The British government could give cash handouts to households affected by fracking developments, to head off widespread opposition to the controversial method of extracting natural gas.
Prime Minister Theresa May announced that £1 billion would be made available to communities near to deposits of shale gas, and said that residents will be able to choose whether funds are used to build services or infrastructure, or whether they take the money directly.
The fund has been set aside in an attempt to head off widespread concerns about hydraulic fracturing, or fracking, the technique used to extract the gas, which involves pumping water at high pressure into the ground, and has been linked with earthquakes and groundwater contamination elsewhere in the world.
In the UK, the Crown owns sub-soil rights to natural resources, meaning that landowners do not automatically get a payday if explorers strike gas on their property.
Behind the high-profile protests and sit-ins by environmental groups, there is a backbeat of local opposition in regions where exploration licences have been granted. That resistance is not ideological, but hinges on fears over pollution and property damage, and is founded on a mistrust of both the government and private sector, according to Joanne Hawkins, a lecturer in business law at the University of Leeds, who has conducted extensive research into communities’ concerns about fracking.
“There is now a recognition that there is this kind of mistrust. I think they’re hitting a brick wall with how to deal with it and what to do moving forward,” she says. “I think probably this compensation fund is a misunderstanding of the fact that people are worried about their private property, but what they want is reassurance that if something goes wrong, they won’t be left out there as guinea pigs with no comeback. Rather than being offered payment to accept it, they have concerns and they want to see those addressed… What they’re concerned about is the impact on their local water, the impact on their local air.”
Previous community development initiatives – such as exploration company Cuadrilla’s sponsorships of local sports teams and engineering competitions – were perceived as bribes, according to Hawkins.
“If [the government fund] is taken as payment to individual households, I think that would probably be perceived negatively as a type of bribe, given that they already see that sponsoring local teams and competitions was a way of buying their favour. I think the format that it takes could have quite a significant impact on whether such a scheme is successful,” she says. “However, I’m not sure that offering people that benefit, whether it is through improving their local area or individually, will actually change what they’re concerned about. The fund needs to work alongside measures to address public mistrust and local impact concerns.”
Dash for gas
Under former prime minister David Cameron, the government announced that it was “going all out for shale”, offering tax and planning incentives for companies looking to exploit the country’s estimated 40 trillion cubic metres of gas contained within shale resources. Even national parks were opened up for exploration.
Fracking was pitched as a way to reduce the country’s dependence on imported natural gas; the UK was self-sufficient in gas at the end of the 20th Century, but imported nearly 60 per cent of its requirements in 2015. Gas use is forecast to rise by another 40 per cent over the next 15 years.
The geologists tell us that there’s significant amounts of gas in the rock, but we don’t know whether it’s going to be economic to develop. Without an exploration and appraisal phase we won’t know that.
In the USA, shale gas sparked a revolution in domestic energy, massively reducing imports, driving economic growth and creating thousands of new jobs. For the UK, that is a fairly distant prospect.
As Michael Bradshaw, professor of global energy at Warwick Business School, says: “It’s a revolution in very slow motion, that may just not happen at all.”
Global gas supplies are hardly constrained, and prices are low. UK shale will need to compete on price with that available on the international market. Whether it can is unclear.
“We’re at a very early stage in the process. The geologists tell us that there’s significant amounts of gas in the rock, but we don’t know whether it’s going to be economic to develop,” Bradshaw says. “Without an exploration and appraisal phase we won’t know that. And we won’t get to that point unless we can get around this problem of opposition. It’s a kind of Catch-22 at the moment.”
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