Energy and cimate change secretary Ed Davey has warned supporters of natural gas and shale gas not to see it as an easy solution to the UK's energy challenges.

Speaking at a CBI meeting last night about the Energy Bill and electricity market reform, he said he wanted to dispel the “myth” that the Bill’s reforms were unnecessary “because a global glut of cheap gas will solve our investment and carbon problems”.

He agreed that gas will form a significant part of the energy supply mix in the foreseeable future, and that it is cleaner than coal, but cautioned that its price is volatile, "with global gas prices rising 40% last year".

“Yes, prices can go down, as well as up. And yes, unconventional gas can make a difference, although perhaps not as big a difference as some sections of the press would have me believe,” he said.

“Analysts think shale gas extraction in Europe will be more expensive than in the US, and probably won’t happen at scale until the end of this decade,” he said, adding that although shale gas might be forecast to double its share of the market by 2035, “that will still account for barely a third of global demand”.

Several reports published last week on shale gas for the European Commission waned that it could be more damaging than coal in some circumstances, to attempts to curb climate change, and that its extraction needed more regulatory control and monitoring.

In terms of natural gas, whether conventional or not, Davey added that “We’re competing with fast-growing economies which are hungry for gas. Demand in the Middle East is rising steeply.

"China alone is expected to double its demand by 2017. No wonder the consensus is that gas prices will either remain high, or go higher.”

Davey was obliquely responding to suggestions in the press that the new environment secretary, Owen Paterson, has been appointed to support George Osborne's push for more natural gas by backing indigenous production of shale gas.

Yesterday, three leading environmental charities, the RSPB, Friends of the Earth and WWF, wrote to Ed Davey to urge the government not to push ahead with UK shale gas extraction, at the very least until the potential impacts are properly understood and provisions are put in place to protect the countryside and ensure that any development is in line with UK Climate Change Act commitments.

Mike Clarke, RSPB chief executive, said; “We’re concerned that government is pushing ahead with shale gas extraction without clear safeguards in place to protect wildlife and people."

David Nussbaum, chief executive of WWF-UK said: "Instead of jumping on the shale gas bandwagon, which is clearly not consistent with a low emission future, the government must reaffirm its commitment to tackling climate change and prioritise renewables and energy efficiency."

Today, The Energy Event, on for two days at Birmingham's NEC, sees a session by shale gas developer Cuadrilla, who will argue that Britain needs to back this novel energy supply, which has proved to be such a game changer in the US.

However, Britain has a very different system of land ownership and rights, and is more densely populated, than North America, making exploitation of shale gas reserves problematic. The new chair of the Committee on Climate Change, Lord Deben, who is also due to speak at the event, has also warned Mr Paterson that shale gas is not the answer thsi weekend.

Davey mounted a defence of the current draft of the Energy Bill at last night's meeting. It has been widely criticised for being too complicated, a claim he denied.

He also denied that it was intended to provide covert support for the nuclear industry, but instead to help meet a rising demand for electricity and fill the gap that will be caused by forthcoming closures of old generation plant.

This will require around £100bn of investment in electricity infrastructure over the next 10 years, he said, some of which must be spent on low carbon generation, such as solar and wind farms, in order to meet the UK’s legally binding carbon emission targets.

Story: David Thorpe, News Editor