EU Shale Gas Legislation: An Interview with Joe Hennon, Spokesperson for Environment
Natural Gas Europe was pleased to have the opportunity to speak with Joe Hennon, European Commission Spokesperson for Environment. We spoke about the role of Europe and the expected environmental laws relating the development of shale gas.
European Committees, consulting companies and stakeholders are asking for a clear regulatory framework on shale gas. What is the status of legislative proposals relating to shale gas?
It looks like we will propose something towards the end of this year. As far as we are concerned the sooner the better. It will be sometime between September and December, it is difficult to know exactly when. I think it is more likely to be towards the end of the year because we had public consultation recently, where we had over 23,000 contributions in many languages. It will take quite a while to go through all of that.
Is it somehow related to the elections to be held in Germany in September?
No, it is completely unrelated to that.
So what’s the planning? Proposals between September and December, and then?
Then it would go to the Parliament and the Council. So it depends on how long they take and how controversial it proves to be. It is difficult to predict these things. But you would expect it to take at least a year to go through these two institutions. But as I said, it really depends on how controversial people find it and how much debate and discussion there is.
Do you expect a disclosure of chemicals?
We would expect so, (with) the REACH legislation normally companies have to say what they are going to use chemicals for. If they are going to use chemicals in fracking then they will have to declare what those chemicals are and what are they going to be used for.
Will it be a public disclosure?
Yes.
Do you foresee any revision of the Article 4 of Directive 2011/92/EU (Environmental Impact Assessment Directive)?
That is quite likely. But it depends what approach the Commission decides to take. We may take the approach of amending individual pieces of legislation. Or we may think it is better to propose legislation purely on shale gas… We have not decided yet what the best way to do that is.
What is the position of European Commissioner for the Environment, Janez Potočnik on the matter of shale and unconventional gas development?
From the point of view of whether member states should use shale gas or not we don’t have a view. That’s because the treaties allow the member states to explore their energy resources whatever way they see fit.
Our point of view would be that if we were to do shale gas exploration and exploitation, then we need to have environmental rules, which serve the purpose. We have environmental rules for things like oil drilling, and mining, and chemical use and so on. So what we would like to see is environmental protection.
The Commissioner personal point of view is that unless the European public accepts shale gas exploitation then it doesn’t have much of a future in Europe. But as I said it is for member states to decide whether or not they want to look for shale gas.
The Energy Commissioner Günther Oettinger has taken a favourable position on shale gas while Climate Commissioner Connie Hedegaard is more guarded. How does the EU reconcile divergent positions?
All three Commissioners are looking at shale gas together within the European Commission, and whatever we do propose will be a Commission proposal. So it would be the College of Commissioners. It is normal that you will get Commissioners who have different points of view and different topics but the important thing is that it will be discussed inside the Commission. We would eventually propose something, which is a Commission proposal, so which takes into account all the discussions that have been taken place internally.
Do you foresee any additional emissions reduction targets after 2020?
Well that’s possible. I mean that has been discussed already by Commissioner Hedegaard for the post 2020 period. There is already a policy paper, which has been released about two weeks ago… But all that needs to go through the Parliament and the Council. We would expect additional targets for 2030, but what they would be is too early to say.
A study of the Massachusetts Institute of Technology suggested that shale gas would most likely limit the development of renewable energy in the US. Is it reasonable to think that the investments in shale gas are distracting funds and investments from renewable energies also in Europe?
Well, it is a danger. But member states have already signed up to achieving 20% of their energy coming from renewable by 2020. So that has not changed. From our point of view if shale gas replaces things like coal, well then ok. But we have to remember that shale gas is still a fossil fuel. So, yes, there is a danger that if cheap gas becomes available then maybe people will invest less in renewables. But they have a commitment already to 20% of renewables. So we would expect member states to keep that.
Is the funding for pilot projects in shale gas adequate with the potential importance of this energy? Page 12 of the Working Document on pilot projects and Preparatory actions in budget 2014 (1.3.2013) reports that the funds for the pilot project for energy security on shale gas is a tenth of the funds for the project “Exchange programme for young farmers”.
In general the EU budget wouldn’t be the only source of funding anyway. It would be up to member states to decide whether they fund from public funds or not. And presumably there would be plenty of private sector investors also that would look at shale gas.
What is the riskiest approach for the environment: the lack of a certain legal framework in Europe or the favourable legal context in the US?
It is a difficult one to answer. We would say that there needs to be environmental legislation in place. It is a question of managing the risk. What we would normally do in Europe is we identify what the risks are and we try to deal with them... So from our point of view we would say that what you probably need is environmental legislation, which does manage the risk, the same way we do for oil drilling and extractive industries.
How do you answer to experts and operators who say that the EU is not a very agile and responsive organization?
We are not a government. We don’t have power just to pass legislation or to take quick decisions the way you would if you were a national government. So we have to take the interests of 27 member states into account. We have this unique structure whereby the Commission proposes things and then the Parliament and the member states discuss it. So all EU legislation takes a couple of years. Nothing is proposed without a cost-benefit analysis, and where there is an impact assessment. So I would think that by its nature it takes the EU a while to enact new legislation.
But the EU legislation has then to be passed by national Parliaments or Governments. Changes may occur. Are the EU activities reassuring the investors?
The EU works on many things including the oil industry, including other types of mining. When you have something new like shale gas, which comes on the market where the only experience is in the US. I think it is normal when you see the level of public debate and the level of public concern about shale gas, it is normal that the EU will take its time to properly analyse it. But that doesn’t stop member states starting to explore for shale gas, which countries like Poland and the UK are already doing. Because as I said basically every country is free to explore its natural resource in whatever way it wants to.
The only thing that investors might be concerned about is what kind of environmental legislation the EU might introduce. Because the EU is not in the position to ban for example exploration of shale gas, but at the same time individual countries can do that. So I don’t think that is the EU necessarily that would be contributing to investors’ uncertainty because there is already uncertainty when you look at countries that want to not allow it and countries that are keen to go ahead. The EU can actually bring a certain amount of confidence to the market by passing legislation, which covers all 27 countries.
What initiatives or investigations have been undertaken so far?
We have commissioned a lot of studies. We had three studies for the European Commission… There have also been two studies with the European Parliament… Wealso had a public consultation, which ran for pretty much three months, which is recently finished. We will be having also a series of stakeholders meetings. We are consulting very widely on this, and looking at it from as a scientific point of view as possible.
In conclusion, is the EU a hurdle for investors?
What’s the alternative? The alternative is no EU and then investors have to deal with 27 individual countries. At the moment, if you were investing in shale gas in Poland you would have one perspective but if you were thinking about investing in France you would have a completely different one. I think the fact that you would have a bloc of 27 countries with a population of 500 million people where rules are harmonised, that can be interesting for investors. But it is true that it takes a while for the EU to get a position and to enact the legislation.
By: Sergio Matalucci