Guest article by Matthew Bach
The rise and possible fall of unconventional gas sources in recent years has been widely debated. In this guest posting, I have invited Matthew Bach, of Erasmus University, in The Netherlands, to evaluate the efficacy of certification mechanisms to ensure improved environmental and social performance of the shale gas sector.
There is no other way to put it, shale gas – and especially its extraction – is highly controversial.
Politically, it has pitted supporters and opponents against each other, creating tensions between national and local governments, and generally fostering an atmosphere of animosity and distrust.
Such conflicts have had the unfortunate consequence of precluding something that we sorely need: an inclusive, open and science-based dialogue.
This is all the more essential given the havoc that shale extraction can wreak on our communities and the environment, should it be undertaken haphazardly and without appropriate oversight.
So far, traditional governance approaches have failed to reign in these issues and, with the prospect of shale going global, it is vital to take the bull by the horns and to put in place effective governance systems.
Building on successful programs in forestry and mining, certification is emerging as a possible solution that could fill this gap within the shale gas sector as well (as exemplified by efforts such as the Center for Sustainable Shale Gas Development).
Uncertainty & the need for better governance
Hyperbole is at the heart of the debate over shale gas: for those opposing it, the future of the planet is at stake, while the economy itself hangs in the balance for those in favour. This only complicates an already convoluted picture, in which our knowledge of risks remains imperfect.
How we have been governing shale gas also bears the mark of this uncertainty. Governments struggle to balance the demands of a determined grassroots opposition with those of powerful vested interests, and short-term economic returns with the long-term well-being of citizens.
It is in this regard that avoidance has emerged as a hallmark strategy, either by design through bans and moratoria or by default through the absence of policies and regulations. Nevertheless, burying our heads in the sand will do little to solve the issues linked to shale gas in the long-run.
Certification as a silver bullet?
From mining to forestry, third-party multi-stakeholder certification has been used to address the negative consequences of economic activities, as well as persistent gaps in their governance calling for greater accountability, transparency and inclusivity.
A certification process unfolds over three phases. The involved parties begin by ‘setting’ a standard that will be capable of addressing the problem that brings them together. The standard is then translated into ‘criteria’ to assess compliance through an on-the-ground ‘assurance’ process.
The process does not end here; a certification program needs to carefully monitor and evaluate its impacts, as well as establish mechanisms for learning and improvement to ensure it is effective. Most successful initiatives make use of the best practices standardized by ISEAL Alliance.
Certification has a leg up over other forms of voluntary regulation, such as codes of conduct or reporting standards, in that it does not rely solely on goodwill: the assurance process means that compliance is assessed and those who fail to meet the mark can be sanctioned.
Another advantage of certification is its use of markets to generate incentives: firms benefit from price premia, improved reputation and lower litigation risks. Additionally, inclusive and transparent standard setting can generate the accountability and legitimacy that other approaches lack.
Certification might not be a silver bullet, but it has a recognized potential to promote the adoption of higher standards, while circumventing policy gridlock and redressing democratic deficits.
Learning from other sectors
Other natural resource sectors can offer insights into the effectiveness of certification, as it has only recently been applied to shale gas. Particularly relevant examples are found in the forestry, mining and conventional oil & gas sectors, which have experienced a much higher uptake, while facing many of the same social and environmental challenges.
Forestry is perhaps the most mature of these (the Forest Stewardship Council was founded in 1993), followed by mining which has recently witnessed rapid growth in the number and scope of initiatives. Though the conventional oil & gas sector is the least developed of the three, it yields important insights given its overlaps with shale gas and other unconventional hydrocarbons.
Though differences emerge along a number of dimensions – of which the nature of the resources (renewable or not) or their ownership structures (concentrated versus distributed) – they remain broadly comparable in terms of the issues that certification addresses within them. These can be bundled into social, environmental and operational categories (Figure 1).
Learning from shale gas stakeholders
It might appear as good news that the full range of issues addressed by certification in other sectors is applicable to shale gas, but in practice shale gas stakeholders take a much narrower view whether from industry, government or civil society.
Environmental and operational issues are widely discussed and there is even a degree of consensus over good practices, especially concerning air and groundwater pollution. Even so, issues such as the protection of sensitive ecosystems or biodiversity have been neglected.
Social issues, however, are largely a fringe concern beyond general calls for community engagement. In fact, stakeholders have avoided discussing problems linked to human rights, property rights or working conditions which has led to mixed perceptions of the sector in many communities.
Taken together, these discrepancies reveal a very real gap in the governance of shale gas, which certification could fill as it has in other sectors.
When it comes to any form of natural resource exploitation, prioritizing rapid economic gains over social and environmental considerations is a strategy headed for failure. And yet, waiting for complete scientific knowledge to enact better governance is neither realistic nor necessary.
Certification has shown itself capable of charting a course through situations fraught with uncertainty and conflict, towards appropriate production in such sectors as forestry, mining and conventional oil & gas. This has been achieved by:
- Bringing diverse stakeholders to the table to set higher standards;
- Ensuring rigorous compliance through on-the-ground assurance procedures;
- Evolving in step with the targeted issues through robust mechanisms for monitoring and evaluation.
At the same time, certification has developed a track record of success in precisely those areas currently missing from shale-related governance efforts – namely, all manner of social impacts – as well as in others that have received insufficient attention.
There is therefore a distinct possibility that certification could be used to achieve better shale gas extraction.