Davey drops Cameron’s fracking prices pledge

Ed Davey has dismissed the prime minister's claim that fracking has potential to "drive energy bills down" in a speech on shale gas development.

The Liberal Democrat energy and climate change secretary confirmed reports of a shift away from David Cameron's line in his address at the Royal Society in central London.

Cameron had sought to win public support for a wave of hydraulic fracturing across northern England in a newspaper article last month, by pointing to the likely positive impact consumers could see in their energy bills.

Last week the Ecologist reported officials at the Department for Energy and Climate change (Decc) were moving away from using the argument, preferring chancellor George Osborne's approach of sounding "a firmly positive note without mentioning price".

Now Davey has addressed the issue of price head-on – and conceded British shale gas development would only have a limited, uncertain effect on prices.

His speech emphasised the small-scale of British shale gas deposits compared to those in the United States, where exploitation of the resource has had a significant effect.

Limited gas exports have ended the US' complete isolation from other markets, but it remains broadly separate from the European market into which shale gas would be introduced.

"North Sea gas didn't significantly move UK prices – so we can't expect UK shale production alone to have any effect," Davey said.

"But given there are plenty of demand-side upward pressures on gas prices, as we've seen so painfully in recent years, shale gas is well worth pursuing simply to have more supply-side downward pressure on prices.

"For if Britain can lead in Europe and can show a lead on how shale can be done safely, and as part of a complete shift away from coal, shale gas production might take off not just in the UK but across Europe."

Supporters of shale gas in Britain accept there are unlikely to be any short-term positive benefits, but development in Poland and elsewhere could eventually result in a shift.

Wholesale gas prices have risen by 50% in the last five years, leading Davey to conclude: "Frankly… any downward pressure that can be exerted on prices will be welcomed by consumers and industry alike."