Sustainable fracking investments?

Shale gas is presenting investment opportunities for mainstream investors, but can sustainable investors take advantage of this rapidly expanding form of energy production?

Shale gas extraction – or fracking as it is also known – has been heavily criticised by environmental campaigners for presenting ‘numerous environmental, safety and health hazards’.

Large amounts of high pressure water is used to shatter shale rocks and release natural gas which is then piped up to the surface, which can cause toxic sludge to rise to the surface or even trigger minor earthquakes.

Fracking has even been associated with flammable gases entering the water system and coming out of household taps.

According to Impax Asset Management, shale gas could provide investment opportunities for sustainable investors.

While some will feel that the controversial form of gas extraction should not feature in any sustainable portfolio, Impax have identified opportunities in the improvement of water treatment and waste from the shale gas industry.

Increasing production efficiency and ensuring better compliance in an industry facing much stricter future regulation, could also present opportunities for sustainable investors according to the firm.

Bruce Jenkyn-Jones, managing director of the Listed Equity team at Impax, said: 'Some of the best investment opportunities arising from the shale revolution are in the suppliers helping the industry to operate more efficiently, reduce pollution and meet increasingly strict environmental controls. We could be about to witness a modern day equivalent of selling shovels during the gold rush.'

Companies in the water sector provide water, chemicals, pumps and associated infrastructure to the extraction process. Currently there is no significant treatment of the contaminated water generated as a by-product but Impax expects this to change as regulation tightens.

Increased regulation is also likely to help companies involved in testing the output products from the wells and throughout the refining process, as well as companies involved in the disposal of hazardous waste.