David Cameron has told the World Economic Forum that Europe will need to provide cheap and predictable sources of energy in order to encourage businesses to relocate- including shale gas - and that burdensome regulation could drive investors away.

Describing renewables as a vital part of the future, the Prime Minister said that while he understand the concerns over the technology, Europe needed to explore the opportunity represented by shale gas.

This included putting the right regulations in place – such as ensuring that well casings are set at the right depths with tight seals - and Government reassurance  that nothing would go ahead if there were environmental dangers. However, if this was done properly, shale gas could actually have lower emissions than imported gas.

Mr. Cameron said that while the announcements from the European Union this week represented important progress, there was still a way to go in “really embracing” the opportunity, commenting:

"We should be clear that if the European Union or its Member States impose burdensome, unjustified or premature regulatory burdens on shale gas exploration in Europe investors will quickly head elsewhere. Oil and gas will still be plentifully produced, but Europe will be dry.”

Shale gas key to re-shoring jobs in Europe

Commenting on a reversal of the practice of offshoring where companies move production facilities to low cost countries, the Prime Minister said there was now the opportunity for the reverse with jobs to return by reshoring. Flagging up a survey of major US-based manufacturing companies which had found that more than a third were planning or actively considering shifting production facilities from China to America, he said a recent forecast had suggested millions of jobs could be available for re-shoring globally.

Mr. Cameron said:

“There is no doubt that when it comes to re-shoring in the US, one of the most important factors has been the development of shale gas, which is flooring US energy prices with billions of dollars of energy cost savings predicted over the next decade.”

“Just look at what shale gas has done for America – for American firms and American jobs.”

“It has reduced industrial gas prices in America to about one quarter of those in Europe and it’s set to create a million more manufacturing jobs as firms build new factories.”

“A recent study suggests that US GDP is going to be to on average close to half a trillion dollars higher every year between 2008 and 2035 because of shale.”

NGO says Cameron turns "blind eye" on impacts of UK shale gas

However, commenting on David Cameron’s warning to Brussels today not to stand in the way of fracking, Friends of the Earth Head of Campaigns Andrew Pendleton said:

 “Yet again the Prime Minister has turned a blind eye to expert advice on the impacts of UK shale gas. Industry experts have warned that fracking won’t lead to cheaper fuel bills, and only last week BP said switching to shale gas will do little to cut emissions. The best way to create jobs, boost the economy and tackle rocketing fuel bills is to invest in energy efficiency and develop the UK’s world class renewable power potential.”

Lords to hear from Minister of Environment and CEO of Enviroment Agency on shale gas impacts

The House of Lords Economic Affairs Committee separately announced today that it will take evidence on the issue from Owen Paterson MP, Secretary of State for Environment, Food and Rural Affairs at Defra and Paul Leinster, Chief Executive of the Environment Agency. 

The evidence session will be the last in the Committee’s inquiry into the potential impact of shale gas and oil on the UK economy.

 Areas the Committee will cover with the witnesses include:

• What role Defra and the Environment Agency have in regulating shale gas development in the UK and what their organisations' priorities are in delivering that regulation.
• Do opponents of fracking have legitimate environmental concerns? Have some fears been exaggerated?
• What policies exist to prevent groundwater contamination from shale gas extraction, which has been described as the ‘biggest environmental risk’ of fracking.
• How the current environmental permitting process works and how UK regulation works within the framework of European legislation.
• As an MP for a constituency where shale gas extraction may occur, what does Mr Paterson think about local opinion on fracking in North Shropshire? Is a one percent share of revenue sufficient to overcome local opposition?
• How will the UK’s high population density impact on the potential for the development of shale extraction.

The evidence session will start at 4pm on Tuesday next week  - watch the session live on the internet at www.parliamentlive.tv