Fracking Off: How Might the Shale Revolution Impact a UK Without Scotland?

Tim Yeo seems to be rarely out of the news these days – from his vested interests in renewables to his u-turn on Heathrow airport expansion. The advent of shale gas is another subject in which he has managed to attract publicity. Last year, under his Chairmanship, the Energy & Climate Change select committee warned the government against banning shale gas exploration and went as far as to say it might help redress energy security of supply concerns: http://www.naturalgaseurope.com/british-parliamentarians-mps-shale-gas

Today the same committee is conducting an inquiry into the impact of shale gas on energy markets. Mindful of the parliamentary recess, it is unlikely that the inquiry will conclude prior to DECC’s publication of the UK gas generation strategy later in the autumn. The concept of drawing up a specific strategy infers that Liberal Democrat Ed Davey MP is arguably more of a pragmatic Energy & Climate Change Secretary than his predecessor was.

For shale rests uneasily with the concurrently proposed UK legislative measures to address the energy ‘trilemma’, marking the most ambitious shake up of the electricity market in decades and to all intents and purposes, paving the way for significant investment in renewables. It also rests uneasy with the Scottish nationalists as the First Minister Alex Salmond has earmarked renewables as the source of Scotland’s ‘reindustrialisation’. Salmond fears that if shale were treated as not just a transition fuel, gas prices would reduce dramatically and undermine the economic arguments underpinning the renewables sector’s rapid expansion.

Yet within the terms of reference for the DECC inquiry there is a notable lack of reference to the potential impact Scottish independence could have on the UK’s exploitation of shale gas. A case in point would be the prospect of establishing a wealth fund from the tax revenues. How might such a fund be distributed were Scotland to go it alone?

In a disunited Kingdom, would remaining parts of the union rely on buying-in from Scotland’s energy resources or might they look more fondly on a cheaper alternative on their own turf? To that end, it might not just be Scotland that wants to frack off – Blackpool could join them!

Lucy Gilchrist is Head of Energy & Climate Change at hanover communications international ltd.