The Committee on Climate Change has been asked by the Scottish Government to examine the impacts of extraction of Scottish unconventional oil and gas (UOG), comprising shale gas, shale oil and coalbed methane, on greenhouse gas emissions and climate targets.
It is outside the scope of the study to investigate other issues that have been raised in relation to UOG development, such as local noise, traffic, water and wider environmental impacts; some of these are covered by parallel studies commissioned by the Scottish Government. The Committee's advice relates solely to greenhouse gas emissions and the impact on Scottish emissions targets.
The implications for greenhouse gas emissions of UOG exploitation are subject to considerable uncertainties, both regarding the size of any future industry and the emissions footprint of production. This uncertainty alone calls for close monitoring of developments. The Committee will continue to monitor developments and provide further advice should this be necessary.
A moratorium on planning consents for extraction of unconventional oil and gas resources in Scotland is currently in place. If exploitation of UOG is to be pursued, it requires that a strong regulatory framework is put in place. It may ultimately necessitate the establishment of a dedicated regulatory body.
Unconventional oil and gas exploitation at scale would have unique characteristics. The Scottish Government has recognised that stronger environmental regulations may need to be put in place during the moratorium period. This strengthening is essential before production can commence. The current regulatory framework in Scotland for greenhouse gas emissions from UOG lacks clarity over the responsibilities and roles of the various actors and may have gaps relating to regulation of emissions to air including fugitive methane emissions.
Our assessment is that exploiting unconventional oil and gas by fracking on a significant scale is not compatible with Scottish climate targets unless three tests are met:
- Test 1: Well development, production and decommissioning emissions must be strictly limited. Emissions must be tightly regulated and closely monitored in order to ensure rapid action to address leaks.
- Strengthening of the regulatory system is essential before production can commence. Much greater clarity is necessary over the respective roles of different actors in this system, entailing full coverage of greenhouse gas emissions (i.e. including strict limiting of both CO2 and methane from all sources, covering not just the production site but also associated infrastructure before the point of grid injection or delivery to end user);
- A range of technologies and techniques to limit methane emissions should be required, including 'reduced emissions completions' (also known as 'green completions'), liquid unloading mitigation technologies (e.g. plunger lift systems) and vapour recovery units should these be needed, as well as flaring of methane rather than venting it;
- A monitoring regime that catches potentially significant methane releases early is essential in order to limit the impact of 'super-emitters';
- Production should not be allowed in areas where it would entail significant CO2 emissions resulting from the change in land use (e.g. areas with deep peat soils);
- The regulatory regime must require proper decommissioning of wells at the end of their lives. It must also ensure that the liability for emissions at this stage rests with the producer.
- Test 2: Consumption - fossil fuel consumption must remain in line with the requirements of Scottish emissions targets. Scottish unabated fossil energy consumption must be reduced over time within levels we have previously advised to be consistent with the emissions targets. This means that Scottish unconventional oil and gas production must displace imported gas rather than increasing domestic consumption.
- Test 3: Accommodating unconventional oil and gas production emissions within Scottish emissions targets. Additional production emissions from shale wells will need to be offset through reductions elsewhere in the Scottish economy, such that overall effort to reduce emissions is sufficient to meet emissions targets.
There are also potential implications of Scottish shale production for global emissions. There are two issues:
- Lifecycle emissions of tightly regulated domestic unconventional oil and gas production as against imports. The overall emissions footprint of Scottish shale gas, if tightly regulated, is likely to be broadly similar to that of imported gas. Tightly regulated domestic production may provide an emissions saving when displacing imports of liquefied natural gas, and would provide greater control over the level of emissions associated with supply. Liquids produced under this framework could have quite variable emissions footprints, and so it is difficult to say whether they would provide an emissions saving over imports.
- Impact on the global energy system. Initial evidence suggests that tightly regulated shale gas production is likely to have a broadly neutral impact on global emissions, with emissions savings due to switching from higher-carbon fossil fuels approximately offsetting emissions increases due to increased use of unabated gas. Within the context of a world committed to decarbonisation, it is likely that domestic production of hydrocarbon liquids would displace high-cost production elsewhere in the world rather than increasing overall oil product consumption or driving fuel switching.
Test 1: Well development, production and decommissioning emissions must be strictly limited
Left entirely unregulated, the emissions footprint of unconventional oil and gas production could be substantial. Any significant level of exploitation of Scottish resources in this way would be inconsistent with emissions targets. However, there are technologies and techniques that are known to limit greenhouse gas emissions from shale production. Experience and data from the US provide estimates of the costs and effectiveness of many of these measures.
US experience also indicates that an important contributor to methane emissions has been so- called 'super-emitters': large methane leaks left unchecked for extended periods of time. As a consequence, a small number of wells have been found to contribute disproportionately to emissions. Limiting emissions therefore requires that the monitoring regime catches the super- emitters quickly and significantly limits the quantity of methane released to the atmosphere, alongside the technologies to limit known sources of emissions.
There is currently a moratorium in place, during which the Scottish Government has pledged to look at further tightening of regulation. It is essential that this tightening does occur before any UOG production commences in Scotland.
The present regulatory regime in Scotland is unclear in relation to the respective roles of the different organisations in the permitting and planning process. There may also be gaps in relation to emissions occurring outside the production site (e.g. from supporting infrastructure such as pipelines, processing facilities and gathering stations) and more generally in relation to emissions to the atmosphere, especially fugitive methane emissions.
Before any production can occur, in order to ensure that domestic UOG production can be compatible with emissions targets:
- The regulatory regime requires much greater clarity over the roles of the different actors (Health and Safety Executive, Scottish Environmental Protection Agency and local authorities), and that these be managed seamlessly.
- The regulatory framework should also ensure that regulation covers all emissions of both CO2 and methane, requires strict limiting of these emissions, entails long-term monitoring and has full geographical coverage of emissions related to UOG supply prior to the gas being injected into the gas grid or put to use (i.e. encompassing not only the production site itself but also related infrastructure).
The minimum set of techniques and technologies required to limit emissions can do so at a cost comparable to the cost of reducing emissions elsewhere in the economy, consistent with the requirements of Scottish emissions targets. As evidence improves, it is likely to be cost-effective and necessary to require the inclusion of further emissions reduction measures.
Test 2: Consumption - gas consumption must remain in line with the requirements of Scottish emissions targets
Scottish emissions targets and the 2050 target can be met in a range of ways, which imply different balances of reductions in coal, oil and natural gas use, as well as the application of carbon capture and storage (CCS). But, in general, they require unabated consumption (i.e. without CCS) of all fossil fuels to decline over time, most likely reducing the use of fuels with the highest carbon intensity (e.g. coal) earlier and more strongly than those with lower carbon intensity (e.g. natural gas).
Scotland is part of an integrated UK gas network. The UK currently gets around half its gas supplies from imports, mainly via pipeline from Norway and via liquefied natural gas (LNG) tankers. Domestic output is projected to continue its decline over the coming decades and most projections suggest that the share of imports may rise over time, even as consumption falls.
There may be benefits for energy security and domestic industry if new domestic sources of natural gas production reduce dependence on imported gas. There is no case, however, for higher levels of gas consumption than we have previously set out.
The long-term path for Scottish gas consumption, assuming emissions targets are met, depends strongly on whether or not carbon capture and storage (CCS) is deployed:
- CCS widely deployed. Use with CCS would provide a way to consume fossil fuels in a low- carbon way. It could also mean that some residual use of unabated fossil fuels in hard-to- decarbonise applications (e.g. some heavy vehicles or gas boilers) can be accommodated even in 2050.
- No CCS. Should CCS not be deployed, meeting the 2050 emissions reduction target will require elimination of almost all fossil fuel use in power generation, transport and buildings.
As well as providing a smaller market for fossil fuels, the greater pressure placed on Scottish emissions targets in the absence of CCS would also make it more difficult to accommodate the emissions associated with production, as there would be less scope to reduce emissions elsewhere in the economy in order to compensate.
A UK approach to delivery of carbon capture and storage (CCS) is urgently needed.
Unabated gas consumption must be consistent with the levels in the scenarios presented in our advice on Scottish annual targets, unless reductions in emissions beyond any the Committee has identified can be found elsewhere. Therefore, any new sources of Scottish production must be used to displace imports. Allowing unabated consumption above these levels would not be consistent with the decarbonisation required under the Climate Change (Scotland) Act.
Test 3: Accommodating unconventional oil and gas production emissions within Scottish emissions targets
Domestic production of unconventional oil and gas will lead to some additional Scottish emissions, even if fossil fuel consumption is not affected and emissions relating to production are strictly limited through tight regulation and monitoring. The size of these extra emissions depends on the size of the future industry, about which there is considerable uncertainty.
In a high production scenario, in which the industry grows rapidly, the impact on domestic emissions from Scottish production could be around 1.6 MtCO2e/year in 2035 under a tight regulatory regime (compared to around 0.6 Mt in a central scenario). This is slightly greater in magnitude to the emissions savings in the agriculture sector under our advice on Scottish annual targets. If regulation were more lax, emissions would be significantly higher (Figure 1).
Figure 1. Impact of Scottish unconventional oil and gas production on Scottish emissions (2035)
Source: CCC analysis.
Notes: Emissions from Scottish UOG production on a territorial basis. KPMG Low, Central and High refer to production scenarios presented in Chapter 2. Ranges around the black dots reflect uncertainty in our emissions estimates. The 'No regulation' case does not reflect the current or anticipated framework, but rather acts as a baseline for comparison purposes in order to show the emissions reductions available through regulation.
The high level of ambition embodied in Scottish annual emissions targets means that finding offsetting effort elsewhere in order to accommodate even moderate additional emissions from UOG production or other sources (e.g. aviation) would be challenging. Areas in which extra emissions reduction might be possible should be considered in RPP3, the report in which the Scottish Government must set out its plans to meet the annual targets to 2032.