Renewable energy and global emission targets are under a serious threat as the global shale oil industry is expanding with an incredible speed. According to a new report by consultancy firm PwC, by 2035 shale oil could account for 12 per cent of the global energy production, and cause a drop in oil prices down to $50 per barrel.
The consequences to the environment might be irreversible. The low oil prices might extend the production and make alternative low carbon technologies a lot less attractive, according to Jonathan Grant, director of sustainability and climate change at PwC.
The report also points out that cheaper oil would result in displacement of production from higher cost and environmentally sensitive areas. In addition, only tax windfalls would be able to provide funding for carbon capture, storage and low carbon technologies.
The numbers indicate that the global GDP could increase by $2,7tr with up to 40% drop in oil prices. Shale oil production could increase UK’s GDP by 3.3%, China could note up to 3% increase, for the The U.S the GDP could raise by 4.7%, while in India this number could reach up to 7.3%, by the year 2035.
However, as Grant points out, such scenario will result in a reduction of investments towards renewable energy projects, increased mobility due to low oil prices and consequently a substantial increase in carbon emissions.
For the period between 2004 and 2011, the U.S. reports an increase in shale oil production from 111,000 barrels per day to 553,000, meaning an annual growth rate of 26%. Globally, the industry is still picking up, however many great economy powers are already exploring its potential.
The UK’s Department of Energy and Climate Change claims that currently there is no estimate of potential reserves in the UK, and there are no explorations taking place.
This statement, however, does not stop environmental campaigners to plea against digging into any shale oil reserves. Doug Parr, chief scientist at Greenpeace, comments that such activities could only have a negative impact on the global economy of climate change. Tony Bosworth, energy campaigner at Friends of the Earth, came with a similar warning, saying that fraking is a threat to the environment and governmental subsidies should be directed to green technologies instead.
On the other hand, the supporters of the idea, however, are certain that this fuel source could actually contribute to net carbon savings, because it could replace coal.
The report raises awareness and points out that asking to leave fossil fuel reserves untouched is not a winning strategy. Fraking technology is still highly controversial, however based on previous experience, it is obvious that any reserve of fossil fuel will be extracted at any cost.