Fossil Fuel Firms Use 'Biased' Study in Massive Lobbying Push

Industry urging governments and business to reject renewables in favour of 'green' shale gas

The Guardian (UK)
20 April 2011
by Fiona Harvey

Senior executives in the fossil fuel industry have launched an all-out assault on renewable energy, lobbying governments and business groups to reject wind and solar power in favour of gas, in a move that could choke the fledgling green energy industry.

Multinational companies including Shell, GDF Suez and Statoil are promoting gas as an alternative "green" fuel. These companies are among dozens around the world investing in new technologies to exploit shale gas, a controversial form of the fuel that has rejuvenated the gas industry because it is plentiful in supply and newly accessible due to technical advances in gas extraction known as "fracking".

The expansion of shale gas holds out the promise of a glut in gas that is driving down prices and creating a bonanza for the fossil fuel industry. Burning gas in power stations releases about half the carbon emissions of coal, allowing gas companies to claim it is a "green" source of fuel.

Central to the lobbying effort is a report claiming that the EU could meet its 2050 carbon targets €900bn more cheaply by using gas than by investing in renewables. But the Guardian has established that the analysis is based on a previous report that came to the opposite conclusion – that renewables should play a much larger role. The report being pushed by the fossil fuel industry has been disowned by its original authors who referred to it as "biased" in favour of gas.

For the last two months, company lobbyists have been besieging government officials in Europe, the US and elsewhere to push the report. Their efforts are being boosted through alliances with energy-intensive industries, which are joining in the pressure on government in the hope of securing cheap energy.

As the problems with the Fukushima plant in Japan have cast a pall over nuclear power, gas companies sense the chance to brand themselves as the main "green" source of energy. James Smith, outgoing UK chairman of Royal Dutch Shell, one of the leaders in the lobbying effort, said switching to gas would offer the world "a breathing space" in the battle against climate change.

This view was challenged by Prof David Mackay, chief scientific adviser to the UK's Department of Energy and Climate Change. He told the Guardian: "You can't reach the [climate] targets like this - there is no way that switching to gas would solve the problem. I don't think it's really credible that gas is the only future."

The lobbying effort by fossil fuel companies has been intense. At a high level meeting on Wednesday, the president of the European parliament hosted a lunch for the gas industry with VIP guests including the EU's energy chief, Günther Oettinger.

It is the latest in a long round of meetings in recent months between gas lobbyists and senior officials in Brussels, including other EU commissioners and prominent MEPs, as part of the industry's charm offensive. Oettinger alone has held at least two other major meetings with gas representatives this year.

At most of these meetings, and at many other formal and informal meetings to discuss EU energy and climate change, officials have been presented with a report commissioned by the European Gas Advocacy Forum (EGAF), an industry lobbying group, based in part on an analysis by consultancy firm McKinsey and called Making the Green Journey Work. This report appears to show the EU could meet its 2050 climate targets €900bn more cheaply using gas than by investing in renewables. A copy of the report has also been presented to the office of José Manuel Barroso, the EU president, who has taken a close interest in EU gas supply with visits to the Ukraine, Turkmenistan and Azerbaijan this year.

Apart from coming to different conclusions about renewable energy, the report also relies on questionable assumptions about the future price of technology to capture and store carbon.

The team at the European Climate Foundation that produced the original report described the EGAF version as "biased to one preferential outcome in support of gas advocacy". They warn that adopting its conclusions would reduce energy security and expose the European economy to the volatile gas price.

A spokesperson for McKinsey said: "It is our long-standing policy not to discuss our clients or the work we do for them."

David Rimmer, Shell's general managed for global gas said, "Shell sees renewables as a major part of the future energy mix but this analysis has shown that increased reliance on gas in the near term saves money and jobs, delivers on climate targets and allows new technologies to be improved before large scale deployment."

Further doubt has been thrown on the industry's claims by a newly released academic study from Cornell University which found that generating electricity from shale gas – because of the difficulty in extracting it from rocks – produces at least as much carbon dioxide as coal-fired power, and perhaps more.

Jenny Banks, climate and energy policy officer at WWF-UK, called on the British government to halt shale gas exploration. "It would be ridiculous to encourage shale gas when in reality its greenhouse gas footprint could be as bad as or worse than coal. We need to reject this source of gas, and have a clear plan to move away from our dependency on fossil fuels and harness the full potential of renewable technologies."

Some in the gas industry are careful to argue that its fuel is complementary to renewables, as it can be relatively easily turned on and off to provide flexible back-up power when the wind is not blowing.

This argument is accepted by Oettinger, who insists that both gas and renewable energy will be needed for flexible low-carbon power generation, and some other senior figures. Nobuo Tanaka, the executive director of the International Energy Agency, said: "Gas is potentially a game changer. But it is complementary to renewables, as it can be turned on and off quickly. It could be baseload power and we could turn off coal."

But renewable energy generators are wary, as they fear that cash-strapped governments will ease off on subsidies for clean power, in favour of licensing gas-fired power stations.

A new gas-fired power station would be expected to have a useful life of about 25 to 40 years. So although switching from coal to gas would help countries meet their short term emissions targets, in the longer term they would be left with fleets of redundant, high-emitting fossil fuel power stations – unless they were fitted with expensive technology to capture and store the carbon dioxide underground. However, this technology is still unproven and it is likely to be decades before it can be widely used. The economics of the technology are highly uncertain, and renewable companies argue that the assumptions used by EGAF to show that the fossil fuel is cheaper than renewables do not stand up to scrutiny.

Shale gas is controversial because it requires large amounts of water to release it from rocks, and the use of potentially dangerous chemicals that could leach into the water supply. Numerous cases in the US, which has led the way in releasing gas from shale rocks using fracking technology, have shown evidence of contamination and dangerous leaks of methane.

Prof Robert Howarth, lead author of the Cornell study, said: "My strong belief is that shale gas has been promoted far beyond the objective evidence of what it can and cannot do. It is time to step back, and objectively analyse whether this is a reasonable energy technology for our future. It is also time to analyse how environmental issues associated with the technology might be reduced, and at what cost."