Last Sunday, Berlin’s film festival “Berlinale” came to an end with the glamorous award ceremony. If Matt Damon didn’t get an award for his enviro-drama “Promised Land,” he still managed to fuel a debate that was also ignited at least three years ago by another film – Josh Fox’s “Gasland.” At the heart of both lies the question: Is “fracking” – short for hydraulic fracturing – helping to provide abundant clean and safe energy, or is it a technique that is about to negatively impact the environment, pollute drinking water and even speed up climate change?
The controversy is fierce, permeating both sides of the Atlantic. However, there are major differences between the nature of the debate in Europe and in North America that warrant a closer look to understand the needs and challenges of all stakeholders across the Atlantic divide.
- Geological Potential: France, Germany and Poland have the largest resources of unconventional gas in Europe. However, the amount of gas estimated in the United States, Argentina or Mexico is more than four times greater than that of France and Poland and almost 20 times more than in Germany, according to the German Federal Institute for Geosciences and Natural Resources, BGR.
- Energy Security: Poland is keen to limit its dependence on Russian gas for strategic reasons. It is therefore looking for new energy sources. In contrast, Germany is working closely with Russia and has diversified its supply of natural gas relatively strongly. France is traditionally more independent because of its intensive use of nuclear power. But what unites them is that they are all less dependent on Middle Eastern oil than the United States.
- Regulatory Framework: There is no unified regulatory framework for fracking. In Poland, despite pockets of local resistance by farmers, there is a broad political coalition supporting the development of new sources. In Germany, politicians are facing increasingly professionalized resistance by a network of civil society groups. Their main issues are drinking water, tectonic and “flow-back” risks from drilling and the climate impact of shale gas development due to methane emissions. With the national elections in September just around the corner, the outcome is still unclear. It could range from a total ban to a qualified authorization for fracking. France has simply banned fracking altogether since 2011. In the context of the U.S., energy policy has traditionally been much more industry friendly and new technologies gain political backing more quickly.
- Re-Industrialization: Against the backdrop of the financial crisis and the perceived threat of the Chinese economy, many in the United States are seeing the availability of domestic energy as a key ingredient to re-industrialize the country. The notion that the U.S. economy will grow as long as the research and development departments remain in the country has been discredited. The new clarion call is to “bring back home” jobs in manufacturing. European countries do not have a high potential for unconventional gas and oil to warrant such hopes, but also have not shifted a commensurate amount of key industries overseas.
- Space: European countries are much more densely populated than most parts of the United States. Drilling operations and settlements are often in the immediate vicinity of each other. As a result, resistance to and concerns of local stakeholders are more pronounced in Europe. In addition, in European countries the state generally holds the rights to natural resources, as opposed to in the U.S., where the owner of the land also owns its resources.
The oil and gas industry is obliged to actively communicate exploration and production plans to local communities. In addition, companies active in that field would be well advised to step up their efforts to explain the technology, its benefits and perceived risks to all its stakeholders. This is true for both sides of the Atlantic. However, companies also need to be aware of the aforementioned differences if they are looking to tap into the potential of unconventional gas and oil in Europe. If they expect a red carpet, they might quickly find themselves in the wrong film.