US carbon emissions have hit a 20 year low. This is due in large part to the switch from coal to natural gas as an energy source. Fracking technology has enabled access to natural gas and oil reserves at much lower cost providing access to huge resource reserves. But many believe the price to access these energy reserves is too high- not in monetary costs, but in environmental and health costs.

What is changing?

Fracking, or hydraulic fracturing technology, has provided access to vast oil and natural gas reserves previously thought to not be economically viable.  The US has been aggressively utilising this technology to exploit new energy reserves.  Largely touted as an economic boom for the US- it has lowered overall energy costs, lowered carbon emissions, and provided wealth to individual landowners leasing their land to the energy companies in exchange for royalties.

Industries, including transportation, manufacturing, petrochemicals, in addition to the energy industry, are transforming to take advantage of natural gas as a cheap plentiful energy source.  Trucks are changing over to LNG (liquefied natural gas) which is cheaper than diesel fuel and less polluting.  Large manufacturers in power intensive industries (steel, mining, automotive plants) are changing their power source from coal to natural gas lowering their utility bills and overall costs.

Natural gas production in the US increased nearly 8 percent in 2011, the largest gain ever. US oil production has increased in each of the last three years, reversing decades of declining output.  The state of North Dakota is now a larger producer of crude oil than Ecuador, a member of OPEC.

Many in the US hail this as a way to reduce the US reliance on foreign energy reserves and ensure future supply.

However, environmentalists and communities are raising environmental and health concerns.  Many believe the costs of extracting the resources may simply be too high.  Reports are increasing of contaminated water, health related issues, environmental pollution and recently fracking has been linked to earthquakes.  The long term impacts of pumping large amounts of chemical laden water under very high pressure, miles underground is simply not known.

Why is this important?

The past has shown the environmental impact of industry and technology is often unknown for years.  As fracking increases, both in the number of wells and the volume of production, concern is growing about the damage to natural environments, the impact on communities including the water supply, and the impact on individual health with many living near or on land with wells reporting health problems.

The volume of truck traffic to build and operate a well, the noise during construction and operation, and the possible contamination of the water supply are all community concerns.

The decision of a single landowner to lease his land for a well can impact an entire community.  The volume of truck traffic to build and operate a well, the noise during construction and operation, and the possible contamination of the water supply are all community concerns.  Some communities are experiencing an economic boom with workers arriving to work in the industry. Locals also benefit often getting high paying industry jobs.  But it also strains the local infrastructure with no one wanting the low paying retail or restaurant jobs which are badly needed to service the community. Many communities while having low unemployment also experience housing shortages (driving up housing prices for the locals) and overcrowding in the schools.  And what happens when the boom is over?

Other countries are watching what has happened in the US.  The UK and Australia have vast natural gas reserves which could be exploited as well, but France and Bulgaria have banned fracking. Countries and states in the US are examining legislation to allow or prevent the technology.

On the one hand, concerns over carbon emissions from coal and global warming, make fracking and a switch to natural gas seem like a positive alternative.  On the other side, the negative impacts on the environment, including the release of methane in the process, and contamination of the water supply may be worse than continuing to use coal.  Investment in fracking and natural gas also diverts resources and focus away from investment in non fossil fuel energy alternatives.

Community groups and environmentalists are lining up on one side of the debate with the energy companies on the other.  Clearly more needs to be done to understand the economic, social and environmental impacts of this technology.

By Elizabeth Rudd

About the author

Elizabeth has a strong background assisting clients to navigate the often conflicting signals in their external environments and find innovative opportunities . As a strategic foresight consultant at FutureNous she has assisted organisation to explore the future to find new products, alter their business model, find expansion opportunities and build their resilience. Her experience spans many industries including technology, mining, utilities, healthcare, non-profits, government, media and telecommunications, and many others. Elizabeth also works with Shaping Tomorrow writing Trend Alerts and more in-depth reports exploring the impact of long term (macro) trends.