Rhein on Energy and Climate

The European Commission is due to present its policy guidelines for shale gas production on 22 January. It is expected to leave member countries large latitude for the exploration and production, subject to respect specific health and environment safeguards, e. g. for water.

We should not expect a boom comparable to what the US Middle West has been experiencing in the last few years and which has sent shivers to European energy-intensive sectors. Far from it!

In the USA the “big boom” is already over. The size of the deposits seems to have been grossly over-estimated. Investments in new deposits have fallen dramatically, from $35 billion in 2011 to only $3.4 billion in 2013.

We can therefore expect American gas and oil prices to rise again in the near future.

According to geological surveys Europe is much less endowed with shale gas deposits. Most of these are concentrated in Poland and Great Britain, most interested in shale gas/oil. In addition, Europe’s population density will make the exploration and production more expensive than in the USA.

There is not the slightest chance for Europe approaching energy self-sufficiency through shale gas/oil, as the USA is about to achieve, even if only for a short time. In 2035 domestic production might cover just 10% of total EU gas demand, according to Commission estimates.

Shale gas will be no more than a transitory solution. Its reserves will be depleted within a few decades. Europe must therefore focus on energy efficiency and renewable sources as the only valid panaceas.

This being said, Great Britain and Poland should be free to exploit their shale gas reserves if that helps them bridge the gap towards more sustainable solutions.

Eberhard Rhein, Brussels, 17/01/2014

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