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The future of the UK shale gas industry in the UK is uncertain because it faces a difficult financial future, MPs have been told.
In the first of two sessions examining the environmental risks of fracking, the Environmental Audit Committee (EAC) heard that it is an uncertain economic future, rather than environmental risks, that pose the biggest threat to the UK’s nascent shale gas industry.
Chair of environmental think-tank E3G Tom Burke said he has confidence in the regulatory authorities to manage the shale gas industry, but told the committee it is “a very difficult, competitive environment”.
He said: “It is difficult for a new industry with no infrastructure – financial infrastructure or supply chain infrastructure – to build from scratch. It won’t result in you being the least cost operator.”
Burke told the committee: “If you want to be something other than niche, you have to get the costs down. And it is very difficult to get cost down to compete with others. That is likely to be a disincentive to investors.”
He added that the carbon emission commitments the UK is signed up to will also limit the long term future for shale gas because to get the cost savings the industry would need “a long lifetime, not a short lifetime, making it difficult to be a bridge [fuel]”.
Professor Paul Stevens, a fellow at Chatham House in energy and environment resources, also raised concern over the economic future for UK shale development.
He told MPs: “I remain sceptical it will viable economic option over a significant time period here in the UK.”
Stevens added it will take a long time to drill the number of wells needed to make shale gas production economically viable.
The EAC also heard from the University of Manchester’s research fellow John Broderick, that shale gas would be entering into a shrinking market and would “work against” the UK’s legally binding climate change target.
He said: “The transformation of the energy sector is away from fossil fuels on mass, not between different fossil fuels like coal and gas.”
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