U.S. Energy Revolution: What Does It Mean for the UK and Europe?

Communications consultancy APCO’s London office recently held a roundtable discussion with former U.S. Energy Secretary Bill Richardson and Professor Alan Riley of City University regarding the implications of the U.S. energy revolution for the UK and Europe. The discussion could not have been timelier, with the energy debate in the UK heating up around the government’s decision to back the construction of a first nuclear power plant in a generation, and the leading political parties stating their positions on the rising costs of UK energy bills.

Secretary Richardson acknowledged the many benefits that the United States has reaped thanks to shale gas exploration, such as cheaper electricity, more jobs and the lowest emission of greenhouse gasses in decades. He then made it clear that in order for the UK to enjoy some of these benefits, both the UK government and business needed a strategy on how to pursue shale gas exploration.

He highlighted the lack of transparent communication from business and government towards local communities to date. He emphasized that local communities need to understand what risks are posed by hydraulic fracturing techniques and what companies are doing to mitigate those risks – and this needs to be backed up by the strong scientific available. If the UK and Europe want to reduce its dependence on OPEC and Russia, shale gas is an opportunity that needs to be grasped in the right way.

To overcome any grassroots opposition – which Secretary Richardson believes stems largely from fear created by a lack of information – he expressed the need for the companies especially to learn important lessons from the United States. This includes developing a compelling narrative around the benefits of shale gas in terms of job creation and reduction in greenhouse gas emissions, transparently telling that story to affected communities and to fund studies and collaborate with universities to further objectively and scientifically assess the issues.

Research is especially crucial when it comes to environmental concerns associated with shale gas such as methane emissions, the possible risk of contaminating groundwater and the physical effects of fracking in the form of increased seismic activity. Secretary Richardson emphasized that European governments and energy companies need to be transparent and honest with the general public on these and other issues.

Secretary Richardson’s concerns were echoed by a number of industry leaders at a recent Financial Times conference on shale gas, at which he spoke. Paolo Scaroni, CEO of ENI; Remi Eriksen, CEO of DNV Maritime and Oil & Gas, and Andrew Austin, CEO of IGas Energy, all said that in general, companies simply had not done a sufficient job in educating and informing communities about the risks of fracking. Without doing this, companies risk losing their license to operate because their opponents will win the argument and communities will be left with little choice but to oppose fracking.

Professor Alan Riley, a highly regarded expert in energy law, also acknowledged the issues of trust when it comes to illustrating the benefits of this  energy. According to Professor Riley, the UK and Europe have a lot to lose if this is not addressed, particularly because other regions will start to see Europe as an importer of shale gas and not a producer. There is so much potential shale gas around the world that European governments need to recognize that they face a situation where the natural resources are competing for the necessary capital investment – rather than the other way round.

To put it simply, Professor Riley suggested that if Europe does not join the shale gas revolution soon, other parts of the world will, and Europe (together with the UK) will miss the boat. This will have a negative impact – not only because the UK will miss the chance to gain the benefits of greater energy security – but also because the United States and other regions that have developed shale gas exploration will start to sell cheap coal to the UK and other European countries, reversing all the work that the region has done to tackle climate change.

The opportunities around shale gas are certainly in the balance, but both Governor Richardson and Professor Riley expressed hope that a “Galileo moment” when Europeans convert to the benefits of shale gas was not far off. All it would take is for one or two states to start producing shale gas in Europe before others follow the lead. In the meantime, industry and government needs to do the necessary groundwork through coordinated and transparent communication in order to shift the needle of public opinion.

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Categories: Global Political Insight, International politics

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