EU Draft Document Scraps Binding Rules for Shale Gas
Confusion combined with hard negotiations is nothing new in Brussels. It comes as little surprise that European Commissioners are struggling to shape guidelines for shale drilling that could please all the 28 member governments.
In principle, European attempts to give a clear framework to shale gas exploration activities are nothing but difficult. Nonetheless, it seems that the European Commission (EC) found a way to reconcile symmetrically different stances.
Through its draft recommendations, the EC indicates its inclination to build up a two-step process: a first phase based on non-binding principles, a second phase that could open the doors to legally binding laws in case of defiance to the non-binding rules. The EU would indeed review its rules on 22 July 2015.
In other words, the new documents are a triumph of diplomacy. European institutions basically say that member states can do whatever they want. However, in case countries and companies made mistakes, the EC would then phase in new binding rules.
GUIDELINES: SOME MORE DETAILS
Guidelines ask the countries to show compliance with the best environmental practices, requiring extensive public consultations and environmental impact assessments.
According to the draft document, European countries in favour of shale gas would be forced to publish a ‘scoreboard’ to prove their compliance with ‘best environmental practices.’ The countries would be called to implement a system to monitor operations ‘in a way which prevents possible surface leaks and spills to soil, water or air.’
Europe also wants to minimise flaring and avoid venting.
‘A site should only be selected if the risk assessment conducted under this chapter demonstrates that no direct discharge of pollutants into groundwater will result from high volume hydraulic fracturing,’ the document adds.
WHAT DOES THAT MEAN FOR NATIONAL GOVERNMENTS?
According to the guidelines, each country would be free to ban or allow shale gas. The ones giving green light would be then the litmus test to check whether operations were detrimental for the environment.
This approach is somehow tautological, as countries would be the first ones to retreat from a position that proved to be dangerous. In case of accidents, local governments would indeed step in as fast as possible. Indeed, if any incident happened in Europe, national governments would inevitably take a step back in order to maintain their credibility. Especially in tough economic times, politicians would do whatever it takes to maintain a grip on their electorates. They could easily turn their back on shale gas.
As history teaches, disasters would force countries to reassess their positions. Fukushima is the main example, suggesting that a regional mistake would inevitably imply a retreat for the entire (regional or global) industry.
Despite the tautology, the draft recommendations are good for the industry. They embraced the position of the British government. UK Prime Minister David Cameron did indeed lobby to avoid new EU laws that could have strangled the nascent shale gas industry at birth. The investment of Total disclosed on Monday is a clear sign. The industry welcomed the draft proposals.
GENERAL MESSAGE: AVOID MISTAKES
European regulators don’t want to be responsible for industry’s decisions, as Brussels cannot bear the brunt of any eventual failures. Coherently, the guidelines will not interfere with a nation’s right to ban the practice.
In this sense, Brussels’ laissez faire approach forces European shale gas investors to cooperate with governments. Companies are now called to stay put and work with competitors. The intrinsic message is to carry operations safely and responsibly.
WHAT DOES THAT MEAN FOR COMPANIES?
Companies would be called to control the fracturing fluid used for each well, the volume of water used for fracking operations, while monitoring the pressure applied during the process.
The guidelines, which will be part of a European package of documents on future energy and climate policies to be released on 22 January, would also recommend companies to take into account the characteristics of the land, with possible restrictions for seismic-prone areas.
WHAT DOES THAT MEAN FOR THE POPULATION?
‘The direct price effect on European regional gas markets is likely to remain moderate.... but even a moderate decrease or avoided increase in gas prices - for instance through increased negotiation power towards non-EU gas providers - would be beneficial for member states,’ reads the document.
An eventual decrease in gas prices would be beneficial for consumers. But the recent experiences indicate that governments and companies cannot rely on population, which is normally sceptical to drilling operations in their backyard.
“If you want to succeed in a new business model, you need to pay attention to the public acceptance,” Hansch van der Velden, Co-Chair of GasUnie, warned in November in occasion of the European Autumn Gas Conference.
That is right. The draft document will probably open the door to shale gas. But the real kick off will depend on the public support. After Brussels’ green light, the real challenge is to convince population and environmentalists. And this will happen only if governments and companies will commit to responsible and safe operations. On this, Brussels is undeniably farsighted.
Sergio Matalucci