We’re familiar with the shale boom story in the U.S., though our European comrades have not been as lucky. But this lacking performance in the shale sector could lead Europe to experiencing a renewable energy boom.
In the U.S., cheap shale gas has replaced coal in wide swathes, leading to a decrease in greenhouse emissions. That’s caused environmental groups and leaders in Europe to pay close attention, and they have tried to replicate the achievement across the Eurozone. However, it hasn’t gone all that well.
Reuters reports:
“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 decarbonizing,” he added.
Europe continues to view shale gas with narrowed eyes, questioning its environmental attributes. So far, they have relied on conventional gas to provide foundational power support as renewable power sources kick in in increasing numbers. The Danish utility DONG Energy, for example, had long rested on the basis of coal-fired power. Now, they are transitioning to an increasingly diverse mix comprised of solar and wind renewables.
Part of the reason why shale operations have proved difficult across the Eurozone is the diversity in land and zoning rules and comparatively high population density.
So far, EU nations have come up with just 20 test drills, while the U.S. has bored almost 35,000. Just this March, Poland confessed that its shale gas reserves are actually probably just a tenth of the size previously hinted at.
But, as mentioned earlier, this paucity of shale gas operations means good news for the European renewables sector. Investment in that area hit $260 billion worldwide in 2011, or a rise of 5 percent.
This growth, of course, depends to a large extent on government subsidies, which are essential to supporting the fledgling industries as they require heavy upfront costs and pay returns over the longer term.
But with these subsidies, companies like DONG Energy will continue the transition into the renewable energy market.
