Interdisciplinary Project 2013
Expert supervisor: Prof. d. Simone
Pront – van Bommel
Tutor: Lucas Rutting
Date: 20 december 2013
Words: 8.591
Shale gas:
Blessing or
curse?
A stakeholder
analysis on the
extraction of shale
gas in Noord-‐
Brabant, the
Netherlands
Berend Brugts (10264280),
Fenna Hoefsloot (10215506),
Ernst Kuneman (10283617) &
Bart Housmans (10172769)
Table of Contents
1 Introduction ... 4
1.1 Stakeholders ... 4
1.2 Objective and relevance ... 5
2 Theoretical framework and methodology ... 6
2.1 Creating common ground ... 6
2.2 Descriptive stakeholder analysis ... 6
3. Stakeholders ... 8
3.1 Companies (i.e. Cuadrilla Resources Ltd) ... 8
3.1.1 Interests & Strategy ... 8
3.1.2 Implications of shale gas extraction for Cuadrilla ... 9
3.1.3 Influence of Cuadrilla ... 10
3.2 Local Communities ... 10
3.2.1 Interests & Strategy ... 10
3.2.2 Implications of shale gas exploitation for local community ... 11
3.2.3 Influence of local community ... 11
3.3 Low tier governments ... 12
3.3.1. Interests & Strategy ... 12
3.3.2. Implications of shale gas exploitation for low tier governments ... 12
3.3.3. Influence of low tier governments ... 12
3.4 Dutch national government ... 13
3.4.1. Interests & Strategy ... 13
3.4.2. Implications of shale gas extraction for the Dutch national government ... 13
3.4.3. Influence of Dutch national government ... 14
3.5 The European Union ... 14
3.5.1 Interests & strategy ... 14
3.5.2 Implications of shale gas extraction for the European Union ... 15
3.5.3 Influence of European Union ... 15
3.6 Global community ... 15
3.6.1 Interests & Strategy ... 15
3.6.2 Implications of shale gas extraction for global community ... 16
3.6.3 Influence of global community ... 16
3.7 Interest/Power matrix ... 17
4 Discussion ... 19
4.1 Evaluation and interpretation of results ... 19
4.2 Deficiency’s in report ... 20
5 Conclusion ... 21 Literature ... 23 Appendix A ... 26 Calculation 1 ... 26 Calculation 2 ... 26 Calculation 3 ... 26
1 Introduction
Shale gas development and exploitation is currently experiencing rapid growth -‐mainly in the United States and Canada-‐ due to high cost-‐effectiveness achieved by using a combination of horizontal drilling and hydraulic fracturing techniques. In the US, shale gas production accounted for 39% of total natural gas production in 2012 compared to 15% in Canada and 1% in China (Koch, 2013). Moreover, more countries are investigating their potential shale gas reserves for commercial and domestic production in an era of growing energy demand (Koch, 2013).
In the European Union there is a strong interest in exploiting domestic energy resources for decreasing the reliance on foreign energy (gas) supplies. In 2008 the new ''EU Energy Security and Solidarity Action Plan'' emphasized the structural efforts needed to realize a common energy policy of its member states. In the long term this means realizing an energy system with a diversity of non-‐ fossil fuel supplies (95% reduction in GHG emissions in 2050 compared to 1990), the development of (flexible) infrastructures and demand management (e.g. the building of a smart grid). In the short to medium term this means realizing a continuous flow of supply by preventing a supply crisis and decreasing the reliance on imports (especially gas), therefore increasing and developing the use of indigenous energy resources (European commission, 2008).
The national energy policy in The Netherlands is for the major part in resemblance with the outline of the European energy goals sketched above. The Dutch government seems to take a positive stand on commercial production of domestic shale gas reserves since it would receive a certain percentage of the revenues. Consequently, domestic shale gas production may help realize energy policy goals by increasing energy independence, however since Dutch shale gas reserves are relatively small, exploitation thereof would only lead to increased energy independence on the short to middle term. These reserves would last 3 to 7 years respectively if exploited with the production rate of conventional gas production in The Netherlands in 2011 (BP, 2011).
Currently, there exists an intense debate about the efficiency of shale gas production and the risks it poses to the environment and local community. There is no scientific consensus yet on the social and physical risks concerning shale gas extraction, which is reflected in different institutions providing ambiguous information related to these risks (EBN, 2012; Eck et al., 2006; Jenner & Lamarid, 2012). Consequently, social consensus proves far from present. ‘Anti-‐organizations’ have emerged, consisting mainly of local residents near possible extraction points and environmental organizations such as Greenpeace and Milieudefensie (Milieudefensie, 2013; Greenpeace, 2013).
1.1 Stakeholders
In the Netherlands, the lack of social and scientific consensus has resulted in a variety of stakeholders, each with their own goals, interests and risk perceptions concerning shale gas development. However, even within certain stakeholders (i.e. the Dutch government) there is no unanimity about these issues. Firstly, the local communities are involved in the situation. The local citizens would be the first to experience negative effects of the drilling sites, for example through harmful seismic activity and leakage of fracking fluids (Howarth et al., 2011). The local municipalities would also experience these effects and might be hold (partly) responsible for the costs. Local municipalities might also experience a drop in house pricing due to the drillings, and thus experience
multiple possible negative effects. Thirdly, The Ministry of Economic affairs represents the interests of the Dutch government. The Ministry would gain direct benefits from the drilling companies, which would convey a 40% fee of the value of the shale gas (EBN, 2012). Subsequently, in Noord-‐Brabant, Cuadrilla Resources is a central actor is the issue since they have obtained the rights to exploit the shale gas and conduct the drillings. Fifthly, the European Union (EU) has interest in this case, as it might affect the goals it has put up concerning the aim to increase the energy independence of its member states (European commission, 2008). Finally, the global community is involved as the eventual outcome of the Dutch shale gas situation serves as input for other potential drilling sites worldwide (Howarth et al., 2012). The experience gained in the Netherlands, might affect legislation concerning shale gas exploitation in other countries. A minor other effect on the global community can be found in the possible leakage of the greenhouse gas methane from drilling sites.
As Wolsink (2013) demonstrates, implementing a new energy technology system is not only based on technological advances or economic viability, but also on political and social support. The socio-‐ political components in the process of developing the extraction of shale gas in the Netherlands have had a strong influence on the decision making process of shale gas extraction and indeed posed several obstacles to the implementation of the new technology. Therefore, shale gas extraction should be considered as a complex socio-‐technical system where we recognize the interaction between the specific technical and social components.
1.2 Objective and relevance
In this paper, difficulties around realizing shale gas development in the Netherlands are analyzed through a descriptive stakeholder analysis. The objective is to construct a foundation on which further steps towards a solution including all stakeholders can be taken. This is done by conducting interdisciplinary research on the spatial implications (the relationship between space, environment and society) of shale gas extraction, the distribution of costs and benefits among the different stakeholders involved and the foundations for diverging perceptions on the cost-‐benefit and environmental implications of shale gas extraction. Seen the complexity and widespread debate on the subject, a disciplinary approach to this subject is inadequate for a full understanding of the underlying problems. By taking an interdisciplinary approach however, the focus can be shifted towards the multidimensional character of the implications of shale gas development (Repko, 2012). Thereby, this research will answer the following research question: What are the different positions of the relevant stakeholders on shale gas extraction in the Netherlands and what implications, interests and influences explain these different positions? With implications, we refer to the positive as well as the negative consequences of shale gas extraction on the actors.
Research on this subject is important for several reasons. From a social perspective, this paper may help identify the underlying problems of the diverging interests and perceptions of stakeholders involved in shale gas development in The Netherlands, thereby clarifying the relevant issues, creating common ground (between stakeholders) and speeding up the decision making process. In addition, insights and knowledge gained from this and previous research on shale gas development may serve as comparative material for energy transitions in the (nearby) future. For these reasons this research may serve the broader community in general. From a scientific perspective, this research contributes to the relevance of interdisciplinary research by creating a thorough understanding of a subject with multidimensional implications. In addition, the methodology and
steps followed in the case study can be used as an guideline in identifying stakeholders in similar cases.
2 Theoretical framework and methodology
2.1 Creating common ground
Previous to this paper we conducted individual disciplinary literature reports from the perspectives of the following disciplines: Business studies, Earth sciences, Political sciences and Human Geography. Investigating the situation from these different disciplines allowed us to identify and go in depth on characteristics specific to each perspective. Firstly, the Business Studies literature report concluded that the costs of the exploitation of shale gas can be divided in direct costs, which main drivers are the drilling rig, the depth and properties of the shale layer and the lease costs, and hidden costs which main drivers are environmental costs that arise from greenhouse gas emissions and implementation costs due to the dense population in the Netherlands. Secondly, the Earth Science report concluded that when the focus is purely on the physical and environmental aspect of shale gas exploitation in Noord-‐Brabant, the summation between positive and negative features seems to end in favor of the start for shale gas exploitation, as long as new technologies are developed and eventually implemented in the final exploitation stations. These new trends are still relatively undeveloped and should be subjected to improvements and large scale testing. Thirdly, the literature report of Political Science stated that short term benefits resulting from shale gas exploitation may arise on the national level by supplementing conventional gas reserves and increasing the resources-‐to-‐production ratio. As shale gas is being framed as a 'transition fuel' in The Netherlands, one would expect that exploitation of shale gas reserves would contribute to the realization of the energy transition by 2050. Nevertheless, scientific research suggested the opposite. And lastly, the Human Geography literature report concluded that the procedural and non-‐ transparent top-‐down approach of the national government, the exclusion of local stakeholders in the decision making process and the unfair division of profits have caused the community and socio-‐ political acceptance to decrease dramatically during the development of shale gas extraction in the Netherlands. This opposition is not exclusively concentrated regionally, but has created a national movement against shale gas extraction.
Subsequently we analyzed the conclusions resulting from the disciplinary reports using a data management table and searched for common ground between the concepts and theories assessed in the disciplinary reports. Hereby aiming to identify conflicts or gaps between gathered insights (Repko, 2012). Integrating these newly found insights by reorganizing the data exposed the relationship between these conflicts and led to the identification of the disparity caused by the differing perceptions of the different actors involved in extracting shale gas in the Netherlands. This interdisciplinary approach provides the possibility to review the corresponding or opposing assumptions belonging to different actors in a comprehensive context (Repko, 2012).
2.2 Descriptive stakeholder analysis
By conducting a descriptive stakeholder analysis we can identify the groups which affect or are affected by the decision to start the extraction of shale gas in the Netherlands. Identifying the underlying implications leading to differing perceptions, interests, agenda’s and influence for each stakeholder increases our understanding of the conflict and can be used to bring forth a substantiated solution. The steps followed during the research are pictured in figure 1.
The first step in conducting a descriptive stakeholder analysis is the identification of the stakeholders involved in the extraction of shale gas in the Netherlands (Reed, et al., 2009). Using existing literature and the previously composed disciplinary reports, in combination of focus groups and semi-‐structured interviews led to the identification of the earlier mentioned stakeholders. We hereby focus on the active stakeholders whom themselves are influenced by the possible extraction of shale gas, thereby excluding actors such as non-‐governmental organizations. Interviews were held with Cuadrilla Ltd. and Witteveen and Bos, a consultant agency assigned by the Ministry of Economic affairs to conduct research on the implications of shale gas in the Netherlands. In advance, a framework of themes to be explored for the interview was constructed to contribute to the quality and the structure of the interview.
Consecutively, the stakeholders are classified according to their specific interest and influence concerning the extraction of shale gas. Leading in this categorization are the diverging perspectives per group depending on the paradigm, or in other words, the cognitive framework shared by the members of the group. This paradigm is the foundation for the forming of a discourse specific to a stakeholder or group of stakeholders. A discourse is a shared way of interpreting the situation and assists in arranging and justifying relative positions of proponents and opponents (Dryzek, 2005). Interest profitable for the specific group are advanced, while others are suppressed (Dryzek, 2005). Therefore, a discourse is inseparably connected with political power and the goals the group wishes to achieve.
Additionally, the effects on the extraction of shale gas on the stakeholders is analyzed. A cost/benefits analysis is conducted per stakeholder laying bare the positive and negative impacts associated with the extraction of shale gas and how these are distributed amongst the actors involved. This includes the direct monetary costs and benefits, as well as the hidden costs and environmental and spatial implications. The results from this analysis are shown in an interest-‐ influence matrix displaying the significance of the situation and the power per stakeholder.
Finally, the relationship between the stakeholders are investigated through an actor linkages matrix. This provides a comprehensive view on the interaction between stakeholders and the potentially conflicting interests (Reed, et al., 2009).
Figure 1: Steps followed during the descriptive stakeholder analysis based on research done by Reed et al. (2009).
3. Stakeholders
3.1 Companies (i.e. Cuadrilla Resources Ltd)
3.1.1 Interests & Strategy
Cuadrilla Resources Ltd. is an oil and gas exploration and exploitation company which has its headquarters based in the UK. In the Netherlands, Cuadrilla has two daughter companies: Cuadrilla Brabant B.V. And Cuadrilla Hardenberg B.V which both received concession rights in 2009 from the Ministry of Economic Affairs for the exploitation of shale gas in the areas North Brabant and the Noordoostpolder (Cuadrilla resources, 2011).
Natural gas, including shale gas, is widely seen by Cuadrilla as a fuel that will have an important function in bridging the gap between fossil fuels and renewable energies (IPCC, 2007;IEA, 2011). This conviction rests on their arguments that gas is cheaper and burns cleaner and more efficient compared to oil or coal. Furthermore gas production can supplement demand when renewable energies are not capable of providing enough energy during peak demand (e.g. due to weather circumstances) (Stephenson et al., 2012). Another argument that is used by the gas industry and Cuadrilla in particular is that shale gas is simply too valuable to remain hidden under the surface (Engelder 2011).
The gas industry predicates that in the case of generating electricity shale gas would replace coal fired power stations and thereby reduce the amount of greenhouse gasses (GHG) emitted into the atmosphere. It is yet to be determined what amount of shale gas will be used for the production of electricity and what amount will be used for heating and cooking. However, a Greenpeace report of 2011 states that the current amount of conventional gas is sufficient to cover the amount of electricity generated by coal fired power stations and to make the transition to a complete
sustainable electricity mix (Greenpeace 2011). To conclude, shale gas is brought by the gas industries as the necessary transition fuel to a renewable energy mix while in fact it is possible to achieve a complete renewable energy mix with other resources (idem). The next paragraph will discuss the direct costs and benefits of shale gas exploitation that are accounted for by Cuadrilla.
3.1.2 Implications of shale gas extraction for Cuadrilla
The main implications of shale gas extraction on Cuadrilla are financial implications expressed in direct and indirect monetary costs and benefits. In this paper, a distinction is made between direct costs and benefits, which are the costs/benefits that can directly be assigned to the exploitation of shale gas and indirect costs/benefits which are cost and benefits that are not directly accountable for. The next paragraph will discuss the direct costs and benefits.
The main drivers of the direct costs are the drilling rig, the installation of the drilling location and infrastructure, the depth and properties of the shale layer, lease costs and fiscal conditions (Cuadrilla Resources 2011). Cuadrilla estimates the costs of the test drillings in the Brabant area at 10-‐15 million Euro per test location (Cuadrilla Resources 2011). The lease costs for Cuadrilla are 40% of the shale gas revenues they make and these costs have to be paid the ministry of Economic Affairs. Another great source of direct costs are the implementation costs of the shale gas fields in the Netherlands. These costs are most likely highly underestimated by the gas industry according to Postma (2013). The high amount of wells together with the infrastructure required for the exploitation of shale gas will be difficult and very expensive to implement in one of the most densely populated countries in the world. Finally, legislation and quality demands to decrease impact on the environment significantly rises the costs of shale gas exploitation in the Netherlands (EBN 2012). All these direct costs have to be paid by Cuadrilla and this raises the question whether the benefits are high enough for Cuadrilla to cover these costs.
The direct benefits of the exploitation of shale gas mainly depend on global and national gas prices which are subject to supply and demand. The revenues of the total available and exploitable amount of shale gas production in the Netherlands would be, with the 06-‐10-‐2013 prices, between 18.8 and 46.9 billion Euros (www.indexmundi.com). However, 40% of the revenues that Cuadrilla earns are in fact for the Ministry of Economic Affairs. This is due to the fact that in the Netherlands, the government is the owner of all materials in the ground below a depth of 100 meter (van Est & van Waes, 2013). Signifying that the landowner above 100 meters has no rights concerning the gas found below his property.
The indirect costs and benefits for Cuadrilla are the hidden costs, which are the environmental costs, caused mainly by the emissions of greenhouse gasses. During the production of electricity out of shale gas CO2 is emitted into the atmosphere. Besides the emission of CO2, shale gas is directly leaked to the atmosphere during the exploitation of shale gas. Although many studies found conflicting results about the amount of shale gas leaked, Jenner and Lamadrid (2012) combined several researches and found an average leakage rate of 2-‐3% of the total amount of shale gas produced during the lifetime of the well. Other indirect cost that occur from environmental damage are a result of the possible seismic activity, water pollution by leakage of fracking fluids and so called visual pollution of the landscape (Kamp, 2013) by the drilling sites. However, these environmental costs are insignificant compared to the hidden costs that occur as a result of the emission of greenhouse gasses.
Environmental costs of the emission of CO2 are very difficult to transform in the economic costs and therefore also very difficult to allocate these costs to Cuadrilla. However, the Economics for Equity and Environment, a network of economists, published a report in 2010 saying that one ton of CO2 in the atmosphere did up to an average of 660 euro in economic damage which is the result of the global warming potential of CO2 (Stanton and Ackerman 2010). Calculation 3 in appendix A enables the allocation of costs to the appropriate stakeholder. To sum up, the indirect economic costs caused by the greenhouse gas emissions are 2.4 billion + 160 billion = 162.4 billion euro’s. These costs are enormous and if these costs would have to be paid by Cuadrilla, their investors would probably hold back their investments in shale gas fields in the Netherlands. However, Cuadrilla is not legally obligated to pay these costs. Instead, these costs are beard by the global community who face the consequences of the warming of the planet. The possible seismic activity, water pollution by leakage of fracking fluids and so called visual pollution lead to costs that are borne by the local communities and municipalities.
3.1.3 Influence of Cuadrilla
The government in the Netherlands is the owner of all materials in the ground below a depth of 100 meter (van Est & van Waes, 2013) and the landowner above 100 meters has no rights concerning the gas found below his property. This caused Cuadrilla to focus their attention on the Dutch Government in order to get the concession rights for exploitation of shale gas. However, socio-‐ political components in the process of developing the extraction of shale gas in the Netherlands have had a strong influence on the decision-‐making and have become an obstacle for Cuadrilla in the implementation of shale gas extraction. This social-‐political component seems to largely focus on the possible environmental implications of the shale gas drillings. This low amount of support in the local and national community has partly pressured the Minister of Economics to announce that the exploratory drilling in the Netherlands will be postponed for another year (Kamp, 2013). Cuadrilla attempts to be as transparent as possible by providing a lot of information through the internet, interviews and by issuing reports on the effects of shale gas extraction in the Netherlands. Their aim is leave no room for speculations about possible negative environmental effects of shale gas extraction and they claim that the extraction is possible without any leaking of gas (interview Cuadrilla). So far, this so called ‘’closed system’’ has not been proven possible so the claim of Cuadrilla can be seen as a speculation itself.
3.2 Local Communities
3.2.1 Interests & Strategy
The tendency towards a top-‐down, technocratic and hierarchical method of implementing the extraction of shale gas in the Netherlands has led to a broad opposition throughout the Netherlands (van Est & van Waes, 2013). The procedural and non-‐transparent approach of the national government, the exclusion of local stakeholders in the decision making process and the uneven division of profits have caused the community and socio-‐political acceptance to decrease dramatically during the development of shale gas extraction in the Netherlands. This has led to the development of a discourse built on the community perception towards shale gas.
This discourse is not exclusively concentrated regionally, but has created a national movement against shale gas extraction. Research done by Newcon Research & Consultancy (2013) among the citizens of Boxtel, has shown that the community acceptance of shale gas fracking is very low. Up to
89% of the interviewees stated to be against drilling of shale gas within the municipality, of which 6% said he/she would leave the community if the drilling went through. The risks of environmental degradation and earthquakes were the main reasons given, a lack of knowledge on the implications and risks to public health was also mentioned. More than half of the respondents declared to be willing to come into action to prevent future drilling operations (Newcon Research & Consultancy, 2013).
3.2.2 Implications of shale gas exploitation for local community
For the local community, the negative implications or costs of shale gas development are mainly environmental in character. It is therefore important to get a clear picture of what results the research concerning the environmental implications of shale gas drillings have provided. The concerns of local inhabitants relating to environmental implications focus on two main points. Firstly, environmental degradation by the possible mixing of the fracking fluids used in the exploitation of shale gas with surface water and/or ground water aquifers, thus contaminating drinking water supplies. The contaminated fluids can enter open waters and ground water aquifers via different ways. The first possible leaking of liquids is during its transportation to well sites, which is done by truck. Next, during the injection of the fluids it might either escape due to well case failure, or due to leakage through fractures. The risk on a well-‐case failure can be greatly increased when hydraulic fracking is repeatedly performed in order to extract more gas from shale. Subsequently, the liquids may escape in situ due to improper handling and/or leaks from retention tanks (Howarth et al., 2011). On the whole, if the drilling sites are under sufficient supervision and the equipment is handled with care – as Cuadrilla states it will – (ground) water pollution by fracking fluids seems to be marginal (Howarth et al., 2011).
The second concern is damage to housing as a result of earthquakes. Research concerning possible seismic activity due to hydraulic fracking shows that seismic activity cannot be ruled out (Ooms et al., 2013). The high pressure involved in this process might cause subsidence in rock layers surrounding the borehole. In Blackpool (UK) seismic activity was encountered near shale gas drilling sites (Ooms et al., 2013). The drilling stations Cuadrilla Recourses is planning to use in Noord-‐ Brabant are similar to the stations in Blackpool. Cuadrilla Recourses have conducted research on this topic, with counter arguments to this concern as a result. Dutch law states, under the ‘Mijnbouwwet’ (mining law) that vibrations of 1,5 mm/s in urban areas are allowed. These values where encountered within 150 meters from the drilling sites. Seen as Haaren en Boxtel (urban areas) have a location removed respectively 3,2 and 12 km from the sites, seismic activity exceeding building limit safety is to be ruled out (’Cuadrilla Recourses’, 2011). However, it cannot be ruled out that some buildings -‐ situated in the countryside, outside these urban areas – will be affected by seismic activity and will temporarily have to be evacuated.
Finally, the matter of visual pollution of the landscape remains to have a margin in uncertainty, seen as the precise location and number of the shale gas drilling sites remains unknown till concrete plans are made. However, it can be affirmed that some visual pollution of the landscape will be present.
3.2.3 Influence of local community
Local communities can influence the decision making process by giving an unanimous answer to the shale gas issue thereby pressuring policy makers and initiators. This can be mainly be done by
exerting pressure on low tier governments (e.g. municipalities), interaction between these groups is therefore of major importance. However, due to the scale of the shale gas exploitation plans the
Rijkscoördinatieregeling is of use which gives the national government full authority over the shale
gas issue and by which it can individually determine whether or not it should be extracted (van Est & van Waes, 2013). The municipality or province have been requested an opinion, but have no final say in the decision making. This in turn, severely affects the influence of the local community on the shale gas issue since they first of all pressure their low tier governments. When local pressure leads to national pressure however, the decision outcome may shift in the opposite direction. Thus, low social support in the local and national community has already partly pressured the Minister of Economics to announce that the exploratory drilling in the Netherlands will be postponed for another year (Kamp, 2013)
3.3 Low tier governments
3.3.1. Interests & Strategy
The municipal councils of Boxtel and Haren have declared themselves to be a shale gas free municipality. In the Netherlands a total of 82 (out of 402) municipalities have joined Boxtel and Haren and stated that shale gas extraction is unwelcome on their terrain at time of writing (Schaliegasvrij, 2013). These are not only municipalities which are candidates for potential shale gas extraction, but include several regions where no shale gas has been found. The resistance of these “shale gas free” municipalities to participate in the process of shale gas extraction has shifted the debate from a regional dispute to a subject of national interest.
Correspondingly, the province of Noord-‐Brabant accepted a motion to reject all activities concerning the extraction of shale gas in the province. They argue that is it not in line with their ambition to become less fossil fuel dependent in 2020 and that there is not enough knowledge about possible risks and the possibilities of mitigation of these risks (Kerkhof, et al. 2013).
3.3.2. Implications of shale gas exploitation for low tier governments
The costs outlined for the local community also apply to low tier governments as municipalities or provincial governments since these are the local authorities. The difference being that local communities are directly confronted in their personal lives with possible externalities, whereas low tier governments operate from an institutional context. In principle, should shale gas be exploited and lead to costs for the local environment and community, the drilling companies are held responsible and pay for the costs. However, spillover effects to low tier governments cannot be excluded.
3.3.3. Influence of low tier governments
Municipality and provincial governments have a regulating authority and authorize permits for the drilling companies. The plans and regulations of these lower tier governments provide the framework for further decisions. By means of a development plan, municipalities are able to restrict certain utilizations of the area, for instance shale gas extraction (Mineur, 2013). In the case of shale gas development, the provincial governments may exercise limited authority via the Mijnbouwwet. When shale gas development is not in line with certain laws concerning nature conservation, air-‐ ,soil-‐ and ground quality or when apparent risks are present, the province in question can interfere in the decision making process (idem).
However, due to the Rijkscoördinatieregeling the powers of the municipalities and provincial governments are of marginal importance. They can provide the national government with information and advice, and may try to influence the decision-‐making process by more informal ways.
3.4 Dutch national government
3.4.1. Interests & Strategy
The Dutch national government has set the ambitious aim to reduce greenhouse gas (GHG) emissions with 80% to 95% by 2050 and to obtain 16% of the total energy demands from renewable energy resources by 2023 (SER, 2013). These goals are in compliance with the objectives the European Union has set for its member states. Since the CO₂ emissions resulting from the extraction and processing of shale gas are assumed to be low compared to energy derived from coal or oil, shale gas has been regarded as a possible transition fuel towards a more sustainable future. The gas industry and the ministry of economics predicate that the shale gas fields would replace coal fired power stations and thereby reduce the amount of GHG emitted into the atmosphere. As a transition fuel, shale gas would serve as an energy resource in combination with unconventional resources such as renewables, to lessen the total amount of greenhouse gasses released into the atmosphere. However, Stephenson et al.(2012) concluded that studies conducted on the production and lifecycle emissions of shale gas contain a high amount of uncertainty due to different input variables and assumptions. All studies found higher GHG emissions for shale gas compared to conventional gas, with some outliers suggesting even higher emissions of shale gas compared to coal. This indicates that shale gas is currently being framed as a transition fuel by the Dutch government while there is no solid scientific base yet to assume that it is. The current framing of shale gas could be described as a form of green washing, which may be used to serve particular interests.
In addition to the framing of shale gas as a transition fuel, shale gas could contribute to decreasing the dependency of the Netherlands on foreign energy resources (e.g. Russia). The Netherlands holds the second largest (conventional) gas reserves in Europe (with 0.6% of world total) and has been a net exporter of gas for several decennia. By the end of 2010, the proved reserves in the country amounted to 1.2 trillion cubic meters (BP, 2011), the equivalent of 996 Mtoe (Million ton of oil equivalent). With the production rate of that year, the reserves will be depleted within 17 years from 2010 (BP, 2011). As stated in the introduction, it is currently estimated by the independent research institute TNO that the recoverable shale gas reserves in The Netherlands vary between 200 and 500 billion cubic meters (bcm), the equivalent of 166 -‐ 415 Mtoe. These reserves would last 3 to 7 years respectively when exploited with the production rate of conventional gas production in 2011.
3.4.2. Implications of shale gas extraction for the Dutch national government
Exploiting domestic shale gas reserves will not contribute to long term energy independence for the Netherlands since the shale gas reserves are relatively small. However, on the short to medium term, the exploitation of shale gas may supplement conventional gas production and thereby decrease reliance on foreign imports by increasing the reserves-‐to-‐production ratio. On the international level, Dutch shale gas could be exported to other member states, thereby decreasing European reliance on foreign (extra-‐EU) imports directly. In this way, the exploitation of Dutch shale
gas could be in line with these policy goals. While the effect of the relatively small Dutch shale gas reserves on increasing (short term) energy independence of the EU would be marginal, coordinated shale gas production in combination with other member states could have a positive effect.
As stated earlier in this report, 40% of the revenues gained of the extraction of shale gas by Cuadrilla are destined for the Dutch national government in return for extraction rights. These revenues can be as high as €18,76 billion (see appendix A) and could benefit local communities. Yet, these are short to medium term economic benefits which have to weigh up against possible negative environmental implications and hidden costs not accounted for by Cuadrilla or other stakeholders. 3.4.3. Influence of Dutch national government
Due to the Rijkscoördinatieregeling, the national government has full authority over resources 100 meters below surface level. The coordination law has been applied to enhance the efficiency during the implementation of innovations of national interest, for instance to speed up regulations and the authorization of permits on different governmental levels. Since shale gas is formed in earth layers at a depth of 3500 meters, the government is the legal owner of the available shale gas and therefore also obtains the sole right to give concessions to drilling companies (e.g. Cuadrilla) without support of the local community or municipality (van Est & van Waes, 2013). This in contrary to the US, where the landowner is also owner of the gas found below his lands. Hence, part of the revenues gained from the extraction of gas in the US is for the landowner(Rogers, 2011), opposed to the Netherlands where the revenues are only shared by the national government and the drilling company.
3.5 The European Union
3.5.1 Interests & strategy
In the European Union there is a strong interest in exploiting domestic energy resources for decreasing the reliance on foreign energy (gas) supplies. Its domestic (conventional) gas reserves amount to 1992 million tons of oil equivalent (Mtoe) (1.3% of world total), which will be depleted within 14 years from 2010 with the production rate of that year (BP, 2011). Total EU-‐27 gas production in 2011 was 140.3 Mtoe, which accounted for 17.4% of total energy production. EU-‐27 gas import in 2011 amounted 266.3 Mtoe, 28% of total energy imports. These gas imports where necessary to supplement the total gas demand, which resulted in a total consumption of 397.6 Mtoe (23.4% of total energy consumption) in 2011 (European Commission, 2013). Therefore, new energy resources have to be found in order to fulfill present and future energy needs. In 2008 the new ''EU Energy Security and Solidarity Action Plan'' emphasized the structural efforts needed to realize a common energy policy of its member states. Key points are the reduction of greenhouse gas emissions, increasing the share of renewables in energy consumption and improving energy efficiency all by 20% by 2020. It further states that energy security should be of major concern to member states in particular and the European Union as a whole. In the long term this means realizing an energy system with a diversity of non-‐fossil fuel supplies (95% reduction in GHG emissions in 2050 compared to 1990), the development of (flexible) infrastructures and demand management (e.g. the building of a smart grid). In the short to medium term this means realizing a continuous flow of supply by preventing supply crisis and decreasing the reliance on imports (especially gas), therefore increasing and developing the use of indigenous energy resources. In
addition, it states that the EU should increase its efforts to act as an union concerning energy (security) issues on the international level (European Commission, 2008).
3.5.2 Implications of shale gas extraction for the European Union
Since shale gas is an indigenous energy resource of the European Union, exploitation thereof may directly add to the stability of energy supply, as well as to energy independence of EU. The Adherents of the energy safety discourse focus on the possibilities of shale gas to secure the provision of energy after other resources deplete. While the effect of the relatively small Dutch shale gas reserves on increasing (short term) energy independence of the EU would be marginal, coordinated shale gas production in combination with other member states could have a positive effect. Furthermore, the extraction of shale gas may also provide jobs and tax income for the EU members. However, difficulties with the estimation of these benefits occur due to the lack of quantifiable data about the amount of shale gas that is to be found in the EU. Taken into consideration the controversies about the amount of shale gas in the Netherlands it may be possible that estimations about the amount of shale gas in the EU might vary even more. Secondly, the political opinion of the EU members on shale gas are divided by proponents like Poland which states that shale gas should be at the heart of the EU debate on energy security, and opponents like France which implemented a law against fracking in July 2011. The question about the political feasibility to act as an union concerning shale gas may also hinder the possible extraction of shale gas (European Commission 2008).
3.5.3 Influence of European Union
The European Union has the ability to create a set of rules and laws concerning shale gas that EU members have to implement and by the development of the 2008 ''EU Energy Security and Solidarity Action Plan'', the European Union puts its members under pressure to search for and exploit indigenous energy resources. However, as described before it is unlikely that these will affect the decision making of the different members whether to start or not with the exploitation of shale gas, since this decision is made on the national level. Nonetheless, if the Netherlands starts with the exploitation of shale gas and it turns out to be a success, this might alter the opinion of other European Union members towards shale gas. As a result this could lead to increased pressure of the majority of the European Union on individual member states to start with the exploitation of shale gas.
3.6 Global community
3.6.1 Interests & Strategy
The global community might experience externalities linked to shale gas extraction, therefore it should be regarded as a stakeholder in the issue. It is hard to picture the global community as a homogenous body, but in this chapter it is viewed as all the inhabitants and governments of the earth (also within the European Union). Currently, the global community has not really meddled in the Dutch shale gas affair. This should be attributed to the fact that no drillings have been conducted yet. However, the global community could express their concerns and possibly voice demonstrations when negative effects occur. Moreover, the situation currently present in the Netherlands with regard to shale gas -‐ and the eventual outcome – might suite as an example for other countries with shale gas reserves.