British fracking could weaken Putin’s grip on Ukraine

Ever since it became clear that large parts of England were sitting on potentially vast quantities of shale gas, environmentalists have been up in arms, protesting that the technology is unproven, and could wreak havoc on the landscape.

In villages such as Balcombe in East Sussex, it has been virtually impossible to drill exploratory wells because of the ferocity of the opposition. Fracking has been about as popular in this country as Piers Morgan has been on American TV.

That could be about to change. Shale gas has mostly been sold on the basis that it is cheaper, and also that it is more environmentally friendly than most of the alternative sources of energy. But the crisis in Ukraine has thrown another argument into the mix.

The clearer it becomes that Russia is a bullying, autocratic regime, with no reservations about sending its troops onto foreign soil, the more and more foolish it seems to depend on it for oil and gas. There are plenty of good arguments for shale – but perhaps the best one is that it stops us depending on Vladimir Putin to keep the lights switched on.

Tension in Ukraine has been bubbling up for weeks, but it took a dramatic turn this week as Russia appeared to be annexing Crimea. No one quite knows how the crisis will be resolved and there is very little either the US or the European Union can do about it.

The British might have sent soldiers to Crimea in the 19th century, but no one is planning to do that in the 21st century. The G8 can threaten to boycott a meeting in Sochi later this year, and the British can hold up visas for Russian businessmen. Neither is exactly going to terrify anyone in the Kremlin.

The only sanction that would have any real bite is to stop importing Russian oil and gas. The trouble is, no one is going to do that – we would all freeze if we did.

Russia sends vast quantities of oil and gas to western Europe through pipelines running across Ukraine. A third of Europe’s overall energy needs are supplied by Russia, and in the Baltic states it is more than 50%. Germany gets almost 40% of its natural gas from Russia, Austria more than 50%.

True, the dependency works both ways. Europe depends on Russia for its energy, and Russia in turn depends on the money it makes from those exports. Around half the Russian government’s revenues come from energy taxes.

But the reality is that while Russia can survive on its reserves of cash for a while (at around 15%, it has one of the lowest ratios of government debt to GDP in the world), western Europe cannot survive for very long without Russian energy.

The lights would go out, and the factories would stop running. We can threaten sanctions all we like – but only so long as they exclude the one commodity that actually matters.

Shale gas can transform that equation. There are vast reserves in this country, and, even more significantly, in France, Poland, and probably in Germany too. Poland has the biggest reserves in Europe, followed by France. Germany, the major European country most dependent on Russian gas, also has potentially significant reserves.

So far, there has been virtually no drilling – and without any wells the estimates are always unreliable – but some studies put the gas available in Germany as high as 17 trillion cubic feet.

The trouble is, Europe is even more reluctant to develop its shale gas than we are. France has an outright ban on fracking, even though it could be the one thing that might transform the prospects of its high-cost, uncompetitive industries.

The German government has yet to make a decision on whether to allow fracking or not, but given the strength of its green lobby, it is hard to be optimistic. This, remember, is a country that has just decided to start winding down its nuclear industry – the other major energy source that does not depend on Russia.

Of the major European countries with lots of shale gas, only the Poles are unambiguously in favour, perhaps because they more than anyone know what dependence on Russia can mean in practice. But the Poles can hardly supply the whole of Europe by themselves.

The development of the American shale industry has already shown how it can transform geopolitics. America was increasingly dependent on Middle Eastern oil, and was sucked into military adventures in the region to keep supplies flowing. It can now supply its own energy once again – and so can take a far more detached, impartial view of countries such as Saudi Arabia and Iraq.

The same could be true in Europe. If the shale gas that undoubtedly exists were developed in full, then it might not mean we no longer import any energy from Russia – but we could be a lot more ‘take it or leave’ it about the matter.

The main case for shale gas, of course, will always be economic – as it should be. It needs to be cheaper and greener than the alternatives to be worth developing. But so long as those criteria are met, there is a political case as well.

Countries that are energy independent have more options. The protestors in Balcombe and elsewhere should bear in mind that if they are successful, then they are strengthening Vladimir Putin’s grip on Russia and Ukraine – and it is hard to see what is so great about that.

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Shale gas 'fracking' promises to transform Britain's energy market. Find out what it is, what it means, and how to invest.