Shale gas offers a cheaper way to replace coal and cut greenhouse gas emissions than renewable power, BP’s chief economist said on Tuesday, but dismissed claims that failure to develop it would drive industry out of Europe.
The comments from one of energy’s most senior economists feed into heated debate ahead of a summit meeting of EU leaders in March about whether Europe faces a disadvantage to the United States because of high energy costs.
BP’s L> Energy Outlook to 2035 has predicted unconventional gas, including shale, will account for 21 percent of all gas produced by 2035, up from 8 percent in 2012.
Almost none of that will be in Europe as “above ground factors”, chiefly local politics, stand in the way, Christof Ruehl said in an interview.
The shale gas revolution in the United States has led to intensive lobbying in Brussels from industry and states, such as Britain and Poland, which argue their competitiveness is damaged because European gas prices are between three and four times higher than in the United States.
“All these companies in Europe are saying they will pack up and go and there is an industrial renaissance in the United States. It’s a bit of a red herring,” Ruehl said, citing other factors, such as wage costs.
“The major macro-economic implication is the balance of trade,” Ruehl said, referring to energy import costs. “That will dwarf the industrial debate.”
While the United States looks forward to energy independence, the Commission, the EU executive, has also voiced concerns about a fuel import bill it predicts will reach 600 billion euros ($811 billion) annually by 2050.
SOURCE: Reuters, 2014