Environmental Impact Assessment for Fracking Projects: European and Austrian Perspectives

Given the recent turbulence on the European gas market, the need for Europe’s natural gas autonomy is being discussed more than ever. To satisfy gas consumers’ demands, the exploration and exploitation of Europe’s unconventional gas resources, such as shale gas, is an oft-suggested alternative to gas imports.
Even though Austria has material resources of shale gas, Austrian policy-makers tend to take a critical view to efforts to exploit shale gas resources within Austria.

Shale gas and how to exploit it

Shale gas is a form of natural gas that is trapped within a depth of 1,500 to 3,000 metres beneath the surface within shale formations of the so-called source rock. Due to the tight and impermeable nature of source rock, shale gas accumulates within small pores and fissures of the bedrock (so-called unconventional resources as opposed to natural gas formations that accumulate in large reservoirs).

To release the trapped gas, a mining technique called hydraulic fracturing (“fracking”) was developed. Frac-fluid, consisting of water, sand and chemical additives, is inserted with extremely high pressure into a drilling hole, fracturing the bedrock and thereby creating pathways for the natural gas.

Critics of this technique argue that fracking may have a severe detrimental impact on the environment, especially as the frac-fluid contains chemical substances that may drain and pollute ground water resources. These concerns led to a pan-European discussion whether fracking should be subject to a mandatory environmental impact assessment (“EIA”).

European legislation

Under the EU’s directive on the assessment of the effects of certain public and private projects on the environment as of 13 December 2011 (2011/92/EU; EIA-Directive) member states must scrutinise certain intended projects (listed in Annex I of the EIA-Directive) for their environmental and public health effects. The results of the wide consulting procedure conducted during the EIA (including the interested public and experts of all affected fields of science) will form the basis for the authority’s decision whether to licence the intended project. Under the EIA-Directive, projects for the extraction of natural gas exceeding 500 cubic meters/day are subject to a mandatory EIA. However, fracking projects often cannot be subsumed under this legal test as the average amount of shale gas gathered through fracking mostly remains under this threshold.

The heavy criticism with regard to the effects of fracking also induced a debate in the European Parliament whether to enact a mandatory EIA for fracking projects. With a slight majority, in October 2013 the European Parliament passed an amendment to the EIADirective under which the exploration and extraction of shale gas by fracking shall be subject to a mandatory EIA, regardless of the amount extracted. However, the Council did not approve the proposed amendment. Therefore, the most recent amendment of the EIA – Directive (2014/52/EU) leaves the European legislation on fracking unaltered. As before, member states enjoy the discretionary right to decide whether deep-drilling projects, such as exploiting shale gas by fracking, shall be subject to an EIA.

Consequentially, on 22 January 2014 the Commission released a recommendation (2014/70/EU) in which it sets out minimum principles that should be taken into account by member states when applying or adapting their regulations on fracking and the exploration of shale gas. Among others, the Commission suggests that member states prepare a strategic environmental assessment prior to granting licences for exploration and/or exploitation of shale gas and ensure that an EIA is carried out. However, as this recommendation is not binding, the member states have discretion whether to follow the Commission’s proposals.

The Austrian legal framework

With a recent amendment (BGBl I No ⁷⁷⁄₂₀₁₂) to the Austrian Environmental Impact Assessment Act (Umweltverträglichkeitsprüfungsgesetz “UVP‑G”), Austria opted for an obligatory EIA for fracking projects. However, the Austrian provision is ambiguous as to the scope of its application, leaving it unclear whether only the process of fracturing or already the exploration of unconventional gas resources and respective test drillings are subject to an EIA.

Based on the materials to the amendment, it can be inferred that all activities pertaining to the exploitation of unconventional gas resources are subject to an EIA. Therefore, already exploratory and test drillings for a future exploitation by fracking must be licensed under the UVP‑G.
This wide scope of applicability of the UVP‑G has led to criticism of stakeholders of the energy industry. They argue that no severe environmental impacts may be expected from exploratory test drillings, especially as frac-fluid is not used at this stage. Still, there is a wide political consensus that fracking projects should be subject to a strict assessment; some politicians also argue for a total prohibition (as discussed in Voralberg with connection to fracking projects at the Bodensee/Lake of Constance).

The mandatory EIA has already claimed its first victim. Following the enactment, the Austrian energy undertaking OMV decided to cease its plans to exploit a shale gas resource in Lower Austria due to economic inefficiency. Also due to the political environment, possible future projects face a strong headwind.

Conclusion

With the enactment of the mandatory EIA for fracking projects, Austria expressed its commitment to preserve the environment against possible adverse effects connected with the fracking technique. However, it can be discussed whether it was appropriate to apply the EIA requirement to mere exploration activities. By enacting such strict provisions, Austria seems to be inhibiting attempts to explore and exploit shale gas resources in Austria. This legislation seems adverse to European and national efforts to increase energy autonomy.

By enacting strict provisions concerning the licencing of fracturing projects, Austria seems to inhibit attempts to explore and exploit shale gas resources, which might have adverse effects on efforts to increase energy autonomy.

authors: Bernd Rajal, Mark Tuttinger