BERLIN (Bloomberg) — Chancellor Angela Merkel’s coalition is set to ban shale gas fracing in Germany, passing legislation in parliament on Friday that is set to end years of discussion over whether the nation should follow the U.S. in launching a boom in drilling.
Merkel’s coalition of Christian Democrats and the Social Democrats will use their majority to amend natural gas extraction rules, in effect banning the unconventional method of tapping oil and gas deposits not reachable with traditional methods, according to a draft bill obtained by Bloomberg News. Conventional fracing that doesn’t involve extraction from shale may be continued to be practiced under strict rules, the draft shows.
The lawmakers moved quickly after a report that companies such as Exxon Mobil Corp. and Wintershall AG, which sought licenses for exploration, were preparing to move ahead. As long ago as 2014, Merkel’s coalition prepared an mining amendment that would allow shale fracing below 3,000 m under certain geological conditions. The government wanted the companies to hold off on projects until after the amendment was passed.
“We have a new situation where industry said that without any legal rules, we’ll simply start making requests,” said Volker Kauder, parliamentary chief for Merkel’s Christian Democratic-led bloc, in comments to reporters this week in Berlin. “Therefore we had to act.”
Lawmakers from Merkel’s caucus debated the shape of fracing rules as the technology took off in the U.S., providing a dramatic expansion in fossil-fuel production. The government is coming down on the side of environmental groups concerned with the impact of fracing and seeking to rein in pollution. Industry groups such as the BDI lobby backed fracking, noting in a 2014 report that cheaper cheap in the U.S. could pose a competitive threat to Germany.
Yet hydraulic fracing — pumping water, chemicals and sand to get oil and gas trapped deep beneath rock layers — is deeply unpopular in Germany. Opposition to easing drilling rules has prompted criticism from mineral water makers to beer brewers and citizen groups worrying about earth tremors caused byfracturing bedrock.
Industry is looking for ways to curb electricity prices, which are higher than in the U.S. Germany draws just 5% of its annual natural gas usage from its own sources, mainly from conventional drilling in Lower Saxony.
Germany’s moratorium on fracing and regulatory uncertainty has lost the country 1 billion euros ($1.13 billion) of investment in the gas industry, Martin Bachmann, a board member Wintershall, the oil and gas unit of BASF SE, said in September.
In a comment as recent as April, Dow Chemical Co. CEO Andrew Liveris said the German government should work harder to explain how natural gas can be safely extracted from shale rock to provide cheap energy and jobs.
The draft amendment on which lawmakers will vote Friday in Berlin will:Ban uncoventional fracing nationwide, excepting 4 test probes for scientific purposes. Lawmakers to review the ban in 2021. Give Germany’s 16 state govts a veto right in whether to allow conventional fracing on their territory. Conventional drilling not permitted in zones supplying water for consumption.
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