The claim by Prime Minister David Cameron that fracking in the UK can drive down domestic gas prices is “baseless”, according to the world’s foremost climate change economist.
Lord Nicholas Stern, who led a landmark review on the economics of global warming, told the Independent: “It’s a bit odd to say you know that it will bring the price of gas down. That doesn’t look like sound economics to me. It’s baseless economics.”
On August 12, as the protests against fracking company Cuadrilla escalated at Balcombe in West Sussex, Cameron wrote: “If we don’t back this technology, we will miss a massive opportunity to help families with their bills ... Fracking has real potential to drive energy bills down.”
The intervention from Lord Stern, a cross-bench peer and professor at the London School of Economics, is significant as the economist very rarely makes direct attacks on politicians.
He said that because UK gas was traded internationally any shale gas boom in the UK would be unlikely to have an impact on the gas price.
In the US, where fracking has lowered gas prices significantly, gas is rarely exported because other markets are too far away.
Previously, expert commentators from the International Energy Agency to Deutsche Bank have said different geological, legal and regulatory conditions make it unlikely the US shale gas boom would be repeated in the UK.
Lord Stern also criticised the government for encouraging a rush into fracking without a thorough analysis of all its potential ramifications, such as water pollution and earthquakes.
“There are major questions around fracking and those questions ought to be explored. We’ve not had a proper discussion on these serious issues,” he said, noting particular concern about whether some areas of the UK have enough water for fracking which uses large volumes of water and chemical to blast apart underground rocks and release trapped gas.
The government has failed to adopt a key recommendation by the UK’s science academy, the Royal Society, to develop new regulations specific to fracking, instead relying on a patchwork of existing regulation.
Lord Stern told the Independent he welcomed the increased use of gas if it meant less coal was used, because that would reduce the carbon emissions driving climate change. But he said it would be “very worrying” if the gas was used instead of renewable energy.
Meanwhile, shale gas driller Cuadrilla Resources on Tuesday withdrew an application to extend drilling and horizontal well testing at a site near Balcombe village in West Sussex beyond September 28 when its current permit expires and said it would submit new plans.
The new application for a six-month extension will cover the same well testing as in a 2010 proposal and will not seek permission for extra drilling or any drilling known as fracking, a move Cuadrilla may hope will allay local community fears.
The application will not come before the council’s planning committee until next year after further local consultation.
“Our decision to make a new application ... is to resolve any potential legal ambiguity around how the planning boundary should be drawn for a subsurface horizontal well,” the company said in a statement.
“As this is a new planning application, the county council will consult with interested third parties and we will have the opportunity for further engagement with Balcombe residents about our well testing plans.”
Balcombe was the site two weeks ago of angry protests following an almost month-long standoff over the nascent shale gas extraction industry in Britain.