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Page added on December 23, 2013

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Hurrah! The European Union Will Not Be Regulating Fracking For Natural Gas

Public Policy

One of the worries that we over here in Europe have had is that the European Union will decide to regulate the practice of fracking for natural gas. No, this isn’t because we believe (nor that I believe either) that there should be no regulation at all. Rather, because the EU itself is the wrong organisation to be doing the regulating. And there’s two very good reasons for that.

Here’s the news that the EU isn’t going to be the regulator:

Fracking for cheap gas moved a step closer today after EU officials dropped proposals for new industry regulations.

The Prime Minister had written to EU president José Manuel Barroso warning him the move would hamper investment and cost jobs.

And after the rethink, David Cameron said: “I was just very worried that while we are already behind on fracking and unconventional gas compared to America, we would fall even further behind if we had more legal processes to go through.

“So it’s a good step forward. It could mean 70,000 jobs or more for people in the UK as well as helping to keep the bills of individuals down, but also helping to make us more competitive as a location for investment.

The first reason that the European Union itself would be the wrong regulator is simply the power than the various “Back To The Middle Ages” movements have in Brussels. So much influence do they have that the EU actually gives them substantial amounts of money to lobby that very EU. Which is ridiculous of course but it does indeed happen:

The European Union is paying green campaign groups millions of pounds effectively to lobby itself.

Activists are being given the grants from a European Commission environmental fund, which enables a network of green groups to influence and promote EU policy.

The practice has been branded a “cash carousel” by critics, who have called for the special fund — called Life+ — to be scrapped.

In total, the fund has handed out more than £90 million to green groups in the past 15 years, according to the TaxPayers’ Alliance, which has analysed its spending.

Just over a fifth of its funding — £7.5 million in the latest round of grants — went to help “strengthen” green groups “in the dialogue process in environmental policymaking and in its implementation”.

I’m perfectly happy for Greenpeace to publish whatever it wants despite my disagreeing with just about everything they do write, including their use of “and” and “the”. But Greenpeace don’t take government money to lobby government whereas for organisations like Friends of the Earth Europe it’s up to 50% of their funding in some years. That’s a circular round trip that I don’t think should be happening: and it most certainly gives those green groups too much influence.

But over and above that there’s a much more important reason why the EU itself is the wrong level of governance to be deciding upon this issue. There are, of course, costs and benefits to fracking: there are costs and benefits to everything. It is entirely true that there will be costs in the form of noise, disturbance, possible pollution (although those fears are wildly overblown) and even of methane leaks. There will also be benefits: cheaper natural gas, cheaper electricity and most certainly a very large tax take on the gas that is extracted (yes, EU countries almost all insist upon high taxation of natural resources like fossil fuels. They belong to the nation and should be taxed as such).

And it’s a fairly usual point that those costs and benefits must be set off against each other. To see, obviously, whether a proposal is a net cost or a net benefit. And the important point here is that the EU will only see one set of those: the costs. The cheaper electricity, cheaper gas, the tax revenues: none of those things would be apparent at the EU level. All would be apparent at the national government level though. So, a decision based at EU level would be concentrating on the costs and not appreciating the benefits: one at national level would be more likely to see both the costs and the benefits.

At which point we can turn one of the EU’s own driving mantras back on it: decisions should be taken at the appropriate level (so called “subsidiarity”). And here the correct level is the nation, not the EU.

So, the EU’s decision not to regulate fracking is an excellent decision for those three reasons. It takes it out of the orbit of those EU funded green advocacy groups, it places the decision at the correct governmental level and, as a result of those tow makes a reasonable regulatory regime more likely.

I’m a Fellow at the Adam Smith Institute in London, a writer here and there on this and that and strangely, one of the global experts on the metal scandium, one of the rare earths. An odd thing to be but someone does have to be such and in this flavour of our universe I am. I have written for The Times, Daily Telegraph, Express, Independent, City AM, Wall Street Journal, Philadelphia Inquirer and online for the ASI, IEA, Social Affairs Unit, Spectator, The Guardian, The Register and Techcentralstation. I’ve also ghosted pieces for several UK politicians in many of the UK papers, including the Daily Sport.


6 Comments on "Hurrah! The European Union Will Not Be Regulating Fracking For Natural Gas"

  1. Arthur on Mon, 23rd Dec 2013 12:56 am 

    The EU never was in a position to have any say at all in fracking, that’s the business of the countries themselves. Countries with low environmental standards, like Poland and Britain will start to frack first. The rest could follow sooner or later.

  2. Keith on Mon, 23rd Dec 2013 2:43 am 

    Fracking does not produce cheap natural gas, historical low interest rates produce cheap natural gas. It will be interesting when rates are forced up to see how the fracking industry contends with higher interest payments.

  3. peakyeast on Mon, 23rd Dec 2013 6:08 am 

    What a load of crap. People in europe are generally not for fracking.

    However, there is strong manipulation in the media hyping it and telling us that it will so fantastic and there is ZERO risk involved – and that there is so incredibly much to extract.

    The opinion of the author is clearly another case of prostitution to the media circus.

  4. J-Gav on Mon, 23rd Dec 2013 9:36 am 

    A “reasonable regulatory regime” is precisely what will NOT be forthcoming under this arrangement.

  5. Makati1 on Mon, 23rd Dec 2013 9:37 am 

    Glad to see the fraking poison spreading to our NATO allies … since they have been so willing to help us kill hundreds of thousands of innocent women and children in the 3rd world.

    What goes around …

  6. J-Gav on Mon, 23rd Dec 2013 4:12 pm 

    Makati – Sure looks like at least Poland and the U.K. are going to give it a whirl. On the other hand, there are massive rallies against it in Romania (there’s even a group of about a hundred Romanians protesting weekly against it here in Paris). France’s policy is: “No, fuggedaboutit!” for the time being. Hopefully it’s position will remain unchanged but if a bunch of crazed privatizers get back into power, who knows?

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