Why growing gas demand and coal’s revival raises vital questions over energy policy and social licence

Gas is set to become an increasingly important part of the world’s energy mix … at least for the next two or three decades. Specifically, by 2050, oil and gas is predicted to account for 40 per cent of the total, according to a recent DNV GV report highlighted in UK Energy Strategies’ weekly Monitoring Service.

An increasing global demand for oil and gas surely makes it all-the-more important that Britain, like many other import-dependent economies, has access to its own, reliable, independent and, crucially, secure supply. In this context, the apparent ‘nimbyism’ of activists objecting to increased extraction of our own onshore natural gas could be portrayed as being contrary to Britain’s long-term interests.

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The British experience — characterized by conflict and contradictions over energy extraction — serves as a proxy for many jurisdictions.

The timing of DNV GV’s report is surely not just coincidental with the recent rise in gas prices to a 10-year high. Experts argue that the rise in gas prices has made coal more economical as a fuel for power stations. The potential long-term environmental effects of a ‘coal revival’ for reasons of short-term economic gain can only be seen as a large step backwards for Britain.

The impact of a ‘coal revival’ is greater than purely environmental. In 2017, before the rise in gas prices, the U.K. imported 8.5 million tonnes of the 11.52 million tonnes of coal it consumed — over 70 per cent. A ‘coal revival’ would surely see this percentage rise, leading to the conclusion that coal is not a secure source of energy for Britain in the 21st century, let alone a desirable one.

Britain needs a low-carbon, secure and diverse energy mix going forwards. The UK Energy Strategies Weekly Monitoring Service frequently reports the latest successes in the renewables sector and it is clear that renewable energy is already a significant and growing part of Britain’s energy mix. But what about oil and gas?

Britain is in the fortunate position to have a largely untapped supply of oil and gas under sovereign soil. Unfortunately, the nascent industry seeking to take advantage of this opportunity has so far struggled to secure the social licence in support of both the principle and of the necessary extraction techniques, which would then, in effect, enable government to support its activities. Cuadrilla is now just starting to frack its site in Lancashire, and we await the impact of those activities.

Industry must engage with and demonstrate to communities — including the activists — that appropriate measures are in place to make British onshore natural gas exploration and extraction as safe and environmentally friendly as possible. Unless and until they are, we will surely see more companies experiencing the same delaying tactics that Cuadrilla has experienced at Preston, which will not only keep the costs of extraction higher than arguably necessary, but will also potentially create supply issues for Britain in the future.

So, the recent appointment of a commissioner for this emerging industry should be seen as a positive step. Industry should make full and good use of the engagement opportunities this appointment presents, both with communities, and with local and national government.

While UK Energy Strategies has recognized the need for the oil and gas sector to secure its vital social licence, this has not, as yet, seemingly been translated into the necessary program of action by industry. UKES would be delighted to assist industry — across the energy sector — to work with both government and communities to present its case.

Ian Derbyshire is chief executive of UK Energy Strategies.

Originally posted on JWN Energy – https://www.jwnenergy.com/article/2018/10/why-growing-gas-demand-and-coals-revival-raises-vital-questions-over-energy-policy-and-social-licence/

DNV GL’s report can be found here – https://www.dnvgl.com/oilgas/perspectives/gas-capital-expenditure-boost-to-fuel-the-energy-transition.html?utm_campaign=OG_GLOB_18Q4_NEWS_Perspectives_03%7C2018&utm_medium=email&utm_source=Eloqua&elqTrackId=544fd47a31a44c0bad45fecebd754fa4&elq=392dbdafc3c

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