20130214_R4
Source: BBC Radio 4: Today Programme
URL: N/A
Date: 14/02/2013
Event: PwC: Shale oil could mean "an increase of 12% in total oil supplies, big falls in global oil prices"
Attribution: BBC Radio 4
People:
- Tony Bosworth: Climate change campaigner, FoE
- John Hawksworth: Chief UK Economist, PwC
- Simon Jack: Business journalist for the BBC
Simon Jack: Now, shale gas and shale oil are extracted when a chemical solution is injected at high pressure into certain types of rocks. It shatters them and forces out the gas or oil trapped inside. It's been used to great effect in the US, where energy prices have fallen considerably. But it's controversial because of its environmental impact and because it causes earthquakes, albeit very small ones. A report out this morning from PricewaterhouseCoopers suggests that shale oil has the potential to reach up to 12% of total oil production, could drive down global oil prices. John Hawksworth is Chief Economist for PricewaterhouseCoopers. He's here in our London studio. I'm also going to be speaking to Tony Bosworth, who's a campaigner for Friends of the Earth, he's in our Leeds studio. John Hawksworth first - we're talking about shale oil here, not shale gas. What have you found - what could the impact be?
John Hawksworth: Well, I think, as you said, we think that by about 2035 this could rise and spread from the US to other places - China, Russia, Australia, Latin America, where there are wide open spaces and you can do this kind of thing, and without upsetting local residents. And potentially get an increase of 12% in total oil supplies, big falls in global oil prices - effectively preventing them from rising, which would otherwise happen -
Simon Jack: What kind of oil price falls are you talking about?
John Hawksworth: Well, I think rather than going up to 130 dollars or so a barrel by 2035, which is the consensus view without shale oil, we think it might be more like 80, 90, 100 dollars a barrel.
Simon Jack: So that's about 40%.
John Hawksworth: It's quite - 25 to 40%, in different scenarios. So it's a big, big impact, potentially, on oil prices, and therefore a big benefit to GDP and the economy. But, as you say, there are some environmental issues that also need to be taken into consideration.
Simon Jack: Okay, well just before we get to those, what about the UK? Because there was a fracking experiment done in Blackpool, it was called off, there was a moratorium on that - we're expecting them, actually, to press ahead with that. But you're saying this is only suitable where there are big open spaces.
John Hawksworth: I'm not saying it's only suitable, I think that we will see some exploration in the UK but it's never going to be, in western Europe, anything like on the sort of scale it is in some of these other places where they have less of these concerns, due to high population densities. So Europe, by 2035, might only make up 5% of global production of shale oil, we think.
Simon Jack: And do you think that this - the price falls will actually, for example, torpedo the development of alternative fuels? If something gets much cheaper, then the imperative or the incentive, or the economic case for renewables, etc., is weakened.
John Hawksworth: Yes, I think the key thing is that the government uses this economic windfall from shale oil and shale gas and re-invests it in low-carbon technologies over the next 20 years, so that we actually get some long-term benefits from this and we can eventually move away from these fossil fuels. So it gives you a window of opportunity to get the economy going, generate some revenues and then re-invest that. If that doesn't happen, then we would have a longer-term problem with increased carbon emissions.
Simon Jack: Okay. Well, that's the economic case there. Tony Bosworth from Friends of the Earth, what are your concerns about this?
Tony Bosworth: Well, we don't think this is clean energy at all. It's more fossil fuels, and that just means more carbon emissions. Globally we've got more fossil fuels than we can burn, if we want to avoid catastrophic climate change, so looking for more fossil fuels is completely the wrong direction. We need to be leaving the shale oil and the shale gas in the ground and focus on clean energy alternatives.
Simon Jack: So even the shale gas, you object to? Because there is - I mean, it does create less emissions, I think, than burning traditional coal or oil. So shale gas - there is an environmental case for, isn't there?
Tony Bosworth: There is not an environmental case for shale gas. I think the academic jury is out about the relative emissions compared to coal. But the bottom line is: it's more fossil fuels. You know, we've got more than we need to - we can afford to burn. We don't need to be looking for more. If we carry on burning shale oil or shale gas for 20 years, as John Hawksworth said, it's going to be too late to tackle climate change and avoid the worst impacts.
Simon Jack: Though what did you make of his point, that we can get the economy - John's point that you can get the economy going, use the dividend or the spoils from this new-found resource, to recycle that into renewable energy? You might actually do a power of good.
Tony Bosworth: I don't think we need to go via shale oil or shale gas. We need to be moving to renewable energy now, if we want to tackle climate change, we want to avoid the worst human consequences and devastating economic impacts. The UK's got a huge resource of clean energy, and if we set a decarbonisation target for the UK, and we pursue that clean energy and we slash energy waste, then we can create jobs, we can get the economy going through green energy, not through more fossil fuels.
Simon Jack: But are you - presumably you are worried that because this is such a tempting economic case, that it might actually derail attempts to plough more money into renewables, right now?
Tony Bosworth: I think that's a real concern. The government has got to be dead set on making sure that we're embracing the green economy, embracing those green economic and energy alternatives. And that's why a decarbonisation target for 2030, such as being advocated by the Committee on Climate Change - it's supported by some of the big energy companies and it's supported by other big companies and some political parties - that's the way we have to go. Clean energy alternatives and slashing energy waste.
Simon Jack: Okay, Tony Bosworth from Friends of the Earth, John Hawksworth from PricewaterhouseCoopers, and Justin and Lena, thank you all.