Europe Starts to Take Another Look at Fracking

By Andrew Stuttaford

Monday, October 10, 2022

 

As I mentioned in the most recent Capital Letter, Britain’s new prime minister, Liz Truss, has lifted the ban on fracking introduced in the Johnson years. But before cracking out the champagne, it’s worth noting that merely allowing fracking does not mean that it will take place. To start with, in addition to the usual objections from climate warriors and other greens, many locals will object to the dislocation that fracking might bring to their parts of the country. Not only is the U.K. more crowded than some of the areas in which fracking takes place over here, but there is also far less incentive for property owners and local communities to agree to it.

 

Back in 2013, the Economist (a somewhat more sensible publication then than now) explained where a good part of the problem lay:

 

Fracking has boomed in America partly because local people have been paid off handsomely. Landowners can sell the rights to the hydrocarbons under their fields. States tax extracted oil and gas, and redistribute much of the revenue to the affected counties, which spend it on glorious schools and fire stations. America has NIMBYs too — and some states have banned fracking outright — but money has proved a powerful salve.

 

In centralised Britain, by contrast, almost all the proceeds from fracking that do not flow to miners would end up in the Treasury’s coffers. Oil and gas rights are held in effect by the crown, not landowners. . . .

 

It’s just amazing — amazing, I tell you — that giving people an economic interest in this resource might encourage them to support its development.

 

Truss’s move is a welcome one, but even if local objections can be overcome, the amount of reserves remains highly disputed. Making matters worse, would-be investors in fracking projects must contend with the reality that Britain is likely to have a Labour government in a little over two years. The chances that such a government will reinstate the fracking ban are high, except perhaps if it can be shown by then that the U.K. has enough in the way of frackable reserves to make a difference.

 

But an even greener country (at least notionally) also appears to be ready to take another look at fracking.

 

Joseph Sternberg, writing for the Wall Street Journal:

 

Germany’s energy crisis is a crisis of choice, or rather a crisis of two choices, the second following directly from the first. The choice most German politicians seem to want to talk about is the second of the two, the choice to source so much of the country’s energy imports and especially natural gas from a single, unsympathetic vendor, Russia…

 

A solution to this problem is achievable without an excess of policy imagination or political skill. If importing gas from Russia no longer is an option, the gas will be imported from somewhere else. Pledges to accelerate construction of terminals to accept liquefied natural gas from the U.S. and Middle East have lent Economy and Climate Minister Robert Habeck of the Green Party an image of vigorous activity in pursuit of Germany’s voracious energy needs.

 

But Germany is as dependent as it is on foreign fuel only because of the first decision Berlin made: not to tap the country’s substantial domestic gas reserves, which by some estimates could satisfy much of Germany’s gas demands for the next two decades.

 

The manifestation of this choice was hostility to the hydraulic fracture, or fracking, technology that could tap Germany’s shale-bound gas reserves. Berlin in 2017 all but banned, on dubious safety grounds, the fracking techniques that could reach most of Germany’s gas.

 

Now some politicians are asking whether the country can afford to leave that gas in the ground. A split has opened within the unwieldy governing coalition of Chancellor Olaf Scholz. Two of the coalition’s three parties are staunchly anti-fracking—Mr. Scholz’s Social Democrats (SPD) and Mr. Habeck’s Greens. The third, the free-market Free Democrat Party (FDP), is for it.

 

Sternberg warns, rightly, that there is little sign that fracking will start in Germany any time soon, although the polling data he has dug up throws out some interesting anomalies:

 

Opinion polling over the summer found only 27% of respondents supported fracking, compared with 81% support for more wind and 61% support for burning more coal as solutions to Germany’s looming energy crisis.

 

I’ll leave those numbers standing there in all their absurdity. Until the problem of securing a reliable back-up is secured (or power-storage technology takes a giant leap forward), building more wind power is not going to be of much help. The mismatch between the support for coal and for fracking is (as we can also see with German attitudes to nuclear power) yet another reminder of the role that superstitious dread plays in the framing of German energy policy.

 

But, writes Sternberg:

 

don’t entirely abandon hope. The real surprise of that poll was that “only” 56% of respondents opposed fracking outright, with the remaining 17% undecided. This after voters have been bombarded for years with antifracking messages, and with fracking supporters launching the latest debate from a standing start. That the opposition isn’t near-universal suggests that the harsh realities Russia’s war has imposed on Europe may be opening the door to more skeptical thinking about German energy policy.

 

Well, so it should, and not before time. Rushed and reckless, and as poorly thought through as exercises in central planning tend to be, the energy disasters in the U.K. and Germany ought to act as warnings to the U.S. not to go down the same path. Whether our own policymakers are paying much attention seems doubtful.