'Dash for Gas' Confusing UK Energy Investors

Conflicting messages on the future of UK energy from its government have puzzled investors and hampered decisions on either renewables or shale extraction, according to an expert report released Wednesday.

The UK's Committee on Climate Change is an independent statutory body which advises governments on carbon budgets and preparing for climate change. In its fifth progress report, it notes that shale gas mined in the UK could produce less greenhouse gas in total than liquefied natural gas (LNG) imports from places such as Qatar.

But, as reported in British media Wednesday, the Committee also urged caution on wide-scale development of shale gas extraction.

The report says: "Shale gas, like other forms of gas, cannot be regarded as a low-carbon fuel source. It can, however, have lower emissions than imported liquefied natural gas (LNG), if regulatory arrangements are in place to manage methane released during its production. If wider social and environmental issues can also be addressed (e.g. local water supply impacts), UK shale gas may therefore play a useful role substituting for imported gas in meeting demand for heat, and for gas-fired generation to balance the system or in conjunction with CCS [carbon capture and storage]."

However, the report's authors added it stuck to previous recommendations that "a dash for gas" should not imperil the development of low-carbon energy generation.

Chief executive David Kennedy commented: "It is economically sensible to invest in low-carbon technologies. The government has committed to low-carbon support mechanisms to 2020, but they have said after that we might have a dash for gas – and this is destroying the confidence of investors, particularly in the renewables sector."

He said shale gas was unlikely to be a "game-changer" in the UK, unlike the US.