By Celeste Kauffman*
By joining the “shale gas revolution,” Latin America and other countries of the global South are abandoning the green energy revolution.
Shale gas (natural gas trapped in shale rock) production began to expand in the United States in around 2006, the result of high oil prices and technological advances that substantially reduced the cost of accessing shale gas. By 2010, industry hailed a “shale gas revolution,” as its production increased from less than 1% of domestic natural gas production in 2000 to over 20% by 2010, and projections showed that this would only continue to rise, leading to domestic energy independence in a few short decades. Natural gas was touted as a form of clean energy, as it does not produce as much carbon dioxide as other fossil fuels. While it began as a US phenomenon, the shale gas revolution quickly spread to other countries and regions, first Canada and Europe, and later countries in Latin America and Africa.
The technological advances that permitted this revolution are related to hydraulic fracturing (fracking). Fracking is a process of horizontal drilling in which drillers inject vast quantities of water, mixed with sand and chemicals, into shale rock. This high pressure injection fractures the rock and releases the natural gas trapped inside.
While industry has heralded natural gas as a green energy, in reality, the environmental impacts of fracking to obtain shale gas are manifold. Fracking causes water depletion and pollution. It pollutes water with between 80 and 330 tons of toxic chemicals per frack, which then must be disposed off after the frack is complete, often leading to surface water contamination and spills. Additionally, fracking can cause earthquakes and leads to air pollution.
In addition to direct environmental impacts, industry spin claiming that natural gas is a clean energy source also siphons resources and investment away from less developed but legitimate green energy sources. Thus, in 2013, investments in renewable energy sources declined 5% in North America, reaching its lowest numbers since 2010. By contrast, spending on oil and gas has more than doubled since 2009.Since 2012, investors have increased investments to the Energy Select Sector SPDR Fund, which tracks oil and gas companies, by $US2.3 billion, while withdrawing $US32.5 million from the largest exchange-traded fund in renewable-energy equities.
Reductions in investments have had a direct impact on the continued development of renewable energy. Thus, while combined capacity for solar and wind power expanded 30% in 2012, this increase dropped to 9% in 2013.
Dwindling support for renewable energy is not just a private phenomenon. In the US, cheap natural gas has undermined political support for tax credits for renewable energy. When federal incentives expired in 2013, wind farm construction dropped 92%.
The situation is similar in Europe. The European Union Horizon 2020 project allocates a substantial portion of its €80bn budget to research and development of renewable energy such as solar and wave power. However, after 18 months of intensive fossil fuel industry lobbying, the EU named natural gas a green energy source, eligible for Horizon funds. This means that a large portion of EU funds available to make legitimate renewable energy sources competitive will now be used to subsidize the environmentally catastrophic fracking industry.
The lack of interest in renewable energy sources will likely travel hand-in-hand with the shale gas revolution to Latin America and Africa. Regional financial institutions, such as the Inter-American Development Bank (IADB), are already showing increased interest in natural gas projects. The IADB has invested 30,727,850 USD in energy projects in the region in the past five years, making it the Bank’s second largest area of investment. Many of these projects relate to green energy development, including solar and wind energy.
Thus, it is troubling that its repertoire has begun to include financing for projects related to natural gas, which it hails as a clean energy. For example, while the project description does not explicitly refer to natural gas, the IADB has supported several projects to develop “low-carbon fuel alternatives” in Brazil. Also, in 2014, the IADB is considering a natural gas project in Uruguay, which the Bank argues will “lead to a reduction of GHG emissions, as the country switches away from costly, more carbon-intensive diesel-fueled electricity generation to natural gas-fueled generation.” The Bank’s lack of understanding regarding clean energy is disturbing to say the least.
Even if such projects do not directly fund fracking, the current increase in the popularity of natural gas stems from industry greenwashing coupled with fracking’s ability to produce more gas cheaply. This combination creates a strong incentive to divert resources from renewable energy projects, which often require greater investment during their development phase, to natural gas, which is marketed as a profitable, “green” investment.
With climate change on the international agenda, and economies that are often growing faster than global North counterparts, the global South, and Latin America in particular, has the opportunity to make smart investments and focus on developing truly green, renewable energies. Thus, the global South should avoid being drawn away from green clean energy sources by the false promises of natural gas and fracking.
*Celeste Kauffman is a researcher at the Center for the Study of Law, Justice, and Society (Dejusticia)
Photo credit: Eric Gustafson