The COP 20 in Lima, and New York’s recent decision to ban fracking, has elevated discussions about alternative energy sources, an issue addressed at the AIIA, KAS and University of Melbourne expert workshop on climate change. 

Shale gas, fracking, and renewable energy comprise three alternative energy sources that have attracted increased attention. All three sources contain a range of competing strengths and limitations.

Unconventional gas is defined by its geology, not its gas type. Shale gas, which is natural gas trapped in shale formations, has become an important source of unconventional natural gas. Worldwide interest in shale gas has grown, with substantial reserves identified in Europe, Australia and Asia.

Since the development of hydraulic fracking extraction technology in the 1940s, gas has emerged as a potential alternative to coal in the past few decades. Fracking is a method of extraction in which fractures are induced in rocks by injecting them with high pressure liquids. Concerns about fracking include community, health and environmental issues, especially regarding the contamination of water and wastewater disposal.

By replacing coal with gas, shale gas and fracking represent a practical way of reducing emissions, as gas produces fewer greenhouse gases than coal. However, the amount of gas available for use is speculative, and an increase in its use could threaten the viability of renewable energies by diverting investment away from research and development.

The USA is currently the leading producer of shale gas, and is poised to become a net exporter rather than an importer. However, it is unlikely that the business model can be replicated elsewhere due to the existing political and economic context surrounding gas and oil.

In Germany, where renewable energy has gained much more domestic support, power producers have invested heavily in gas plans. However, they have met difficulties trying to combat low CO2 prices. The addition of renewable energies, such as wind and solar PV, will have a drastic impact on the electricity market. However, they are heavily dependent on environmental factors such as sun exposure. The fluctuation of energy supply is therefore a technical challenge. Despite this, as of 2013, 70% of Europeans still remained committed to renewable energy resources, while less than 10% prioritise shale gas or other gas alternatives.

With the discovery of domestic natural oil and gas reserves in the 1960s and 1970s, ASEAN member states began to shift away from nuclear energy alternatives and towards fossil fuels. In Malaysia, energy production has traditionally revolved around oil and natural gas. However, limited oil and gas reserves have compelled governments to look elsewhere for energy alternatives. Today, ASEAN states like Malaysia have begun to turn towards investment in renewable energy, with the target of having renewable energy sources provide 15% of total electricity.

Unfortunately, energy policy (especially around renewables) is still a relatively new development in Asia. In some ASEAN states, such as Malaysia, policies are still quite fragmented, with planning occurring mainly around peninsular areas that are more susceptible to the impacts of climate change. Regional power companies are pursuing nuclear and other technologies, illustrating tensions between old and new energy sources.

Discussion around the topics of shale gas, fracking and renewable energy reveal uncertainty around the path forward from fossil fuels. Although shale gas presents a viable alternative to coal, with low carbon output, skepticism still exists around the economics and risks of gas extraction. If the USA becomes a net exporter of gas, shale gas has drastic implications for international trade and for the development of renewable energy technology. Elsewhere, fragmented energy policies highlight apprehension about the viability of renewable energy development.

Krislyn Tan is a former intern with the Australian Institute of International Affairs, National Office. This article can be republished with attribution under a Creative Commons Licence.

This is the first in a series of three articles responding to key issues at the COP 20 in Lima as well as the AIIA expert policy workshop on climate change issues. This workshop was run in conjunction with the EU Centre on Shared Complex Challenges at the University of Melbourne and Koran Adenauer Stiftung on 17 and 19 November 2014.