Economic boom? Think Again

This text was produced by the Broad Alliance in response to an article In Scottish Review written by fossil fuel industry lobbyist Ryan Stevenson. Stevenson claimed that Scotland would be turning its back on a hugely profitable new industry if it did not go for UOGE. The article was published in the review on 29 November.

Ryan Stevenson's claim (11 November) that UOGE (unconventional oil and gas extraction) would be an 'economic boom' for Scotland is refuted by KPMG’s impact study conducted for the Scottish Government. Perhaps he hasn’t read it.

The KPMG report states: 'According to our estimates, the industry could represent an average of 0.1% of Scottish GDP (2015 figure) in our Central scenario and 0.3% in our High scenario which is not a large contribution to the Scottish economy.' The total additional impact of UOGE on the Scottish economy would be a paltry £30m a year over 42 years.

The total of jobs would be 1400 FTE at the peak and even that would depend on how well pads are developed – if it is simply one or two teams going from place to place, the total will be even lower. And many of those jobs will be for HGV drivers, transporting waste water and liquid gas around on Scotland’s roads. Why on earth would Scottish communities give any social licence to an industry that carries such risks in return for such paltry amounts?

The SNP’s 2016 election manifesto declares: 'We will not allow fracking or underground coal gasification in Scotland unless it can be proved beyond any doubt that it will not harm our environment, communities or public health.'

This position accords with the precautionary principle and is the reason for the Scottish Government’s (SG) ban on underground coal gasification (UCG). The same precautionary principle led to New York State’s ban on fracking in December 2014. The compendium of scientific, medical, and media findings demonstrating risks and harms of fracking, compiled by Physicians for Social Responsibility and Concerned Health Professionals of New York, underpins this decision.

INEOS owner Jim Ratcliffe’s assertion that 'there is no science behind the vocal minority’s opposition,' is blatantly false. The expanding body of scientific evidence (200 peer-reviewed studies on fracking published so far this year), presented to the Scottish Government by the Broad Alliance, provides more than sufficient scientific evidence for an immediate ban. It is the view of the Pennsylvania Medical Association, who in October called for a ban on fracking.

Ratcliffe’s contention that over a million shale wells have been safely drilled in the US, and that the US is 'the most highly regulated market' also needs exposing in view of the Halliburton Loophole.

At the behest of Vice President Dick Cheney, former chief executive of Halliburton, the US Energy Policy Act of 2005 exempted the hydraulic fracturing drilling process from the Clean Water Act, Clean Air Act and the Safe Drinking Water Act and stripped the Environmental Protection Agency of its authority to regulate UOGE. Without these exemptions, it is unlikely that the industry would have been able to proceed. The idea that INEOS, the major licence holder in Scotland and across the UK, wants us to take the US as a model for regulation is deeply concerning.

The impact studies show that permitting UOGE will scupper Scotland’s emissions targets. The climate change committee’s impact study says UOGE can only be permitted if it displaces imports – but this is now unachievable because INEOS has a contract to import gas from the US for at least the next 15 years. UOGE produced in Scotland would be additional. A further requirement is that emissions must be offset by reductions elsewhere. The largest forecast is that UOGE would produce 1.6 million tons of CO2e/year by 2035. So where can such savings be found?

As Dr Iain Black put it: '1.6 million tons of CO2e/year is larger than the savings the whole Scottish agricultural sector has been asked to make. So, in effect, we are saying: "Thank you, farmers of Scotland, all your hard work reducing emissions is going to allow us to turn swathes of the central belt into industrial zones and to threaten the water you use." Good luck selling that'. 

The climate impact report also demands well-by-well monitoring of emissions and a framework for rapid shutdown. But a recent study by Professor Andrew Watterson of Stirling University found that the UK’s regulatory agencies are not equipped to deliver intensive regulation.

It is implausible that an under-resourced SEPA (Scottish Environmental Protection Agency) could properly regulate something of the nature and scale of the UOGE industry, in the most densely populated region of Scotland where extensive underground mine-workings and geological faulting constitute unique and novel extractive challenges. Moreover, Scottish communities would not agree to additional funding to regulate an industry which represents minimal economic benefit for them or their country. SEPA is stretched to the limit already – how much would their budget need to increase to achieve the regulation needed, and why should we pay it?

KPMG’s study does not even attempt to quantify negative impacts on existing sustainable and currently healthy industries including tourism, construction, farming, food and drink – or our whisky industry, which is reliant on pure, clean Scottish water. Studies in America have shown house prices fall within two miles of a well by 25%, with many home owners unable to sell. Estate agents in the central belt of Scotland report they are already being asked about possible well locations, and have estimated a drop of 10% in house prices.

The industry hails Aberdeen as an example of the prosperity oil and gas could bring communities embracing UOGE but Grangemouth, at the dirty end of the business, is the more realistic comparison. In spite of Grangemouth hosting multiple petrochemical giants, five of the datazones in Grangemouth fall within the bottom 15% of the Scottish Index of Multiple Deprivation and residents’ circumstances are not improving.

On these bases we do not foresee an 'economic boom' from UOGE, but rather a wholesale harm to the economic health and environment of communities across Scotland’s most productive region, and a complete loss of faith in government regulation and action on climate change. That’s a high price to pay for an industry that we now know for sure will deliver no real economic benefit to the Scottish economy.

Donald Campbell writes here on behalf of the Broad Alliance of Concerned Communities Against Unconventional Gas, a lobby group