Photo: Stephen Jones
The fracking industry in the US is on the verge of collapse, with oil prices plunging 50 per cent in eight months, thanks to Saudi Arabia’s unexpected decision to sell its oil cheaply.
There are now not enough buyers to mop up excess fracked gas and oil, which are produced together, causing frackers to halt the drills – low profits mean they risk bank loan defaults.
Shale-well drilling company Stone Energy has reduced the number of fracking wells it will drill in the Marcellus Shale region, and it’s not the only one. Goodrich Petroleum, BHP and EQT are also becoming less active. Across the US, shale gas fracking is shutting down.
Would-be fracker Centrica, which owns rights to frack in Britain (gained from Cuadrilla Resources) says lower oil prices will hurt profits from its drilling-fields this year, which may prove a strong disincentive to its British fracking plans.
Oil prices all over the world move in tandem. Similarly, frackers are at risk when low public demand for gas results in a ‘global gas glut’: too much oil and gas for the market to absorb forces prices down.
The chief economist at the International Energy Agency (IEA) said recently that thanks to renewables, recession and low coal prices, there is a low demand for gas in Europe. Britain, however, has a strong public demand for gas, which is used to feed 38 per cent of power-plant fuel needs.
One way to decrease this demand is to use household or community-owned renewables instead of commercial energy plants for power.
At the moment, this is rare in Britain, because the cheap bank loans which could fund renewable energy aren’t made available to individuals or community groups (while fossil fuel investors have no problem getting hold of them).
Community projects often cost under $15 million, and ‘at that level, banks aren’t really interested,’ explains Emma Bridge, chief executive of community generator association, Community Energy England (CEE).
Crowd-sourcing and community funding schemes such as Trillion Fund can pay for some renewables, but when it comes to bigger renewable projects, current laws don’t give communities much in the way of rights to buy and profit from them.
Renewables face not only a funding problem, but a legal problem too, especially in places where laws don’t allow members of the public to buy shares in private power plants.
The ‘right to invest’ clause in the most recent version of the Infrastructure Bill (currently working its way through parliament) only lets the public ask for 5-per-cent ownership on large wind-turbine projects, even when they are in public backyards.
Lord Cameron of Dillington’s remark when debating the bill was that 10-per-cent public wind-turbine ownership would let members of the activist public stop wind-turbine construction.
In Denmark, where there is currently a fracking ban in place, the opposite is true. Most of Denmark’s wind-power energy source is community-owned and wind power provides most of the country’s power on some days.
Profits from wind-energy bills go towards local community funds, thanks to a law requiring up to 20-per-cent public ownership of wind turbines.
‘For a long time, Britain has been one of the worst-performing countries in Europe when it comes to utilizing renewable energy,’ says Paul Monaghan, sustainability advisor at Co-operative Energy.
The British consumer-managed energy supplier thinks 25 per cent should be the minimum amount of public ownership offered for larger renewable power projects.
Instead, the government will soon remove British landowners’ right to prevent frackers from trespassing beneath homes.
Allowing more public ownership of renewables can be seen as a way of safeguarding public access to electricity and water in the face of fracking and dwindling traditional oil and gas reserves.
- See more at: http://newint.org/blog/2015/02/13/buy-renewables/#sthash.OhOCxtdh.dpuf