The claim by prime minister David Cameron that fracking in the UK can drive down domestic gas prices is “baseless”, according to the world’s foremost climate change economist.
Lord Nicholas Stern, who led a landmark review on the economics of global warming, told the Independent: “It’s a bit odd to say you know that it will bring the price of gas down. That doesn’t look like sound economics to me. It’s baseless economics.” On 12 August, as the protests against fracking company Cuadrilla escalated at Balcombe in West Sussex, Cameron wrote: “If we don’t back this technology, we will miss a massive opportunity to help families with their bills … Fracking has real potential to drive energy bills down.”
The intervention from Lord Stern, a cross-bench peer and professor at the London School of Economics, is significant as the economist very rarely makes direct attacks on politicians. He said that because UK gas was traded internationally any shale gas boom in the UK would be unlikely to have an impact on the gas price. In the US, where fracking has lowered gas prices significantly, gas is rarely exported because other markets are too far away. Previously, expert commentators from the International Energy Agency to Deutsche Bank have said different geological, legal and regulatory conditions make it unlikely the US shale gas boom would be repeated in the UK.
Lord Stern also criticised the government for encouraging a rush into fracking without a thorough analysis of all its potential ramifications, such as water pollution and earthquakes. “There are major questions around fracking and those questions ought to be explored. We’ve not had a proper discussion on these serious issues,” he said, noting particular concern about whether some areas of the UK have enough water for fracking which uses large volumes of water and chemical to blast apart underground rocks and release trapped gas.