|January 30, 2014|
Britain needs more nuclear not fracking, says IEA
|The UK should consider building more nuclear power plants and should not expect cheap energy prices to come from a US-style "revolution" in shale oil and gas, the world's top energy forecaster has warned. |
"The UK has significant shale gas resources but people shouldn't expect a US scale energy revolution in the UK," Fatih Birol, chief economist and director of global energy economics at the International Energy Agency told The Telegraph in an interview on Thursday.
"The economics are not as favourable as in the US."
Mr Birol's comments come after Energy Minister Michael Fallon unveiled this month a raft of incentives designed to encourage shale gas fracking across the country. The Government hopes that cheap energy from shale will provide a boost to the economy on a scale seen in the US where fracking has played a major part on the nation's economic recovery.
French energy giant Total gave the fracking industry a boost in the UK this month signing a deal to invest in licences to develop shale resources in Lincolnshire but so far it is the only major international oil company to commit in Britain.
Half of Britain could be opened up for fracking to tap 1,300 trillion cubic feet of gas that is estimated to be locked under ground in the North of England alone.
But Mr Birol said that the UK's shale resources, although significant, are much smaller than in the US, which also benefits from more available land to accommodate fracking sites and drilling operations.
Instead of relying solely on tapping the UK's shale's oil and gas reserves to provide affordable energy, Mr Birol says that the UK should consider building more nuclear power plants.
Last year the Government signed a deal with international partners for the construction of a new £16bn nuclear plant at Hinkley Point, the first commissioned in the UK since Sizewell B in 1995.
"Nuclear could have a more positive role to play in the UK," said Mr Birol.
Rising energy costs across the UK have become a politically contentious subject with much of the focus on price rises introduced by the big-six electricity and gas suppliers. Labour Leader Ed Miliband has proposed capping the cost of energy for household consumers.
But Mr Birol, who is the senior economic forecaster at theworld's top energy watchdog, warned that capping prices to consumers, or imposing subsidies, won't work because of rising oil and natural gas prices on international markets.
"Energy prices should reflect the market value," he said.
Although Mr Birol expects to see more oil and gas coming onto the international markets from shale production in the US and conventional sources within the Organisation of Petroleum Exporting Countries, he doesn't foresee a long-term drop in prices.
For oil prices "to go to $50-$60 a barrel for a sustained period would be on the optimistic side," he said.
"I would be surprised to see major drop in international oil or natural gas prices," said Mr Birol. "We may need to learn to live with higher energy prices in the UK and Europe."