Recent weeks have seen a UK Government U-turn and seen the Scottish Government announce an open ended moratorium on fracking. So what does it mean, and what are the implications for the energy industry? Firstly what it means is that there’s an election coming up. As happened with Heathrow before the 2010 election, the issue of fracking has been caught up in crude electoral politics. Heathrow congestion has been a huge drag of the UK economy for more than a decade, but it was a controversial development in an area where there were many marginal seats up for grabs in the General Election, and as a result of pressure from the Conservative Party, the then Labour Government buckled and halted proposals to take forward the expansion of Heathrow. Since then the issue has been mired in controversy, but a solution is still being found.
So what about fracking? Well basically all of the parties have been manoeuvring on fracking for some time. When the UK Government consulted on procedures for fracking, it ignored demands from the SNP for Scotland to take its own decisions on whether landowners should have a say on developments under their land. The power was ultimately given to the Scottish Government under the Smith Commission, but by then pure politics had taken over. Labour, keen to put pressure on the SNP pressed for additional restrictions on fracking at UK level, whilst challenging whether the SNP does or does not support the approach. Greens in Scotland have been posing the same question, just as avidly as the SNP has been avoiding answering it. The truth is that there isn’t really any difference between the two big Scottish parties, as both have kicked the issue into the electoral long grass.
Like mobile phone masts, politicians sometimes wince in the face of at times aggressive campaigning. That should hardly be a surprise as jumping the wrong way on a big issue like this can cost politicians their jobs. However, before anyone on the anti- side starts getting the Champagne out, it should be remembered that none of the main parties have given any definitive position on fracking. Extra safeguards can be found and moratoriums can be dropped. In Scotland there are particular reasons why the issues deserve careful consideration. The future of the Grangemouth refinery in Scotland was called into question as the owner Ineos sought to cut its operational losses. Ineos has made significant investment at Grangemouth, has taken a stake in oil and gas exploration licence areas in Scotland and imported US shale gas now features large in Ineos’ plans for the future of Grangemouth.
Grangemouth is a huge issue for Scotland in terms of jobs and GDP. The economy of central Scotland would be devastated by its closure. More than that, the prospect of a future without a refinery in a country with such a strong track record in oil production is a huge issue for Scotland. Ineos has now said explicitly that Grangemouth is ‘unlikely’ to have a long term future without fracking. This raises the temperature substantially on the issue ahead of the election, but don’t expect any further clarification by the major parties ahead of May.
Whilst political parties may well be cautious about the politics of fracking, the debate has a long way to go before the issues are resolved. Expect lots of hot air and strong words ahead of the election, but despite the controversy the issue will return after May when the real decisions will be taken. The politics of fracking are of course hugely controversial, but this story still has a very, very long way to run.