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In a commentary for the German journal Gebäude Energieberater, the EWG President Hans-Josef Fell provides a political outlook for the oil industry based on the EWG study on Fracking published earlier this year.

He concludes that the oil industry faces a dead-end situation: a low oil price will arrest fossil fuel investment, while a high oil price will accelerate the transition towards renewable energy. In either case, the economic pressure on oil companies increases.

Read the full article (in German) here.

The End of the Fracking Business

A new Energy Watch Group study on the consequences of and current developments in fracking

Berlin, 19 March 2015: A new Energy Watch Group (EWG) study that examines the consequences of fracking in the United States warns strongly against the expansion of shale gas extraction in Germany and Europe. The costs and environmental damage produced by fracking are out of all proportion to the amount of raw materials extracted.

End of the Fracking Boom

Fracking entails enormous environmental destruction, a high consumption of groundwater and large-scale sand mining. What’s more, the indebtedness of companies in the fracking industry is steadily increasing. The drop in petroleum prices since autumn 2014 –a phenomenon related to the financial depreciation of oil and gas reserves – has caused financial problems for many companies. The shale gas industry is not doing well. Mass layoffs and bankruptcies reveal the true story behind the rosy picture of a reliable and long-standing boom in the fossil economy.

Thus far, fracking on a commercially relevant scale has occurred primarily in the United States. In 2005, then-President George W. Bush loosened the environmental regulations for the fracking of crude oil and natural gas. As a result, US gas production has been rising steeply ever since. This has enticed many to believe the fallacy of a supposedly decades-long oil and gas fracking hype.

Expansion in Europe

The study provides an overview of the consequences of a possible expansion of shale gas extraction in Germany, based on the American experience. The apparent success overseas cannot be transferred 1:1 to Europe, where other conditions prevail. No promising shale gas deposits are available here, nor are the infrastructural requirements comparable. In the EU, fracking has very low potential. Nonetheless, politicians – particularly the new EU Commissioner for Energy, Maroš Šefčovič – want to proceed with gas extraction through fracking at all costs. “The US experience shows that short-term success was bought at the price of extensive collateral damage. Last year, New York enacted a ban on fracking. And in Germany, fracking will not be able to play nearly the role it’s played in the US. It’s pure illusion to believe one could repeat the US successes and at the same time minimize the associated environmental effects. France has already imposed a fracking ban, and several other EU countries have instituted a moratorium. Why should Germany take the risks when the energy and climate policy debate requires other measures anyway?” asks Dr. Werner Zittel, the study’s author and head of the Ludwig Bölkow Foundation.

Since December 2014, the proposal for a controversial fracking law has been under discussion. This month, the German Bundestag will begin deliberations on the fracking regulations. This special situation, which calls for a socially responsible decision compatible with climate policy, inspired the Energy Watch Group to prepare a provisional report. “It is completely incomprehensible that a government policy for fracking still dominates from Brussels to London to Berlin, at the expense of environmental protection and against the will of the affected population, while at the same time putting continued pressure on the expansion of renewable energies.”, says Hans-Josef Fell, President of the Energy Watch Group.

The EWG study (in German) can be accessed here.
The English summary of the study can be accessed here.
Here you can read the EWG press release in German.