20150126_R4

Source: BBC Radio 4: Today Programme

URL: N/A

Date: 26/01/2015

Event: Ineos's Tom Crotty: "this country's heading for a cliff-edge problem, on its energy supply"

Credit: BBC Radio 4: Today Programme

People:

• Tom Crotty: CEO, Ineos Olefins & Polymers Europe
• Sarah Montague: Presenter, BBC Radio 4 Today Programme
• Joan Walley MP: Chair, House of Commons Environmental Audit Select Committee

Sarah Montague: MPs on the Environmental Audit Committee have called for the development of shale gas to be put on hold. They say fracking is incompatible with our climate change targets, and that there are huge uncertainties about the effect it would have on water supplies, air quality and public health. Well, the Chair of the Committee, Joan Walley, is here in the studio with us now, sitting alongside her the Director of the Ineos Group, Tom Crotty - Ineos is spending more than £600 million on shale gas exploration in the UK. Good morning to you both.

Joan Walley and Tom Crotty: Good morning.

Sarah Montague: Joan Walley, what is the Committee's problem with fracking?

Joan Walley: I think the problem that we have is that the government is now going all-out for fracking, in undue haste, and we feel that the risks haven't properly been thought through. At this stage, we're at the exploratory stage, we're not at the scale of full-scale industrial fracking. And there are huge environmental considerations, and all of this needs to take place within the context of the carbon budgets that we've signed up to, so therefore it's absolutely critical that all this is part of a process, a holistic process, that is planned through, step by step, and this sudden rush isn't compatible with that, so therefore we need to put it on hold, press the pause button and work out all of these different aspects of it, step by step.

Sarah Montague: Mm, given what you say about it being incompatible with our climate change targets, is there anything that you could hear about it that would satisfy you that we should be going ahead?

Joan Walley: Well, I think we need to be looking at carbon capture and storage - we're not at the stage where that is there, able to be used at this stage.

Sarah Montague: And we're years away from that.

Joan Walley: We are years away from that, and that's part of the issue - I think we're talking about full-scale industrialised fracking in 10-15 years' time, by which time coal will have been phased out, because of the European directives, and shale gas will then be up against renewables and up against the very heavily subsidised nuclear, so therefore will it make the same economic sense in that scenario? When the carbon budgets are being tightened, and there's less headroom.

Sarah Montague: Let me bring in Tom Crotty, here, because a lot of people will have a problem with that, with the logic behind going for fracking, when ultimately you're trying to green the economy.

Tom Crotty: And I think there is absolutely nothing that's inconsistent with greening the economy and the development of our indigenous shale gas. Joan says that we will have a situation, in 10 or 15 years' time, where coal disappears - there's some sort of nirvana there that I can't understand. Basically, what will happpen, as coal disappears, is: we will use more gas. We will not replace that entirely with renewables. Renewables will grow, that's wonderful, they need backup technology, that technology's going to be gas. The net result of a moratorium on fracking will be: we will import more and more gas. Within 15 years, we will import three quarters of our gas into this country. That is not only going to cost the Exchequer a lot of money, it is also going to actually increase the carbon burden, by bringing gas in from countries with less rigorous regimes and the transport associated with moving that gas halfway across the world.

Sarah Montague: Mm, Joan Walley, what about that point, that actually you're just not being realistic, the reality is: we're going to get it - we're going to need to get it from somewhere.

Joan Walley: Well, we are needing a transitionary period, and we do need to have gas, and that is absolutely part of the equation. But why would do start now on needing a whole new infrastructure of a fossil fuel, when we're signing up internationally and we're going to be taking a leadership role in the Paris talks in the United Nations later this year? Why would we be using fossil fuels, when we need to be, long-term, phasing them out? Shouldn't we be passing all that research and development into ways of making sure that we keep within the climate change budgets that we've agreed to? Because we have to avoid that 2 degrees Centigrade temperature rise. And that's the issue.

Sarah Montague: Tom Crotty, if you're spending more than £600 million, that you're spending on shale, on developing renewables, we wouldn't be in that situation.

Tom Crotty: No, absolutely wrong - we are also spending a lot of money on renewable development. We provide much of the building blocks for a lot of renewables, both in solar and wind, and indeed in bioethanol, so we do this alongside. The issue here is that gas is an essential fuel for this country. It is needed to power UK industry. It is needed to heat 85% of the homes in this country. We will not heat those homes by building more renewables.

Sarah Montague: What about the argument, though, that it's years before you can make, effectively - get gas from fracking, anyway, because of the development time?

Tom Crotty: Well, absolutely - we're not going to do this tomorrow, it's not going to take 10 or 15 years but it will take quite a few years to develop it. That doesn't mean you shouldn't do it now. We will need gas for the next 20, 30, 40, 50 years. You know, government - things like the international Panel on Climate Change has said that, a lot of the government reviews have said that - we need that gas, we should use our own gas and not import it from halfway across the world.

Sarah Montague: Joan Walley, the timing of your report is because of a vote on the Infrastructure Bill - you say there's been an undue haste, partly because of the arguments we've heard there from Tom Crotty. There is an argument for moving quickly on this.

Joan Walley: There is an argument for moving quickly on this, but it's a question of actually getting it right, and we need to have a process which is right from the very beginning, is completely transparent. We had that government report just the other week, which had all these redacted parts in it. There isn't the transparency there. The whole regulatory regime is fragmented and it isn't overarching in the way that it should be. And until all of that is absolutely thought through, why should we be starting down a new investment when we're not able to use those resources that are being exploited, in that way?

Tom Crotty: I'm sorry, we're able to use those resources straight away. We already import half our gas. We will instantly replace imported gas with UK gas - that makes eminent sense from an environmental point of view and from an economic point of view.

Sarah Montague: Do you know that there's enough there and that it is affordable to get out of the ground, such that you could be having British gas rather than imported gas?

Tom Crotty: Absolutely not, which is why we have to start the exploration now, and a moratorium will mean we can't answer that question. And that makes no sense whatsoever.

Sarah Montague: The particular timing that we're talking about - the Infrastructure Bill - is because of a law of trespass, which - people are uncomfortable about changing the laws on trespass so that you can drill. Could you ever get the public on side, or is it only going to happen if the government effectively gives you a stronger arm in the process?

Tom Crotty: We hope we will get the public on side, by proving to people that this is a safe process - it's been over a million wells drilled in the US without environmental issues, without risk to public health. We are also looking to put a lot of money back into the community -

Sarah Montague: Sorry, forgive me, but there is some - there are - not everybody would agree with you on that, about the United States situation.

Tom Crotty: No, but the reality is: what we've seen in the United States is a 20-year development period - in the early days they had a number of issues they've now resolved. We would now start this with that 20 years of learning, so we would not make those mistakes, we would use the best of that technology straight away in the UK.

Sarah Montague: Joan Walley.

Joan Walley: We've seen all over the country that there is great public concern about this. And rushing ahead in this way isn't going to get the public on board. It needs to be an open and transparent process - that all needs to be put in place. And I think that it's very damaging to be rushing through in this way - that's why we say it should be put on hold.

Sarah Montague: I come back to my first question to you. Given what you've said, can you ever imagine signing off on shale?

Joan Walley: That remains to be seen. But I think that it's important that we all have a way together of getting to meet the climate change carbon reduction budgets that we need to meet.

Tom Crotty: And I think this country's heading for a cliff-edge problem, on its energy supply. And if we keep postponing these key decisions, we're going to fall off that cliff edge, with terrible results for the people -

Joan Walley: But shale gas isn't necessarily the answer on that.

Tom Crotty: It's one of the key ones.

Sarah Montague: Joan Walley, Tom Crotty, thank you.