The controversial European Union-Canada Comprehensive Economic and Trade Agreement (CETA) a proposed free trade and copyright agreement between Canada and the European Union, could threaten the ability of European countries to implement hydrolic fracking bans and regulations. The agreement states that impeding Canadian companies from fracking for shale gas, could potentially make the impeder face lawsuits under a far-reaching investment clause placed in the CETA draft. The proposed provision could enable energy and extractive companies to challenge bans, moratoria and environmental standards across the EU. Further, such policies give Canadian companies the possibility to call for millions of euros of compensation to be paid by European taxpayers.
Economists and many energy-intensive industries have called shale gas drilling a “game changer.” The industrialization boost seen in the U.S. recently, is partly due to an increase exploration and extraction of natural gas. Fracking has brought a boom in energy production in the states of Pennsylvania, Texas and Colorado, and has further lowered natural gas prices by 20%. It is expected that shale gas drilling will help European businesses compete with their American counterparts.
According to a recent report published by KPMG international, the consultancy group called the shale gas development in Europe inevitable. However, geological, economic and regulatory obstacles have affected European exploration for natural gas. The report stated, for example, that shale gas layers are on average 50% deeper in Europe than in North America, while production costs could be at least 40% higher. Moreover, experts have found both environmental and health problems related to fracking practices. For instance, the International Energy Agency predicts that if all the world’s energy came from fracking, even the greenest and efficient drilling of the fuel could help raise global temperature by 3.5 – 4 degrees.
Nathalie Bernasconi Osterwalder, a senior international lawyer for the International Institute for Sustainable Development, stated that foreign firms, however, will not be above the law. “Consideration would have to be given to whether the bans or moratoria had been in place when the CETA entered into force.” Yet, for countries that do not have a definite stance on fracking, will be faced with problems in the future. If a European government, for example, revoked already approved drilling licenses because of environmental concerns, the government in question could be held culpable for violating the profit expectations of investors under the CETA draft.
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