* 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 (Reuters) - 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 gases.

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 campaigners say.

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.


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 States.

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 said.

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  • PRO: Potential Energy Independence

    Estimates by the <a href="http://www.eia.gov/pub/oil_gas/natural_gas/data_publications/crude_oil_natural_gas_reserves/current/pdf/arrsummary.pdf" target="_hplink">United States Department of Energy</a> put the number of recoverable barrels of shale gas at around 1.8 trillion. To put that into perspective, Saudi Arabia is estimated to have roughly <a href="http://www.opec.org/opec_web/en/data_graphs/330.htm" target="_hplink">2.6 trillion barrels of oil reserves</a>. Christopher Booker writes for <em>The Telegraph</em><a href="http://www.telegraph.co.uk/comment/columnists/christopherbooker/8500496/Shale-gas-could-solve-the-worlds-energy-problems.html" target="_hplink"></a> that there are enough world reserves to "keep industrialised civilisation going for hundreds of years"

  • CON: Water Pollution

    A <a href="http://switchboard.nrdc.org/blogs/amall/incidents_where_hydraulic_frac.html" target="_hplink">blog post by the Natural Resource Defense Council</a> explains that "Opponents of such regulation [of fracking] claim that hydraulic fracturing has never caused any drinking water contamination. They say this because incidents of drinking water contamination where hydraulic fracutring is considered as a suspected cause have not been sufficiently investigated." It then goes on to list more than two dozen instances of water pollution to which hydraulic fracking is believed to have contributed. A <a href="http://insideclimatenews.org/news/20111104/gasfrac-propane-natural-gas-drilling-hydraulic-fracturing-fracking-drinking-water-marcellus-shale-new-york" target="_hplink">new waterless method of fracking</a> has been proposed, but environmentalists are skeptical.

  • CON: Leaks More Emissions Than Coal

    Methane is a greenhouse gas and <a href="http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technologies/how-natural-gas-works.html#enviroimpacts" target="_hplink">major component of shale's carbon footprint</a>. Cornell Professor Robert Howarth said about a study he conducted, "Compared to coal, the footprint of shale gas is at least 20 percent greater and perhaps more than twice as great on the 20-year horizon and is comparable when compared over 100 years."

  • PRO: Burns Cleaner Than Other Fossil Fuels

    <a href="http://www.scientificamerican.com/article.cfm?id=natural-gas-could-serve-as-bridge-fuel-to-low-carbon-future" target="_hplink">Researchers at MIT found that</a> replacing coal power plants with natural gas plants could work as part of a plan to reduce greenhouse emissions by more than 50 percent.

  • CON: Hydraulic Fracking Has Been Linked To Earthquakes

    <a href="http://oilprice.com/Energy/Natural-Gas/U.S.-Government-Confirms-Link-Between-Earthquakes-and-Hydraulic-Fracturing.html" target="_hplink">Several earthquakes both in the U.S. and abroad </a> have been linked to the hydraulic fracturing process. One British company, <a href="http://www.cuadrillaresources.com/cms/wp-content/uploads/2011/11/Cuadrilla-Resources-Press-Release-02-11-11.pdf" target="_hplink">Cuadrilla Resources</a>, admitted in a report that its hydraulic fracturing process well "did trigger a number of minor seismic events."

  • PRO: Jobs

    <a href="http://www.treehugger.com/fossil-fuels/facts-on-fracking-pros-cons-of-hydraulic-fracturing-for-natural-gas-infographic.html" target="_hplink">The industry currently employs more than 1.2 million people</a> in the U.S., and the Department of Energy estimates that natural gas resources have increased nearly 65 percent due to fracking, according to a TreeHugger graphic. Additionally, <a href="http://www.bu.edu/energy/files/2011/07/Fracking-article-Sept-14-2011.pdf" target="_hplink">the gas industry accounts for about $385 billion</a> in direct economic activity in the country, a <em>Nature</em> piece reports.

  • CON: Companies Don't Have To Disclose Chemicals Used In Process

    <a href="http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydroreg.cfm" target="_hplink">Fracking is exempt from the Safe Drinking Water Act of 2005</a>, thus allowing companies to conceal the chemicals used in the process.

  • PRO: Buys Time To Develop Renewable Energy

    Former chief of staff to President Clinton and former head of the Center for American Progress <a href="http://www.businessweek.com/magazine/could-shale-gas-reignite-the-us-economy-11032011_page_2.html" target="_hplink">John Podesta says natural gas can serve</a> "as a bridge fuel to a 21st century energy economy that relies on efficiency, renewable sources, and low-carbon fossil fuels."

  • CON: Requires Large Amounts Of Water

    The fracking process can require around <a href="http://www.hydraulicfracturing.com/Water-Usage/Pages/Information.aspx" target="_hplink">five million gallons</a> of water. In some cases<a href="http://www.treehugger.com/fossil-fuels/facts-on-fracking-pros-cons-of-hydraulic-fracturing-for-natural-gas-infographic.html" target="_hplink"> less than a third of that water is recovered</a>.