current affairs energy

Why I oppose fracking in Britain

I oppose fracking in Britain, but not because of water pollution or earthquakes. My argument against it is quite simple. In the long term, we need renewable energy. We need it because emissions from fossil fuels are causing climate change. We also need it because oil and gas are finite resources, and we will have to move to renewable energy sooner or later anyway. There’s a double imperative here, and fracking delays the transition away from fossil fuels. It’s as simple as that.

Most importantly, hype over unconventional oil and gas draws finance away from renewable energy. That’s happening already. This graph below shows total global investment in clean energy.


As you can see, investment fell pretty sharply in 2012. If we want to prevent dangerous climate change, that shouldn’t be happening. The trend for clean energy needs to be accelerating. Here’s one calculation of the level of investment we need, and our progress so far.


The 2012 fall in investment isn’t because of the economic downturn – see 2009 for that little dip. A couple of countries, Spain and Italy for example, reduced support for renewables because of austerity. Others have brought in bizarre taxation schemes on renewable energy or adopted protectionist measures. But the biggest issue was uncertainty. “The main reason for the 12% decline in 2012” says the Frankfurt School, “was investor concern over policies to support renewable energy in its longest-established markets, Europe and the US.”

Circumstances vary in different countries, but you can certainly see that wavering over clean energy in Britain. In the last couple of years Britain has gutted its relatively new feed-in tariff, cut renewable energy subsidies, and failed to put a decarbonisation target in place for 2030. Pro-renewable ministers were shuffled out of the Department of Energy and Climate Change and punitive restrictions on onshore wind were brought in. At the same time, we’ve been lining up tax breaks to encourage investment in the North Sea, a new gas strategy was unveiled, and we’re trying to create a fracking industry from scratch as quickly as possible. It’s not difficult for investors to see which way the wind is blowing.

So it’s hardly any surprise that Britain’s investment in clean energy dropped 17% last year to $8.34 billion, while investment in North Sea oil and gas is expected to hit a record high this year at over $20 billion.

Personally, I doubt that there will be a rush of money into fracking, and I suspect that it will prove uneconomic in Britain. All this little adventure in unconventional gas is likely to do is prolong the uncertainty over renewable energy, delaying essential reductions in carbon emissions, and keeping us hooked on imported gas for longer.

Interestingly, while developed countries wax hot and cold about renewable energy, many emerging economies have made a decisive move towards it. South Africa jumped straight into the top ten investors in clean energy last year. Spending over $65 billion last year, China is the largest investor by $30 billion. Morocco and Kenya all took substantial steps towards clean energy last year, and 25 African countries now have policies to support renewable energy. Globally, there are now 99 state or regional feed-in-tariffs in operation. As predicted, the cost of renewable energy continues to fall – the cost of solar PV has fallen by 80% in five years. The renewable energy revolution is happening despite us, and investment from developing countries is likely to overtake that from the developed world in the near future.

Last week David Cameron wrote that if we don’t back fracking in Britain, “we could lose ground in the tough global race.” But in his three years as Prime Minister, he has never made a speech about renewable energy. David Cameron is in the wrong race, a fossil fueled race to nowhere, while we fall further and further behind in the one that matters – the race to stabilise the climate before its too late.


  1. Great post!

    As the UK’s promised to end all subsidies of fossil fuels – one of our public commitments at the climate talks – bringing one in for fracking is particularly galling.

  2. The figures quoted do not show the trend for investment in green energy is declining. The trend line is clearly up.

    An industry that is reliant on government largess, and reneweables will be until it is grid comparable, is always going to have large amounts of uncertainty because governments are often fickle. Spain is a good case. It went out and out for a solar with large subsidies. These subsidies were over generous and stoked up a boom based on milking the Spanish taxpayer. Then the Spanish realised they had run out of money and had to put the brakes on hard, rapidly cutting those subsidies and changing contracts retrospectively. No wonder there is huge uncertainty.

    I think this points out a flaw in this blog’s premise that economic growth isn’t everything. Without growth people and nations can’t afford to develop and deploy green technology that requires large subsidies,

    Another reason for a pause in investemnt could be that as solar has been rapidly advancing to grid comparability and may only be a handful of years away, it makes far more economic sense to wait to install efficient cost effective solar that won’t need lasting subsidy rather than rely on government promises that are very changeable.

    1. The drop in investment in renewable energy coincides with a rise in investment in fossil fuels, so this is not a matter of people waiting – it is them seeing where government is leading, and duly following.

      And yes, fickle governments are a problem. It’s pretty much my point.

      Subsidising renewable energy would be entirely possible in a steady state economy. In fact, I’d turn the question around and ask how a growth-based economic model can survive on a finite resource. But since global subsidies to fossil fuels are considerably higher than subsidies for renewables, scepticism over subsidies for renewable energy rings a little hollow.

  3. You know as well as I do that the much loved phrase “global subsidies to fossil fuels are considerably higher than subsidies for renewables” is one of those things that while technically true is meaningless to this debate. Are you suggesting that Saudi, Iranian and Venezuelan subsidies for petrol are transferable to spending on solar panels in Dorset? Yes it would be a good if those governments cut those subsidies, not least because they could bankrupt themselves, but that spending is really a form of welfare and would be spent better on direct cash transfers and social spending rather than windmills. The phrase is banded around as if to imply that we in Britain are subsidising fossil fuels more than renewables, which we most certainly are not.

    In a steady state economy spending is a zero sum game. Spending more on renewables means fewer teachers, doctors or whatever other good you want. Only growth gives you the bigger pot.

    I do think you are making a causation out of a correlation. The fall in investment in renewables does correlate with the talk of a fracking revolution but that does not mean the two are linked. The Bloomberg report doesn’t make that link. While the banking crash was in 2009 the European government solvency crisis has been much more drawn out and many cuts have only really come in in the last couple of years (example Spain didn’t cut till late 2010). This would have happened with or without fracking. Some of the fall (such as in Germany) is down to the price of solar cells falling faster than expected – this is a good thing as we want to do this as cheaply as possible to leave more money to spend on other things.I sometimes feels that if given the choice between spending $10 trillion to end global warming or $5 trillion, climate change activists would choose $10 trillion to show the importance of their cause.

    1. I’m not suggesting the investment has all flowed into fracking – it clearly hasn’t. But it has gone into fossil fuels. As I mentioned, this is a record year for investment in the North Sea.

      And you realise you can still borrow and invest in a steady state economy, right?

      1. Business investment may still be possible but government spending would be fixed in a steady state economy and that is where the subsidies you want come from. So it would still be a zero sum game with other spending.

        1. There are plenty of ways for governments to raise extra finance for investment in a steady state economy. As you may have noticed, our own government keeps spending whether or not the economy is growing. There’s nothing magic about rising GDP figures.

          1. I’ve noticed how the government keeps increasing spending when the economy isn’t growing. If it keeps that up without GDP growth it will go bust a la Greece. Increased government spending in downturns is predicated on future growth to reduce the debt as a proportion of the total economy. Since a steady state economy wouldn’t have that future money raising deficit spending one year really would just be spending brought forward, meaning cuts later to pay for it. Do you think the share of the economy government spends should keep growing forever? It is currently 50%. Increasing government spending in a steady state economy would have to mean a smaller share of the economy outside the government. If you reject making the cake bigger then bigger share for one means less for everyone else. Simple logic.

  4. Yes, that would be spending brought forward, but the whole point of subsidies is that you kickstart the technology. As the technology matures, the subsidies decline and eventually cease. And you fund the innovation through profit-sharing mechanisms that would guarantee a return later.

    That seems healthier to me than creating money out of thin air and then inflating assets to cover your tracks, which is what we appear to be doing at the moment.

    1. We already are subsidizing renewables research. Given that solar prices fell by 40% in one year, how much faster would additional funding achieve? Plus you have no certainty that what you are investing in will make a profit. Ok if future growth will pay your debt, worse if you don’t expect any, then that does mean lower future spending. That is why public spending would be constrained under steady state.

  5. Hi Jeremy, where did you get your graphs from? The link just above is broken – are they from a report which is free to access?


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