The UK government recently lifted its moratorium on the controversial process known as hydraulic fracturing, or fracking. The technique involves pumping fluids at high pressure into a well to recover Natural Gas from shale rock.
The experience in the US is that broad adoption of fracking can lead to greatly reduced price of Natural Gas and as a result is driving down their cost of electricity. The reduction in Natural Gas pricing has prompted many to ask if the cost of Renewable Energy, particularly Wind, is now prohibitive. The increase in supply of newly sourced Natural Gas thereby defocuses the need for sourcing energy from alternative sources. The low Natural Gas prices also help reduce inflationary pressures given that the cost of fuel and heating can be maintained – especially in these economically challenged times.
Given this promise, is the decision to lift the moratorium driven by economics alone and thus overlooking the environmental impact associated with the hydraulic fracturing process? It may also provoke the question – How committed to renewable energy are we? If we can source Natural Gas in larger and more abundant measures, will countries step back from incentives for Renewable Energy until the need becomes more pressing again?
If so, then this is bad for the Renewable Energy industry as competing against low cost electricity will make projects less attractive.
Another thought – Will this pressure lead other governments across Europe to follow suit?
Posted: February 07, 2012