Regulation of Shale Gas in the United Kingdom and its Potential to Inform the EU-Level Harmonising Measures in the Future

Summary

ABSTRACT

This chapter evaluates the consistency of the United Kingdom (UK) regulatory framework on shale gas with Commission Recommendation 2014/70/EU on minimum principles for the exploration and production of unconventional oil and gas. In the absence of European-wide legislation, European Union (EU) Member States have the right to determine the conditions for exploiting their unconventional energy sources. However, due to the environmental and human health risks associated with hydraulic fracturing, the EU has expressed its interest in ensuring adequate protection of the environment and to creating clear and transparent common standards for the benefit of operators, investors and the public while promoting the interests of those Member States which are currently exploring unconventional energy. It can be argued that the UK regime has been designed to address the environmental risks arising from hydraulic fracturing operations and as such it sets a high environmental threshold for operations. In fact, the UK legislation appears to be more comprehensive than in many other jurisdictions commercially exploiting shale gas, and therefore it has a potential to inform the content of any future harmonising measures on the exploration and extraction of such resources at the EU level.

INTRODUCTION

The focus of this chapter is the compatibility of the United Kingdom (UK) regulatory regime for shale gas with Commission Recommendation 2014/70/EU on minimum principles for the exploration and production of unconventional oil and gas. Although a set of energy rules exists at the European level, Member States’ approaches towards regulation of energy has varied considerably due to the division of competencies in the field of energy before the Treaty amendment in 2009. Following this, the EU institutions now have the powers to legislate in respect of energy under Article 194 of the Treaty on the Functioning of the European Union (TFEU), meaning that competence in the field of energy is shared between the European Union (EU) and Member States. However, apart from several environmental Directives, no specific European-wide regulatory framework on shale gas exists. In practice, this has been understood to mean that each Member State has the right to determine their own conditions for exploiting their unconventional energy resources. The Commission has nevertheless indicated its interest in creating a harmonised European legal framework for energy.