14 september 2012

Hollande rejects shale gas fracking

By Hugh Carnegy in Paris, The Financial Times,September 14, 2012

François Hollande has slammed the door on the exploitation of France’s big oil and shale gas deposits using “hydraulic fracking”, risking further tensions with business leaders anxious not to lose access to what they see as a potentially vital energy asset.

Mr Hollande said he had ordered the rejection of seven applications to open up the country’s shale deposits, citing “the heavy risk to health and the environment” of fracking, which injects water, sand and chemicals under high pressure into rock to release oil and gas.

Recent indications of a more open stance by Jean-Marc Ayrault, the prime minister, had led to speculation that the socialist government might review a fracking ban imposed by the government of former president Nicolas Sarkozy.

But, opening a national conference on the environment on Friday, Mr Hollande said: “As far as the exploration and exploitation of non-conventional hydrocarbons is concerned, this will be my policy throughout my [five-year] term of office.”

The president also reaffirmed his election commitment to lower France’s heavy reliance on nuclear power from 75 per cent of electricity generation to 50 per cent by 2025, announcing that the country’s oldest nuclear plant, at Fessenheim, in north-east France, would be closed at the end of 2016.

Mr Hollande’s stance on both shale deposits and nuclear power has provoked concern within industry that he is putting at risk France’s relatively low energy costs, one of its prime economic assets, at a time when the economy has stalled and its competitiveness is in severe decline.

Laurence Parisot, head of Medef, the employers’ federation, said she feared that Mr Hollande had closed the debate on shale deposits, saying such a step “would be very dangerous for the economy and for the country”. She said no plan had been outlined on how to reach the nuclear target.

Estimates from the US energy department suggest France could possess as much as 5tn cubic metres of shale gas, one of the biggest reserves in Europe or about a fifth of US reserves.

Medef argues that exploitation of the reserves could offer a big boost to the French economy, as it has in the US. It says there should be deeper investigation of the effects of fracking and the development of other technologies for shale exploitation.

Jean-Pierre Clamadieu, chief executive of Solvay, the Franco-Belgian chemical group, and a Medef delegate at the conference, said shale had produced a “competitive shock” for the US which France could emulate. “Plus we have an industrial sector in which France could be a global leader,” he said.

But there has been fierce opposition from environmental groups to the opening up of shale deposits mainly centred on worries about pollution of the water table.

Mr Hollande told the conference he wanted France to become a country of “environmental excellence”, saying he would push for the EU to adopt a target of reducing carbon emissions by 40 per cent from 1990 levels by 2030, and by 60 per cent by 2040, extending current targets of 20 per cent by 2020.

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