Britain Thwarts E.U. Plan to Create Binding Fracking Rules

A determined lobbying campaign led by Britain has buried plans for the European Union to legislate uniform regulations on shale gas exploration across the 28 member states.

Instead, the European Commission, the European Union's executive branch, will issue a nonbinding "recommendation" next week asking governments to submit their plans for shale exploration and extraction and to outline their proposals for public review, E.U. officials said.

The document, to be released Jan. 22, is a significant setback for opponents of hydraulic fracturing, who sought hard and fast rules to protect the public from threats they fear the drilling process will bring.

The commission originally planned to issue a "directive," which would require legislative approval by the European Parliament and would have the force of law.

Fracking is a far more volatile issue in Europe than in the United States. France and Romania have banned it outright, while Germany has adopted a moratorium. Except for the United Kingdom and Poland, few other E.U. nations have shown much interest in shale.

The recommendation would not prevent any country from imposing a ban or other domestic restrictions.

On the winning side is British Prime Minister David Cameron, whose intervention capped a well-strategized effort to forestall legislation that he saw as an unwarranted hindrance to investment.

E.U. officials say a recommendation, while lacking the legal force of a directive, still carries "political weight" that would be difficult for countries to ignore.

And its legal status could be upgraded if the commission finds that its recommendation is being flouted.

The draft document says that any country intending to issue permits to explore or extract shale gas should advise the commission on its "public consultation" and environmental impact assessment.

After six months, the commission will issue a scoreboard of what each country plans to do.

"If we are not satisfied with the steps members are taking, we will revisit the possibility of legislation" after 18 months, said an official who spoke on condition of anonymity, since the policy has not yet been released.

Behind the scenes

Britain plotted for months to scuttle legislation. An internal communication last November by Ivan Rogers, London's envoy to the European Union, warned his government that Brussels was moving toward adopting binding rules.

London, he argued, should ensure that the forthcoming climate and energy package, which encompasses the fracking rules, "includes robust guidance, shaped by the UK, but no legislative proposal on shale," said Rogers' note. It was leaked yesterday to European Voice and was confirmed by officials who had seen it.

Rogers also suggested that the European Union could barter its agreement to drop shale legislation to persuade Poland to go along with reductions in carbon emissions. Warsaw has long resisted an E.U. goal for a 40 percent reduction by 2030.

Britain worked hard to line up support. Its environment secretary hosted a series of dinners in Brussels with European counterparts. Poland, the E.U. country that has gone furthest in shale exploration, was on board. Then came Hungary, Slovakia and the Czech Republic.

Cameron went public with the campaign last month, releasing a letter to Commission President José Manuel Barroso arguing against further "regulatory burdens and costs on industry" that could only drive up U.K. domestic energy bills. "The industry in the UK has told us that new EU legislation would delay imminent investment," he wrote.

Legislating harmony

From the commission's perspective, a recommendation has some advantages. A binding directive would be a contentious issue in Parliament that could take up to two years to be enacted. In the process, it could undergo major revisions. A recommendation, on the other hand, is like an edict or executive order, not subject to negotiation.

Shale exploration already falls under legislation governing all forms of drilling. The E.U. Water Framework Directive and the Mining Waste Directive are but two of many examples.

A specific directive on fracking, however, would have harmonized national laws across the entire European Union, making it simpler for investors and the public to make decisions, according to Environment Commissioner Janez Potocnik.

Potocnik told a conference last year that the European Union wanted across-the-board rules of "best practices" that would lend confidence to the public that it was being protected from water contamination, air pollution, methane leaks and other possible dangers.

"Looking across the E.U. as a whole, we came to the conclusion that there was a case for a set of common general principles and measures, much along the lines of the ones proposed in the Golden Rules of the International Energy Agency," Potocnik said.

In 2012, the IEA set out a long list of guidelines to minimize risks but said nothing about how its rules should be enforced (EnergyWire, May 30, 2012). The directive proposed by Potocnik was supposed to fill that void.

It is likely that next week's policy statement will make a reference to the IEA's Golden Rules, either in the recommendation or in the accompanying "communication."

'Dash for gas'

Meanwhile, the Cameron government, facing public discontent after years of austerity policies, has stepped up efforts to win approval for its "dash for gas" policy, arguing that it will boost the economy and ease the public's onerous energy bills.

Britain is "going all out for shale," the prime minister said Monday, announcing greater incentives to local communities to allow drilling within their boundaries. Townships will be entitled to keep 100 percent of tax revenue on gas projects, rather than half, he announced. Tax breaks for municipal councils could amount to £100,000, or $164,000, per well.

The government's contention that a British shale boom would lead to a U.S.-style energy revolution and lower gas bills has been widely questioned.

Paul Stevens, of the Chatham House think tank in London, argued that most of the gas would be piped to Belgium, where it would command higher prices on the European market. "They would not leave money on the table for British consumers," Stevens wrote in yesterday's International New York Times.

The government's fracking plans got a boost this week when the French oil major Total SA announced it was entering into the British shale business, buying a 40 percent stake in two licenses. Though worth $47 million, the investment was a viewed as a vote of confidence in the future of British shale.

Nowhere in Europe has public opposition to fracking been fiercer than in England, where activists have besieged sites of exploratory drilling. Unlike in the United States, property owners do not have rights to underground minerals and have little financial incentive to allow drillers onto their land. Britons are highly protective of their countryside.

Environmental groups denounced the government's successful lobbying effort against E.U. legislation. In a statement, Friends of the Earth campaigner Tony Bosworth accused the Cameron government of hypocrisy.

Arthur Max, E&E correspondent

Republished from EnergyWire with permission. EnergyWire covers the politics and business of unconventional energy. Click here for a free trial

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