The statement continues:
“The Environmental Impact Assessment should disclose all chemicals involved in the process and identify the least damaging disposal route for the waste water.”
I am already getting questions from constituents that I cannot answer about what chemicals are involved in the process, so that is clearly very important to people.
The trust goes on the state that it
“will treat each planning application for energy generation on its own merits and we would expect there to be a net gain in biodiversity in line with current legislation, local planning policies and the National Planning Policy Framework”.
The final point the trust makes, as we have already heard from the hon. Member for Brighton, Pavilion, is that
“the precautionary principle should be adopted until adequate scientific evidence exists as to the environmental impacts.”
Dan Byles: The hon. Lady is being very generous in giving way. I might have misheard her, but I think she said that she could not answer the questions about what chemicals are put into fracking fluid. If she looks on the Environment Agency website, she will see that they are listed in full, as required by the agency’s rules. That is entirely transparent.
Barbara Keeley: I do not think that that is my job—
Dan Byles: Of course it is.
Mr Lilley: Show some leadership.
Mr Peter Bone (in the Chair): Order.
Barbara Keeley: I do not know about the particular developer we will have or the particular process that it will undertake. To be perfectly frank, in the current environment I do not know whether I have the resources to get into that anyway, so it would be helpful if the information could be provided.
Mr Lilley: Will the hon. Lady give way?
Barbara Keeley: No, I want to make some progress.
I want to touch further on the potential environmental impacts of shale gas developments. Constituents of mine have brought reports to meetings and have raised 8 July 2013 : Column 326WH
their concerns. I have already mentioned the issues they see as being more likely to cause problems for the local environment and for human health, including water contamination and air pollution, and I want to go a little further into the latter.
In certain places in the States—Wyoming and Texas have been mentioned—there have been cases of photochemical smog, which increases susceptibility to asthma. A hospital system in Texas, which serves six counties, has reported asthma rates of three times the national average. In my constituency, we already have significant problems with air pollution, due to the volumes of traffic and traffic congestion on the three motorways. My constituency is surrounded by the M60, the M62, the M602 and the local road network. Recent roadworks near a junction of the M60 caused tailbacks of up to two hours, with traffic nearly at a standstill, and that was in the same area as the drilling site.
The current mortality figure for Salford attributable to air pollution is as high as 6%, which is higher than the average for England of 5.6% and much higher than the figures for other parts of the country, such as Devon and Cornwall. We have evidence from the United States of some hazardous pollutants being prevalent around shale gas wells. In my constituency, the Barton Moss site is close to two local housing estates—the real difference is that the hon. Member for Lancaster and Fleetwood was talking about a rural area, while I am talking about a heavily populated urban one—so any drilling for shale gas would only add to the harmful air pollutants already breathed in by my constituents. Has the Department done any work to examine the outcomes and the potential risk of exploiting shale gas in such urban areas? I do not know whether there is information about that, because there is concern about air quality now that the monitoring duty has been taken away from local authorities.
There is a concern that many of the data currently used to promote shale gas extraction are limited or at best incomplete. Hon. Members have given examples and pointed out certain websites. The Tyndall Centre for Climate Change Research has argued that, although there are increasing volumes of data on the subject—such as lists on websites—many of the data are built on provisional sources and there is a paucity of reliable data. Will the Minister tell the House what measures he is taking to develop the information used to underpin Government policy, so that people have certainty? It is important to have certainty about the data on fracking that are being relied on and the potential effect on the environment.
Another concern is that any gains from shale gas will not be as substantial as claimed. A fear that I have heard from my constituents is that gains will go straight to the Treasury and bypass the local community, as we have heard today. It is right to question to what extent shale gas may cut energy bills. Although there has been a boom in the United States, experts say that costs in Europe will be up to 50% higher than in the US because of such factors as the less promising geology and the higher population density. Bloomberg New Energy Finance has said that hopes that shale gas will cut energy prices are “wishful thinking”, and the former Energy and Climate Change Minister, the hon. Member for Wealden (Charles Hendry) has written that
“betting the farm on shale brings serious risks of future price rises.”
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Like the hon. Member for Lancaster and Fleetwood, I am concerned about the real bonus, if there is one, to the local community in Barton and Irlam, because they will experience all the disbenefits. It is said that exploiting shale gas will lead to cheaper fuel bills, but we have heard from other sources that it may not.
I return to the planning issue and whether local communities can have a proper say on any decisions about shale gas that affect them. I have to say to the Minister that the changes to the planning and permit process advertised over recent months have served only to make my constituents more anxious. We know that the Growth and Infrastructure Act 2013 will allow developers to bypass local authorities in some cases, which is a real concern in my constituency. The Act creates an opportunity for developers to fast-track major projects instead of going to the local authority, and I have many times been asked, “Is that going to happen to us?” The Act allows developments for large onshore gas extraction over a certain size to be fast-tracked to the Secretary of State, so it would be helpful if the Minister said whether he thinks shale gas extraction will be fast-tracked.
The hon. Member for Brighton, Pavilion has already referred to the fact that on 27 June the Government published their document on infrastructure investment, which stated that they intended this month to publish measures
“to kick start the shale gas industry in the UK.”
The measures were to include guidelines that, as she said, are not currently available. I am concerned about that, so can the Minister shed any light on why they have not been published? Most alarmingly, the 27 June document stated that the Environment Agency would
“significantly reduce the time it takes to obtain environmental permits for exploration.”
A process seems to have been built in for fast-tracking or streamlining permits in a standard period of 13 weeks from August, but in as little as six weeks in some cases. Alarmingly, by February 2014 permits will be issued within one to two weeks, based on standard rules. Will the Minister tell us what we can expect with the new planning and permit regime, so that I can pass that on?
I want to quote some policy lines that relate to the debate. The shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls), has said that
“the green economy and low carbon energy will be central to Labour’s plans in government”,
and that work for Labour
“on industrial strategy will also have energy and environmental policy at its heart. So will…Armitt’s review into the way in which we make our infrastructure decisions. Without a low carbon infrastructure plan and economic strategy, in the modern economy you simply don’t have an economic plan. Our vision is for a race to the top—to secure a world-leading position for British businesses in helping the world meet the low carbon challenge—and in doing so create prosperity and jobs for people in this country.”
The point about jobs has already been raised.
My hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) has set out the questions that need to be answered to ensure that exploration and extraction are properly regulated and monitored, and he may say more about that later. He has quoted President Obama as saying that plentiful shale gas does
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not make climate change and its associated emissions go away; it makes the need for carbon capture and storage all the more essential and the need to drive renewable technologies more urgent. Legitimate environmental concerns should be addressed and, I would add, consultation with communities should be meaningful. Energy policy needs responsible leadership, and I hope that this debate helps point the way to that and, more importantly, helps to get answers that I can pass on to my constituents.
Several hon. Members rose—
Mr Peter Bone (in the Chair): Order. Because of the number of Members who have indicated that they wish to speak, with the authority of the Chairman of Ways and Means, I am imposing with immediate effect a time limit on Back Benchers’ speeches of eight minutes, with added time for two interventions.
Mr Peter Lilley (Hitchin and Harpenden) (Con): It is a pleasure to be at this debate under your chairmanship, Mr Bone, and I am delighted that you are a chairman of so many things. I congratulate the hon.—and old Malvernian—Member for Brighton, Pavilion (Caroline Lucas) on obtaining the debate. I mention her school since she seems to be obsessed with other people’s schools. It is important to have the opportunity to debate the issues.
The hon. Lady asked Members to draw attention to their interests. I invite everyone to look at my interests, as declared in the Register of Members’ Financial Interests. They will find that I have no interest in fracking or in any oil and gas companies in this country. Over my lifetime, I have been—indeed, I still am—involved in an oil company in central Asia and I was involved in analysing oil companies and predicting energy prices for 20 years, when I had a proper job before coming to this place, so she may try to insinuate that that somehow makes me too well disposed to the oil and gas industry. She may therefore be surprised that, as the hon. Member for Southampton, Test (Dr Whitehead) will confirm, I was the only member of the Energy and Climate Change Committee who criticised, as she does, the suggested special tax breaks for fracking. On the basis of my knowledge of the oil and gas industry, I think that they are probably unnecessary, and we should not give away unnecessary tax breaks; although if they are necessary, that would be fair enough.
I want to draw Members attention to one interest that is not declared in the Register of Members’ Financial Interests. I probably share this interest with all other Members, although too many ignore it. It is my interest in my 70,000 constituents who want their heating bills kept as low as possible, my interest in the people in this country getting jobs and my interest in reviving the manufacturing industry in this country and providing it with fuel that is as plentiful and cheap as possible.
I have great respect for the hon. Lady and those who, like her, simply want to keep fossil fuels in the ground, although if that was my objective, I would start by keeping coal in the ground rather than gas, which produces only half or less of the carbon dioxide emissions of coal. I do not support such a policy because, probably like her, I take as given the Intergovernmental Panel on
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Climate Change summary of the science, I also, unlike her, accept its summary of the economics of taking action to prevent global warming. It has concluded that, in relation to the level of CO2 in the atmosphere, it could not identify
“an emissions pathway or stabilisation level where benefits exceed costs.”
Unless and until we can find a pathway or a stabilisation level for CO2 that will produce greater benefits than its costs, we should not set about impoverishing this generation in the vague hope that we may make some generation in the future richer.
Caroline Lucas: I think I said that the driver for increasing fuel bills for most people today is rising prices of gas rather than renewables or anything else. Those interests that the right hon. Gentleman declared at the beginning of his contribution around jobs and keeping fuel bills low are better met through green energy sources than through gas, the prices of which are pushing up bills right now.
Mr Lilley: The current cost of electricity produced from gas or coal is £50 per megawatt-hour. The current cost of producing it from windmills is £100 per megawatt-hour. For offshore windmills, it is £150 per megawatt-hour and for solar it is off the scale. If we think that we will get cheaper, lower energy bills by going to energy sources that are two, three or four times as expensive, we are living in la-la land.
Caroline Lucas: Far from my being in la-la land, the right hon. Gentleman has very effectively not answered my question. I said that if we were to look at a fuel bill to try to ascertain which elements made it high, we would find that it was gas rather than renewables. Yes, renewables have a greater degree of subsidy now, but that is because they are new. They have a rate that will enable them to come to grid parity very soon. Gas, by contrast, is an old technology and hardly needs those kinds of subsidies.
Mr Lilley: Even that is not true. The most recent generation of gas turbines are so much more efficient than the previous ones that the savings from replacing all our gas turbines with the most recent generation would probably be greater than the savings in CO2, emissions from using wind. I will, if I may, make some progress.
Until we find a way of controlling CO2 levels in the atmosphere that will not cost more than the benefits of doing so, we should not impoverish this generation. My respect for the hon. Lady and her colleague, the hon. Member for Worsley and Eccles South (Barbara Keeley), begins to evaporate when they abandon their real belief, which is that we should not burn any fossil fuels, and start to concoct fabricated fears and spurious arguments against fracking. Their first argument is that there will not be much there—that was what they originally said. Now the British Geological Survey says that there is probably an awful lot there, but that we will not know until we have drilled it.
The hon. Lady went on to say that the process will be so costly that it will cost more than the price, in which 18 July 2013 : Column 330WH
case no one will extract it, so her fears can evaporate. She clearly does not believe her own argument otherwise she would not even bother to attend this debate because it would not be important. She alleges that it will be more difficult geologically to extract shale in this country than in the United States, and that the geology here is less attractive than there, but that is simply not the case.
When the Select Committee interviewed Cuadrilla and BHP Billiton in the States, we asked them how thick the shale beds were in the States that they typically extracted from. They said 300, 400 or 500 feet thick. How thick is the Bowland shale? It is a mile thick; up to 20 times as thick as in America, which means that from one surface pod, we can get up to 20 times as much fracking as they can in the States—perhaps it is only a dozen times.
Dr Whitehead indicated dissent.
Mr Lilley: The hon. Gentleman can intervene if he wishes to put me right.
Dr Whitehead: The right hon. Gentleman will lose time from me intervening, so I am sorry about that.
Mr Lilley: If the hon. Gentleman can be quick.
Dr Whitehead: Thickness is not necessarily the final indicator.
Mr Lilley: If the hon. Gentleman does not have anything interesting to say, then he should not waste my time.
Dr Whitehead: Well, it relates to geological faulting, clay, extractability, tightness—
Mr Lilley: Thank you very much. I am grateful to the hon. Gentleman. That was not very helpful to the debate in general.
The second and more plausible argument is that, even if there are large quantities of gas here and we will not know that until we have drilled, it will not succeed in bringing down prices in the UK, because our prices are fundamentally set by marginal suppliers from Europe. That is both plausible and possibly true, but either we will have so much here, and there will be so much elsewhere, that gas prices will come down, or they will not in which case the tax revenues from producing gas in this country will be substantially greater—three times as much per cubic metre extracted as in the States. With those extra tax revenues, we will be able to reduce our other costs on the economy or other tax bills that people face.
Shale is ubiquitous; it is incredibly widespread across the world. For the hon. Lady to suggest that it will be extractable only in the States is really to express the belief that God is an American, that he has created a particularly unique situation in America with shale that is so different from shale elsewhere in the world and with a technology that will only apply there, and that he has maliciously arranged things so that the technology will not apply to the shale in the UK, France, Poland, China or elsewhere in the world. I simply do not believe that that is true. In all probability, we will see a shale gas revolution worldwide that will probably keep gas prices
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low. It is certainly likely to prevent them going up, and it may even bring them down as it has done in the States.
When pessimism about reserves and prices fail, some people resort to fabricated scares, which are as irresponsible and as unjustified as the MMR scares, which stopped people from taking advantage of vaccination. I hope that we will not allow similar scares to stop us taking advantage in this country of the potential resources that exist beneath our soil.
The letter from the people in Balcombe from which the hon. Lady quoted says that fracking is considered to be an uncertain and risky technology. It is far from being uncertain and risky. The first gas well was fracked on 17 March 1949. Since then 2 million wells have been fracked in the United States, and 200,000 in the last year, without anyone being poisoned from contaminated water, or any buildings or people suffering damage from minuscule seismic tremors.
As far as water scares are concerned, the Royal Society and the Royal Academy of Engineering dismissed fears about water contamination. They concluded that any health, safety and environmental risks associated with hydraulic fracturing can be managed effectively in the UK as long as operational best practices are implemented and enforced.
— Later —
Dr Whitehead: If every country in Europe produced the same amount of shale gas that is presently being produced in the US, yes, that is possible, in terms of the trading in the European market, but that probably is not going to be the case. Therefore we have to look at the relevant prices of gas within the markets. It is a question of trading in a market, not a question of the gas being plugged into someone’s home and therefore creating a reduction in price as far as that house is concerned.
David Mowat rose—
Dr Whitehead: I am sorry, but I cannot give way any more or I would lose the rest of my time.
The other question is what happens with those large amounts of wells in terms of the fracking process? That process involves the use of between 2 million and 7 million gallons of water, and 5,000 gallons of chemicals, per frack; whether we know what is in the chemicals or not, that is the sort of amount of chemicals needed. As has been said, that water cannot be injected largely into
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seams deeper than the fracking itself, as is the case in America, but would have to be disposed of by other means. Also, unless the fracking companies brought the water with them, water would have to be taken from the water table within the area where the fracking was taking place, which has implications for the integrity of the water tables in those particular parts of the country. That is an important but largely forgotten point.
The final thing that I want to say, given the short amount of time I have, is about the policy implications of going for a large amount of fracking. If we went for a large amount of fracking, as I have said we could perhaps supply—over a period—10% of overall UK gas supplies. If we went for a large programme of anaerobic digestion, we could provide 10% of the domestic gas supply. A farm-sized anaerobic digestion plant costs about £2 million to build—
Mr Lilley: What’s stopping them?
Dr Whitehead: The right hon. Member may well have asked a very valid question. As I was saying, such a plant produces about a third of the gas over a 20-year period that a fracking well would produce over 7.5 years, but anaerobic digestion plants will produce gas continuously because the cows that provide the stuff that produces the gas continue to produce the feedstock, as do we from our own waste and our food. Therefore, anaerobic digestion plants do not deplete. A long-term strategy for gas supply security might concern itself with anaerobic digestion and biogas, rather than going for a gas bonanza. We ought to look at all of these factors when looking at the future of gas supply in this country.
Dan Byles (North Warwickshire) (Con): I can confirm that I have no financial interests outside of this place whatsoever. I sit on the Energy and Climate Change Committee, I chair the all-party group on the environment and I also chair the all-party group on unconventional oil and gas. “Unconventional gas”—that is what we call shale gas, which is a bit of a misnomer, because it really is just gas. It is the same gas that we use to heat 83% of our homes and to generate 30% to 40% of our electricity.
Accessing gas from shale rock is not new. My right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) said that gas has been hydraulically fracked in the US since 1949, but he may not be aware that the first exploratory shale gas well drilled in the UK was in 1875, in Netherfield in the south of England. It was an academic activity at that time, but the first commercial shale gas wells in Europe were drilled in northern Spain in the 1950s. Hydraulic fracturing itself is not a new or an unknown process, as my right hon. Friend has already said.
I want there to be a calm debate about this subject, informed by the evidence. Sadly, there is too much rhetoric around the entire shale gas debate, often—it has to be said—on both sides of the debate. Whenever anybody uses the phrase “shale gas bonanza”, I cringe as well. My view is that the evidence to date shows that shale gas can be accessed safely, if operations are done to a high standard and with effective regulation. That is backed up by a growing library of research from reputable expert organisations, such as the Royal Society, the
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International Energy Agency, the Royal Academy of Engineering, and others. The weight of evidence so far shows that unconventional gas can be developed safely, with effective regulation.
Ultimately, this is not a debate about whether to use gas. It is important to state that, because sometimes this debate strays into a discussion about the gas strategy. This is a debate about where we get the gas we use from. Under the Department of Energy and Climate Change’s central forecast scenario, we will be using broadly the same amount of gas in 2030 that we do today. The trouble is that both the Institute of Mechanical Engineers and the Institute of Directors estimate that by 2030 we will be importing up to 80% of our gas, at a cost of some £15 billion a year. That gas will come from Norway and Qatar and in future, probably, from Russia. It will include liquefied natural gas that has to be liquefied, transported and re-gasified. I have no confidence that Russian gas is produced and transported to higher, or even the same, environmental standards as gas in the UK.
— Later —
Graham Stringer (Blackley and Broughton) (Lab): I had not noticed that the air conditioning had changed.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas), whom I tend to either agree or disagree with 100%. Today I am afraid it is the second of those two positions.
There have been many excellent speeches on both sides, and I will try not to say what I was going to say, because that would mean repeating some of the points that have been made; instead, let me deal with some of the facts and issues that have come up.
One of the last points to be made was about water. While relatively little water is used, it has not been pointed out that there is, in most cases, a mile of rock between where the fracking takes place and the water table, so contamination is very unlikely.
On house prices, I was responsible, as chair of Manchester airport, for building the second runway there. At the bottom of it is a beautiful Cheshire village called Style. When the runway was being built, people claimed that house prices there would go down, but the only time prices were affected was during the campaign against the runway, when there were lots of signs up in the village. As soon as the campaign went away, house prices went up, even though the runway was taking very large planes. The fact is that house prices are related to economic activity, so my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) can reassure her constituents that house prices will not be brought down.
Barbara Keeley: It is important to tell my hon. Friend that I already have evidence that, because of these developments, people are planning to move out of the area, which I would not want to happen, while others have said they will not move into the area. This really is having an impact.
Graham Stringer: That is completely consistent with what I was saying—that the fear of the activity, rather than the activity itself, is the problem.
I want now to move on to the science and to speak as a scientist. I agree with virtually everything the right hon. Member for Hitchin and Harpenden (Mr Lilley) said, apart from when he completely accepted what the Intergovernmental Panel on Climate Change said. We must remember that it involves a political process, which lies on top of a number of scientific papers; its work is not necessarily put together by scientists themselves.
The hon. Member for Brighton, Pavilion could be accused of being unrealistically precise in her comments about what is likely to happen in the climate over the coming years, and I would make two simple points about the science. First, I have talked to most of the leading scientists on climate change in this country and in the United States, and there is no known way of distinguishing natural variations in the climate from impacts caused by carbon dioxide—nobody knows how to do that.
Secondly, the models that have been used to predict the increase in temperatures have all been wrong. In the Met Office, we have the biggest supercomputers in the world, which are great at back-projecting climate, but their projections of climate into the future have all been
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inaccurate. That is just an indication that there is something unknown about the science, which is not to say that carbon dioxide is not a greenhouse gas, because it clearly is, and it has been known as such for a long time. However, an artificial precision is being introduced into the debate, and it really should not be there. We do not, therefore, often talk about the science.
My next point is about the costs of all the different policies and the price that will result. An interesting report by Liberum Capital indicates the difference between the cost of the Government’s policies on replacing the sources of our energy and the cost of replacing like with like. It finds that there is a difference of more than £200 billion between the two, and that will come out somewhere in the price of gas to our constituents.
The Government’s energy policy is based on taking a long-term position on the price of gas and oil—fossil fuels. Essentially, they are betting the house, the country or hundreds of billions of pounds that the price of fossil fuel will continue to rise. If that happens, and if renewables are put in place, they are likely to win their bet—and it is a bet. They will have to find the capital to fund those renewable energy supplies, but given that prices of publicly quoted shares in the European renewables market have dropped below their level in 2004-05, that looks very unlikely. If the Government lose their bet, our constituents will pay more for their energy than they should.
David Mowat: I agree with the point the hon. Gentleman has just made about renewables and potential increases in the price of fossil fuels. Effectively, the Government’s strategy is to use renewables as a hedge against increased fossil fuel prices. That is not altogether unreasonable, is it?
Graham Stringer: It would not be if it was just a hedge and it was not artificially pushing the cost of gas and other energy supplies up by holding them in reserve. The hon. Gentleman is right: it is a hedge, but it is a very expensive hedge indeed.
There are two reasons for being against fracking, and the debate has been helpful in clarifying some of the facts. One—it is a completely reasonable to make this point on behalf of constituents—is that people worry when they hear that there is to be fracking in their area. It is therefore quite reasonable for them to ask for the good health and safety standards and good environmental standards that apply elsewhere in the country. However, it is not reasonable to push those standards to the point where the fracking does not happen. When the hon. Member for Brighton, Pavilion talks about the precautionary principle, that is really a way of trying to stop everything. She really should read the Science and Technology Committee report from the previous Session on the precautionary principle, which is often quoted, but it is often used to prevent anything from happening.
Let me give an example. One often has to use the best available evidence to do something, and the reason we are not getting protected areas in the sea at the moment is that the Government are looking for more and more scientific evidence when we should be using the scientific evidence available. If the hon. Lady wants to stop fracking by using the precautionary principle, she is likely to do that, but I think we have to look at the scientific evidence we have and apply high environmental standards.
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Finally, I want to put the Government’s energy policy, which is not coherent, in the context of what is happening on emissions worldwide. Much of the Government’s policy is based on reducing emissions, in the belief that that will bring down global warming and slow down or stop climate change. However, the policy is failing, and emissions are going up. With emissions, one has to deal with imported goods, which are often created using industrial processes that create more carbon dioxide than processes here do. If we push up the price of energy here, we will export production to China, India and other places and increase the amount of carbon dioxide. That is a deindustrialisation policy, and I hope that, by exploiting shale gas in a safe and environmentally responsible way, we can start reindustrialising this country and creating the 72,000 jobs or more that it has been predicted will come from exploiting shale gas.
David Mowat (Warrington South) (Con): I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on obtaining the debate and on her spirited contribution. Unlike the hon. Member for Blackley and Broughton (Graham Stringer), I can only recall being in debates in which I disagreed more or less 100% with her, but I may have missed some of the other debates.
I want to make a few points about the hon. Lady’s spirited contribution. One of the phrases that I have heard used several times is that we are “betting the farm” by moving ahead with shale gas. I have not heard anyone in the Government or otherwise saying that we should do that. We do not want to bet the farm on it. We want a mixed supply of energy for the future, and gas will rightly be part of that. She mentioned Sam Laidlaw who now runs Centrica and who was previously at Conoco and Amerada Hess. Just to put her mind at rest, he is an ex-Etonian, just as she is from Malvern, but I went to a state school in the midlands, and she can take my speech in that way.
I want to pick up on four points. The hon. Lady talked about fossil fuel subsidy. Apparently tax relief —VAT or other forms of tax relief—would be a subsidy. There is a difference between giving a technology money to make it work—I am not necessarily against doing that for some renewables—and just taxing it a little less, and we need to recognise that. I think that she also said—she must intervene if I am wrong—that fossil fuels were six times more expensive than renewables.
Caroline Lucas: They are subsidised.
David Mowat: I apologise; it is probably my fault. Just to be clear, the price of solar is something upwards of 45 times the price of electricity produced from gas at the moment.
As for the climate change issues around shale gas, or unconventional gas, I would take hon. Members’ concerns about the impact of climate change more seriously—I am inclined to think that we should address it—if they took a different attitude to nuclear power, the technology that is far and away the most likely, worldwide, to make a difference at scale to carbon emissions.
I want to consider whether shale gas will affect the UK economy. The hon. Member for Southampton, Test (Dr Whitehead) made an interesting speech about
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the necessary volume of wells. I was not aware of what he said and found his numbers hard to believe, but if they are true, the point is interesting and important. Let us be clear: shale gas is already having a massive influence on the UK economy, because right now one of our major industrial competitors, the US, has energy prices and therefore electricity prices that are a quarter of ours. It has feedstock prices as an input to the global gas industry and the petrochemicals industry that are a quarter of ours. That is already making a difference at the margins. Some industries are already deciding not to invest in the UK and to bring petrochemicals and chemicals back to the US—indeed, out of China, let alone Europe. Shale gas is already having a massive impact on the UK economy, and it is nonsense to pretend that anything we say in this debate, or that the Government do, will make any difference to that.
Graham Stringer: One of the points that has not been made is that there is a slight assumption that shale gas is just methane. It is actually ethane and propane as well, and those can be used as feedstock to our chemical industry, lowering chemical prices and making the industry more competitive.
David Mowat: I thank the hon. Gentleman for that point. He is completely right. Indeed, it would be more accurate for us to talk about unconventional gas than about shale gas, because coal gas is also part of what we are discussing.
Clearly, there is already an impact on the UK economy. I used to do a lot of work on the correlation between energy prices and GDP. They are closely correlated, and particularly so if we are trying to rebalance the economy back towards manufacturing, chemicals, aluminium, steel and chlorine production, and all that goes with that. We cannot do that if we have differentially higher energy prices than our competitors. I refer mainly to the US, although there is increasing concern that the rest of Europe is taking a different path from the UK on carbon taxes, and so on. It is right to let shale gas go ahead and let the market define prices and how things will work.
In the US, the gas price has fallen from $12 per million British thermal units to about $3. The cost of importing liquefied natural gas, if its export is allowed, is about $5. That implies a cap on European gas prices if there were a free market; and the hon. Member for Southampton, Test is right to say that there are three gas markets currently. Such move would imply a cap of about $8 or $9, which is considerably lower than now, although I accept that for strategic reasons the US Government might not agree to export any gas at all.
My hon. Friend the Member for North Warwickshire (Dan Byles) made an excellent point about climate change. The issue about climate change and gas emissions is how we get coal out of the system. The UK still produces 70% of its energy from coal and oil and something like 3% or 4% from renewables, taking into account transport as well as electricity production. The UK has lower carbon emissions per head and per unit of GDP than nearly every country in Europe, in spite of the fact that we have less in the way of renewables. The reason is that we burn less coal than most countries in
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Europe. Incredibly, apparently aided and abetted by members of the Green party in Germany, a programme has kicked off there to build 10 or 12 unabated coal-fired power stations.
Dan Byles: Lignite.
David Mowat: They will burn, as my hon. Friend says, a dirty coal. It is extraordinary that that is happening right now in the EU, and even more extraordinary that there appear to be members of the Green party in that country’s Government while it is happening—the same Green party that purports to care about carbon emissions and climate change.
Caroline Lucas: Germany is on course to meet its emissions reduction target far more effectively than we are. There is a short-term gap, admittedly, because it got rid of nuclear so fast. No one wants more coal, but it is a short-term thing as Germany gets its renewables even further up to speed. It is massively ahead of us on renewables and will get its emissions down faster than we will.
David Mowat: The hon. Lady makes an important point, if it were true, but the fact is that Germany has 25% higher carbon emissions per unit of GDP than the UK, and the UK is decelerating more quickly than Germany. To pretend anything else is not right.
I have some more time—I thank the hon. Lady for that—so I want to wrap up by talking a little about local considerations. When I first became interested in the subject, I could see that Lancashire—my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) made a good speech on behalf of his constituents today—was heavily affected. However, the maps of shale gas have since come out in more detail, and there is more in Cheshire, around Manchester and Warrington. Of course it is right that the work should not go ahead without adherence to the highest environmental standards and that the Government should not give permits without being satisfied that fracking will not considerably increase the earthquake cost and all that goes with it. There should be no compromise on that.
In an intervention, I mentioned the fact that Aberdeen contains three constituencies with the lowest unemployment in the country. That is not a coincidence; it is because the sort of economic activity that we are talking about brings jobs. I want to say on behalf of the people of Warrington that we welcome IGas and Cuadrilla. If they wonder where they should have their UK headquarters and if they pick up the text of this debate, I say to Mr Egan and Mr Austin from those companies, we are open for business in Warrington. We would like them to have their UK head offices in our town. It is only an hour and 40 minutes from London. They are very welcome, and we should go ahead as fast as possible.
Kerry McCarthy (Bristol East) (Lab): As always, it is a pleasure to serve under your chairmanship, Mr Amess. I want to focus on the area in Somerset that borders my constituency. I note that the hon. Member for Wells (Tessa Munt) intends to speak next, so I hope that I do not steal too much of her material.
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So far, four petroleum exploration and development licences have been granted in an area extending from Keynsham, just south of Bristol, down to Pilton and Evercreech—east of Glastonbury—and covering towns such as Marksbury, just south-west of Bath. The area is significantly covered by green belt and includes the Mendip hills—an area of outstanding natural beauty—and there are water catchments for several areas, including Bristol. Bath’s hot springs, which are of course a world heritage site, could be affected. The unique combination of features in the region is said to result from the
“specific geological circumstances of the Mendip Carboniferous strata.”
I understand that UK Methane, which has been granted three of the licences in partnership with Eden Energy, has confirmed that it has been working on plans in the Ston Easton area and around Compton Martin, both within the Chew valley, for its next test drilling sites. UK Methane intends to apply for permission for full production at a site beside the Hicks Gate roundabout on the Bristol ring road in Keynsham towards the end of 2013. Again, that is very close to the border of my constituency. I should say that the areas have been identified for coal bed methane extraction, rather than for fracking, although coal bed methane extraction commonly comes under the same heading and the process can involve fracking.
I thank Louise from Frack Free Somerset for her time this week in setting out the organisation’s concerns. The umbrella organisation brings together many groups, from families to farmers and from the Mendip Campaign to Protect Rural England to Bristol Rising Tide. Residents are particularly concerned about the impact of possible soil, water and air pollution on tourism and agriculture, and there are also concerns about light and noise pollution, especially as some wells could be flaring off gas 24/7. There will be noise from rigs operating 24 hours a day and roads will become blocked with lorries carrying chemicals and waste.
Another key concern is the potential for water contamination, which could also affect people living outside the licence area. The reservoir water supply in the Chew valley needs to be protected, and the impact on the hot springs that supply Bath’s spa water is still unknown. The British Geological Survey’s report to Bath and North East Somerset council concluded that hydraulic fracturing within the carboniferous rocks would
“pose an undefinable risk to the springs.”
The written ministerial statement issued by the Secretary of State for Energy and Climate Change on 13 December 2012 acknowledged instances of water contamination outlined in reports by US regulators and review bodies, which he said confirmed
“the need for the industry to consistently apply good practice, and the need for proper scrutiny and oversight of the industry to ensure that this is in fact done.”—[Official Report, 13 December 2012; Vol. 555, c. 47WS.]
The Environment Agency is of course responsible for providing that scrutiny, but there is real concern that it does not have the staff to monitor wells effectively.
Residents in the area who are opposed to the plans are particularly concerned by evidence emerging from coal bed extraction in south-west Queensland, from gas leaking into local rivers to perceived heath problems
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such as nosebleeds and skin rashes. The Health Protection Agency does not appear to have published its review of the public health impact of shale gas. I hope that the Minister agrees that potential health risks should be assessed before exploration is allowed to go ahead.
Bristol Greenpeace has raised with me its concern about UK Methane, which was described by a local resident, Laura Corfield, in a recent article in The Guardian by John Harris as
“a company of two guys in a broom cupboard”.
It is difficult to confirm UK Methane’s financial position, but John Harris tracked down its head office to an industrial estate in Bridgend with no listed telephone number. I understand that DECC has set out criteria that need to be met for a company to become a licensee, including a level of financial capacity to show that it is able to meet the actual costs that may be reasonably expected to arise.
How does awarding three licences to UK Methane square with DECC’s guidance? Is it presumed that UK Methane will ultimately be trading its licences to a larger company in the same way as with Eden Energy, with which it was partnered and that has now sold its stake to Shale Energy, a UK firm, for a large amount? That does not appear to be consistent with DECC’s view that licences are not regarded as
“mere tradable assets, and we expect companies to buy licence interests with a view to exploiting them—not merely to sell them on.”
There are specific issues with the area’s geology, including the prevalence of coal mine shafts in Bristol and Somerset, which makes the land more unstable and potentially more prone to both subsidence and tremors. A recent technical report by independent geologists Integrale Ltd concludes that:
“Unlike much of North America and Australia where ‘simpler’ rock strata occur, the Carboniferous Coal Measures of the Bristol-Bath Basin form the most tectonically complex area of the UK, ie the rocks are highly fractured, folded, contorted and faulted… So gasfield exploration and exploitation in this district will be commercially and technically ‘high risk'”.
There is a point about whether companies need public liability insurance, given the risks. I understand that, apart from employers’ liability insurance, there is no statutory requirement for insurance.
The hon. Member for South Thanet (Laura Sandys), who is Parliamentary Private Secretary to the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), said that planning applications for shale gas
“make onshore wind farms look like a walk in the park.”—[Official Report, 6 September 2012; Vol. 549, c. 146WH.]
She was referring to the public opposition that is likely to be encountered.
Mr Lilley: Does the hon. Lady ever feel that she has a duty to her constituents not merely to pander to every anti-development pressure group and to give credence to every scare story, but to give some balanced account of what, for example, the royal societies, the Royal Academy of Engineering and the British Geological Survey have said? Two million such wells have been drilled in the States without untoward effect.
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Kerry McCarthy: Perhaps the right hon. Gentleman should speak to his Conservative colleagues who control Bath and North East Somerset council, which recently voted unanimously on a motion objecting to unconventional gas exploration and extraction in Somerset.
There is a concern that the Government’s scheme to provide financial benefits to local communities does not seem to cover coal bed methane extraction unless fracking is used. If he is actually listening to me at the moment, will the Minister confirm that that is the case? Will he ensure that the planning application process provides meaningful opportunities for affected communities to express their concerns? As shown by all the concerns that I have outlined, there is a great deal of uncertainty and unhappiness in the area.
Barbara Keeley: My hon. Friend is making an excellent representation of her constituents’ concerns, and she is the third Member to do something similar in this debate. It is rather remiss of the Minister and Government Members to spend their time chuntering and shouting, as they did to me. It does not behove well for such debates when that goes on when we are doing our job representing our constituents.
Kerry McCarthy: I entirely agree with my hon. Friend. The patronising responses from some Government Members, with their references to living in la-la land, are unseemly.
My final point is on the Government’s link to shale gas companies. Last year, The Observer found that two key executives of the energy trading giant Vitol—its chief executive officer, Ian Taylor, gave more than £500,000 to the Tories and was a guest at one of the Prime Minister’s cosy kitchen suppers—are personal shareholders in a company bringing fracking and CBM to the UK.
Just this weekend, an article by Mark Leftly in The Independent on Sunday detailed a host of senior Government advisers who have financial interests or close ties to fracking companies, from Lord Browne—the chairman of Cuadrilla, who is also lead non-executive across the Government—to Sam Laidlaw, the lead non-executive at the Department for Transport, who is also chief executive of Centrica, which has just bought a one-quarter stake in Cuadrilla’s licence in Lancashire.
Of course there is the conflict of interest between Lynton Crosby’s lobbying firm—which represents the Australian Petroleum Production and Exploration Association, which has been aggressively campaigning for shale gas—and the advice that he gives to the Tory party as its election strategist. When I raised the influence of the shale gas lobby with the Government in January, the Minister failed to respond. I hope that he will do better in answering my concerns today.
Tessa Munt (Wells) (LD): Thank you for your generosity in allowing me to contribute to this debate, Mr Amess. I apologise for having to be absent for a short while.
I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) first for bringing this debate to the House and secondly for laying out some of the points that I was going to make myself.