Scotland will miss out on billions of pounds and thousands of jobs from fracking while England “reaps the benefits”, a petrochemical giant has said after SNP ministers banned the practice north of the Border.
Paul Wheelhouse, the Scottish Energy Minister, told MSPs that the controversial shale gas extraction technique “cannot and will not take place in Scotland.”
In a statement at Holyrood, he said an existing moratorium on fracking, which has been in place since 2015, would continue “indefinitely” after a consultation showed “overwhelming” opposition.
But Ineos, the operators of the huge Grangemouth petrochemical plant, which is responsible for 4 per cent of Scotland’s GDP, said the decision “beggars belief” and accused the SNP of having “turned its back on a potential manufacturing and jobs renaissance”. It predicted £33 billion would be invested in England over the next two decades, with Scotland losing out on 3,100 jobs as the North Sea oil industry continues to decline. The company, which holds fracking exploration licences across 700 miles of Scotland, also warned it was weighing up its legal options, including whether to sue the Scottish or UK governments over £50 million of lost investment.
Environmental groups welcomed the decision but the Conservatives and GMB trade union argued it would wreak major economic damage. They also claimed it was hypocritical for the Scottish Government to allow the import of US shale gas to Grangemouth, while banning its extraction. The ban will be confirmed by a vote in the Scottish Parliament later this year but, with only the Tories opposed to a ban, it is likely to be a formality.
Although energy policy is reserved to Westminster, Scottish ministers’ control over the planning system means they can block any application to frack.
The Scottish Government has previously imposed a similar block on underground coal gasification (UCG), a separate technique used to extract gas from coal seams underground.
The announcement on fracking came almost exactly a year after UK ministers gave the go-ahead to horizontal fracking in Lancashire but Mr Wheelhouse said the public consultation showed 99 per cent of the 60,000 respondents wanted it outlawed.
He cited research showing fracking would add only 0.1 per cent to Scotland’s GDP and be concentrated around densely populated areas of central Scotland around former coalfields and oil shale fields.
Highlighting public opposition, he said: “There is no social licence for unconventional oil and gas to be taken forward at this time, and the research we have conducted does not provide a strong enough basis from which to adequately address those communities’ concerns.”
He said local authorities would be instructed to continue this moratorium "indefinitely" - calling this "action sufficient to effectively ban the development of unconventional oil and gas extraction in Scotland".
But Tom Pickering, Ineos Shale’s operations director, said: “It is a sad day for those of us who believe in evidence-led decision making. The Scottish Government has turned its back on a potential manufacturing and jobs renaissance and lessened Scottish academia’s place in the world by ignoring its findings.”
He added: “It speaks volumes about Scottish leadership on the world stage and sends a clear and negative message to any future investors in Scotland. Expert reports have clearly stated that this technology can be applied safely and responsibly – but it will be England that reaps the benefits.”
Mr Pickering also refused to rule out legal action, telling the Daily Telegraph: “We are a commercial business who has invested in a regime under a government licence and then to be faced with this decision, we have got to consider that. I won't rule out anything at this stage we will weigh up the options."
Gary Smith, the GMB union's Scotland secretary, accused the Scottish Government of being "dishonest and hypercritical", adding: "Scotland is importing a huge amount of shale gas from Trump's America.
"If the government wants to be consistent, it will now ban shale gas imports, threatening a huge number of job losses. The government has failed to explain where the two million households in Scotland using gas to heat their homes will get gas from in the future."
Ken Cronin, chief Executive of UK Onshore Oil and Gas, said: "The Scottish Government ignores the advice of its own independent experts and prefers a future where gas will have to be imported with the damage that will do to the economy and the environment.
"It turns its back on job creation, skills development, an increase in tax receipts and investment in communities. Over the last 20 years, 30 wells have been drilled and produce gas within the Central Belt, without any impact to the natural environment or public health."
Murdo Fraser, the Scottish Tories’ Shadow Finance Minister, said: ““This is a short-sighted and economically damaging decision which is nothing more than a bid to appease the green elements of the pro-independence movement.”
But Labour and the Scottish Greens called for the ban to be enshrined in legislation as the indefinite moratorium could be “overturned at any point at the whim of a future minister” or “open to challenge by large companies such as Ineos."
Mary Church, Friends of the Earth Scotland’s head of campaigns, said: "This is a victory for the environment and for local communities fighting fracking. The Scottish Government's decision today to ban fracking will be warmly welcomed across the country and around the world.”