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Czech Republic: Debate on shale gas extraction

The prospects for shale gas extraction have raised hopes for energy independence in countries around the globe. In the United States in particular, shale gas has meant a fundamental change in the energy balance, turning the country from a gas importer to an exporter and boosting domestic manufacturing. Poland saw great initial enthusiasm, unleashed by estimates that the country was sitting on the largest shale gas reserves in Europe, and by expectations of cutting dependence on Russia and greenhouse gas emissions. But new laws prompted the biggest companies to quit the country, arguing that the rules are too strict in light of the country's geology.

In the Czech Republic, shale gas extraction is only at the research stage, and according to the Ministry of the Environment, there are “no known deposits of shale gas in the Czech Republic yet.” Even so, the subject is already creating fierce discussion.

A group of senators last year proposed a ban on hydraulic fracturing. They're joined by representatives of local authorities, who will have a powerful voice in the debate.

Since the original purpose of the act was to protect nature and landscapes, the original version prohibited all methods of hydraulic fracturing in the extraction of mineral resources. Parliamentary committees later modified the proposal to a ban on the use of hydraulic fracturing in exploration and extraction of shale gas in particular.

The arguments for the ban include high water consumption, the unknown composition of the chemicals used, and risks including earthquakes, water and soil contamination, explosions, irreversible landscape changes and radiation leakage. The potential dangers have also been highlighted by President Miloš Zeman, who said “shale gas extraction is not suitable for a country so densely populated such as the Czech Republic.”

The proposal is purportedly based on an EU directive, which guarantees member states the right to refuse permission for extraction. Its authors propose fines of up to one million Czech crowns (EUR 40,000) for violations, and do not expect any impact on the national budget or on the business environment.

What to expect next?

Negotiations on the act have been postponed until the approval of the State Raw Materials Policy, which has been delayed due to a critique from the Ministry of Environment and certain environmental organizations, and due to pending amendments of the Mining Act.

However, once the bill is approved by the lower house we predict that the Senate will approve it: Senators are mostly local politicians, who often find themselves under a lot of pressure from their voters to implement “not in my backyard” policies. This attitude is further supported by mayors and local politicians.

The previous caretaker government did not take any decision relating to the State Raw Materials Policy or the related State Energy Concept, saying it wanted to leave the decision to a new government with a proper political mandate. While the new Sobotka government hasn't taken a position on the issue, it will have to take local administrations' opinions into account, and thus it will have to consider the Senate’s proposal when setting energy policy.

Authors: Karolina Kristanova (kk@cecgr.com) & Vaclav Kopecky (vk@cecgr.com)