Unconventional oil and gas consultation: analysis of responses

7. Role in Scotland's energy mix (Q4)

7.1 This chapter presents an analysis of respondents' views on the role of unconventional oil and gas in Scotland's energy mix.

7.2 The consultation paper noted that, in January 2017, the Scottish Government published a draft Energy Strategy for consultation. This set out a long-term vision of: (i) a modern, integrated, clean energy system, delivering reliable energy supplies at an affordable price, in a market that treats all consumers fairly; and (ii) a strong, low carbon economy which shares the benefits across Scotland's communities, reducing social inequalities and creating a vibrant climate for innovation, investment and high-value jobs.

7.3 The draft Energy Strategy discussed the challenges of meeting Scotland's future heat, power and transport needs, and considered the overall role of hydrocarbons in Scotland's future energy mix. It noted that heating accounts for 53% of the energy consumed by Scotland's homes and businesses, and that 79% of Scottish homes currently use mains gas as their primary heating fuel, with demand for natural gas predicted to increase until 2040. Given this context, the consultation asked respondents for their views about the place of unconventional oil and gas in Scotland's energy mix.

Question 4: What are your views on the potential role of unconventional oil and gas in Scotland's energy mix?

7.4 Altogether, 22,069 respondents addressed this question. This comprised 115 organisations, 11 discussion groups, 5,658 individuals and 16,285 standard campaign respondents.

Overview of responses to Question 4

The predominant view was that unconventional oil and gas should have no role in Scotland's energy mix. It was seen to be unnecessary, expensive, and inconsistent with the Scottish Government's ambitious greenhouse gas emissions targets. Respondents instead wanted Scotland to concentrate efforts on developing more sustainable energy systems involving renewables and biofuels.

There were two alternative views. The first, expressed mainly by organisations in the oil and gas industry and a range of individual respondents, was that natural gas will continue to be an important source of energy for Scotland – particularly in relation to heating for homes and businesses. With North Sea oil declining and the planned decommissioning of Scotland's nuclear power stations, a domestic source of unconventional oil and gas would provide Scotland with a diverse energy mix, and enable greater self-sufficiency during the transition to a low carbon future. However, there were differences between respondents in whether they saw a small short-term role for unconventional oil and gas, or whether they saw a more significant medium- to long-term role.

The second alternative view, expressed by a range of organisations and individuals, was that there are insufficient quantities of unconventional oil and gas available in Scotland for it to be of any significant importance in Scotland's energy mix. Unconventional oil and gas should (or would) be used primarily as feedstock for industrial processes, not for energy.

7.5 Each of these views is discussed further below. In general terms, the views of different respondents about the potential role of unconventional oil and gas in Scotland's energy mix ranged from 'unnecessary' and 'unethical' through to 'limited for a period of time' to 'essential' or 'critical'.

Unconventional oil and gas has no role in Scotland's energy mix

7.6 Respondents who thought there was no role for unconventional oil and gas in Scotland's energy mix often set their comments within the context of Scotland's draft Energy Strategy and draft Climate Change Plan. The two main points made by this group were: (i) that the development of a new unconventional oil and gas industry in Scotland would jeopardise Scotland's efforts to meet its climate change commitments, and (ii) that it was incompatible with the vision set out in the draft Energy Strategy.

7.7 The group also pointed to findings from the Scottish Government-commissioned economic impact assessment which indicated that: (i) production of unconventional oil and gas would only fully begin in 2026, with peak production not anticipated until around 2044 – just six years before Scotland's energy systems are meant to be fully decarbonised (in 2050), and (ii) under the central scenario (set out in the report), the estimated total production over the lifetime of the industry would be equivalent to 'a mere 5.5 years' worth of gas' based on current Scottish gas consumption levels. Furthermore, it was anticipated that this gas would not be used for domestic heating purposes. Based on these findings, respondents argued that the development of an unconventional oil and gas industry in Scotland would significantly delay the transition to decarbonisation for very little benefit.

7.8 Respondents in this group also repeatedly voiced concerns about the possibility that any investment in a new onshore oil and gas industry would displace investment into the development of cleaner forms of energy and initiatives to promote energy efficiency – thus setting back Scotland's renewable energy agenda. They suggested that there was evidence this was already happening in England with the UK Government's support for nuclear power and shale gas exploration coinciding with a reduction in investment in renewables.

7.9 Some respondents also challenged claims that unconventional oil and gas has a smaller 'carbon footprint' than other fossil fuels such as coal and imported liquefied natural gas. This group argued that there was widespread disagreement about this issue. These issues are discussed in further detail in Chapter 9.

7.10 Respondents in this group tended to call for the development of 'greener', 'clean energy' alternatives to oil and gas. Some encouraged the Scottish Government to continue to provide international leadership with its clear focus on renewables (wind, hydro, wave and solar power). Others suggested a wider range of alternatives and also specifically addressed the issues of Scotland's heating and transport needs. These respondents called for further investment into a diverse range of renewable and sustainable energy technologies and other initiatives, including:

• Developing alternative energy sources and delivering renewable energy to homes and businesses more efficiently ( e.g. biomethane / biogas; ground and air source heat pumps; district heating initiatives ^[14] ; improving battery storage for electricity generated by renewables; solar water heating; installing solar panels / tiles on all new-build houses)
• Taking steps to reduce energy demand ( e.g. improving insulation in homes and businesses; replacing old double glazing; revising building standards to ensure that all new homes and offices are carbon neutral)
• Improving national energy infrastructure ( e.g. developing better connectivity with the UK and Europe to manage variability in renewable supplies)
• Developing sustainable transportation initiatives ( e.g. supporting the transition to electric cars; improving public transport infrastructure; electrifying and expanding rail transport; requiring building projects to employ local people to reduce road travel)
• Other initiatives aimed at reducing greenhouse gas emissions or increasing sustainability ( e.g. carbon capture and storage systems; regenerative agriculture; new manufacturing techniques and technology such as the development of synthetic ethane for plastics).

Unconventional oil and gas as a 'transition fuel'

7.11 Respondents who thought that unconventional oil and gas should have a role in Scotland's energy mix generally spoke about it as a 'transition fuel', and one with a lower carbon footprint than other fossil fuels. Respondents expressing this view included organisations from the oil and gas sector, and a range of individual respondents. Within this group, however, there were differences between respondents with respect to how long they thought the 'transition' period should – or was likely to – last, and whether they saw the role of unconventional oil and gas in Scotland's energy mix as large or small.

7.12 Irrespective of their views on these issues, these respondents generally acknowledged that the long-term direction and priority for Scotland was to reduce its reliance on fossil fuels in line with its climate change commitments. However, this group tended to emphasise the strategic importance of having a reliable energy supply in the short to medium term and achieving greater self-reliance during the transition period. They believed that unconventional oil and gas had a role in giving Scotland a more secure, diverse energy mix during the transition.

7.13 Respondents who argued that unconventional oil and gas had a potentially significant and / or longer-term role to play in Scotland's energy mix pointed to a range of government statistics and forecasts from national energy suppliers, and suggested that it was 'unrealistic' to think that natural gas would not play a significant role in Scotland's energy mix for some time to come ( i.e. at least several decades). They also noted that:

• More than three-quarters of Scottish households use gas as their primary source of heating
• In winter, peak demand (in gigawatts) for gas is substantially higher than electricity demand
• Electricity is significantly more expensive per kilowatt hour than gas, and there is a strong correlation between fuel poverty in Scotland and having no mains gas or having heating provided by electricity only.

7.14 These respondents also pointed out that North Sea oil production is declining and Scotland's current energy requirements cannot be met using renewable sources alone, which mainly produce electricity. They noted that changing the way in which heating, in particular, is delivered to homes and businesses around Scotland will pose major economic and practical challenges over the next few decades, and that the scale of this challenge is such that all options should be considered and 'none should be ruled out on ideological grounds'.

7.15 Doing away with gas entirely and moving to electricity-based heating systems would require a substantial increase in electricity production, particularly during winter months. There would also be major capital costs for government, businesses and homeowners in making these changes as gas appliances in homes and businesses would have to be replaced, and local electricity grid networks would need to be significantly strengthened.

7.16 Respondents in this group also noted that natural gas currently has an important role in generating electricity, and with the planned decommissioning of nuclear power stations in Scotland, gas will continue to provide a back-up supply of power to cover for the variability in wind and solar generated electricity. Others expressed concern about what they perceived to be an 'over-reliance' on renewables, which they believed resulted in the need to import energy from England and other countries to cover times of peak demand.

7.17 These respondents argued that it was better for Scotland to have access to a diverse range of energy sources, rather than becoming reliant on any one source or having to purchase energy from elsewhere. They also thought that it was a 'false dichotomy' to suggest that a government could only invest either in renewables or in gas production; and that there was no reason why Scotland could not, and should not, do both.

Insufficient quantities of unconventional oil and gas

7.18 Finally, a range of both individual and organisational respondents thought that, based on current estimates of the quantity of unconventional oil and gas resources in Scotland, it was likely that any production would be relatively short term ( i.e. compared with countries that have substantial reserves such as the United States). Thus, it was unlikely that any Scottish unconventional oil and gas industry would outlast the current projected demand for natural gas in Scotland. This group thought that unconventional oil and gas would have little role in Scotland's energy mix, and would instead (as stated in the consultation paper) have more value as a feedstock for Scotland's petrochemical industry.

Other relevant views

7.19 It should be noted that there were slight variations on some of the main views discussed above. For example, some respondents thought it was unnecessary for Scotland to develop a new onshore oil and gas industry at this stage. This group argued that oil and gas should continue to be extracted from the North Sea for as long as possible. In the meantime, Scotland should focus on developing green energy technologies and expertise, keeping any onshore reserves for a later date when and if there may be a greater need for them. This group suggested that a delay in establishing an onshore industry would also allow time for the impacts of hydraulic fracturing (in other countries) to be more fully understood.

7.20 A small number of respondents expressed a view that, without further information about the quantity and chemical make-up of Scotland's onshore shale oil and gas reserves, it was unclear whether these reserves would be used primarily for industrial feedstock, or whether they could have a larger role in Scotland's future energy mix. Respondents with this view pointed out that only through further exploration could these questions be answered. Some of the respondents in this group suggested that exploration should be undertaken, but without any commitment being made to large-scale or longer-term drilling.

7.21 Relatively small numbers of (mainly individual) respondents expressed a diverse range of views on other matters related to the role of unconventional oil and gas in Scotland's energy mix, but not directly related to any of the main views discussed above. For example:

• There was an acknowledgement that fossil fuels play an important role in the pharmaceutical industry and healthcare and a view that they should be conserved for these purposes, rather than used for energy.
• At one extreme, there were calls for legislation to be enacted to prohibit fossil fuel extraction altogether. At the other extreme, there were suggestions that Scotland should aim to make as much money from an unconventional oil and gas industry as possible.
• There were concerns about Scotland's energy supply being controlled by small numbers of multi-national corporations whose aims are primarily to make a profit. Some respondents advocated nationalising the oil and gas sector.
• Following on from the latter point, respondents on both sides of the debate sometimes discussed the moral and ethical aspects of where Scotland gets its energy. The more common view was that it would be 'unethical' to extract more fossil fuels in Scotland (thus contributing to climate change) when the country had such abundant sources of renewable energy. However, others argued that it was 'unsustainable', 'unethical' and 'counter-productive' (in terms of reducing climate impacts) for Scotland to import gas and oil from countries with unstable regimes or from countries half-way around the world which have less robust regulatory environments.