* Shale has helped U.S. lower emissions
* Europe nowhere near U.S. on shale development
* European gas prices leave room for renewables
By Barbara Lewis and Henning Gloystein
BRUSSELS/LONDON, Aug 23 Europe has been unable
to repeat the shale gas revolution that has swept the United
States, and that could prove to be the unlikely saviour of
long-term EU efforts to spur renewables and curb greenhouse
The United States has managed to lower greenhouse gas
emissions as well as energy prices as cheap shale gas has
displaced coal, prompting calls from industry for Europe and
others to follow suit.
The argument is that natural gas, which emits less CO2 than
coal, can be a friend, not a foe, to environmentalists.
But investors say the shale gas revolution will not be
repeated in Europe - a failure that could make way for greener
fuel than gas.
"I wouldn't completely write off shale gas development in
Europe, but certainly the scale and speed at which it happens
will not be like in the U.S.," said Chris Rowland, an associate
at Ecofin, a British-based investment manager with around $1.9
billion of assets under management, covering global energy,
utility, infrastructure and alternative energy sectors.
"It's a good fuel for reducing emissions but not a good fuel
for decarbonising," he added.
A series of European Commission road maps envisage virtually
carbon-neutral power generation by the middle of the century.
Unless carbon capture and storage can be developed on a
commercial scale, that means gas as a fuel has a limited future
and should not be invested in too heavily, environmental
They are especially against shale gas, whose environmental
credentials are questioned in Europe.
"We need natural gas as a transition fuel. However, we don't
need such a huge amount of gas and certainly not cheap gas,
because that would kick out not just coal, but also renewables,"
Greenpeace renewable energy director Sven Teske said.
In the medium term, the value of conventional gas is in
providing reliable baseload power to supplement unpredictable
renewables, which depend on the sun shining or the wind blowing.
Danish state-owned utility DONG Energy, which
has relied heavily on coal-fired power generation, sees a
combination of gas and renewables as the way to go.
"We see gas-to-power and wind energy as the ideal mix,
together comprising clean and stable energy. Wind energy as the
clean energy source, and gas-to-power as the balancing power,"
Carsten Krogsgaard Thomsen, DONG Energy's acting CEO, said.
SHALE BOOM A DISTANT PROSPECT
In Europe, gas is likely to mean conventional gas for the
foreseeable future as the barriers to shale stay high.
Higher population density and different rules on land and
resources ownership explain in part why progress has been so
much slower in shale exploration in Europe than in the United
Environmental impact studies are under way in several
countries to examine fracking, the process to extract gas from
shale formations thousands of metres below the earth's surface
by injecting chemicals and water at high pressure.
The industry will need to change radically the way it
approaches fracking if it is to have a future in Europe, said
Andrew Gould, chairman of British oil and gas company BG Group
European Union countries have barely broken ground on shale
gas, with some 20 test drills compared with estimates of as many
as 35,000 sites in the United States.
Poland, Europe's most ambitious advocate of shale, in March
revealed its shale gas reserves are likely to be only one-tenth
the size previously estimated.
Researchers at the Massachusetts Institute of Technology
(MIT) say this is good news for renewables.
"When shale is removed from the market, renewables gain more
ground," they wrote in a report earlier this year.
Investment in renewable energy rose by 5 percent to a record
$260 billion worldwide in 2011, even though the growth rate
slowed along with the global economy. But that growth depended
to a large degree on government subsidies.
If subsidies are cut, the risk for Europe is that cheap
coal, not gas, could dominate the market and carbon emissions
carry on rising.
Most utilities in Europe cannot generate a profit from their
electricity if it is generated from gas at today's prices,
because gas - in contrast to cheap U.S. gas - is too expensive,
and coal and carbon emissions certificates are relatively cheap.
"At the moment it less attractive to invest in gas-to-power
and renewables compared to coal," DONG's Krogsgaard Thomsen