With the coalition government ready to allow fracking companies to quite literally blow up Britain’s countryside in search of a replacement for dwindling North Sea resources, the evidence from the US is increasingly that shale gas is a bubble about to burst rather than a magic bullet.

The first comprehensive study of US shale gas production, Drill Baby Drill by the Post Carbon Institute, appears to lay to rest the notion that shale gas and other unconventional fossil fuels will solve the world’s energy problems.

“The best fields have already been tapped,” says report author, David Hughes, “and no major new field discoveries are expected.” “At best,” Hughes concludes, “shale gas, tight oil, tar sands and other unconventional resources provide a temporary reprieve from having to deal with the real problems.”

The report argues that three factors make it highly unlikely that shale gas will be anything more than a short interlude in the hydrocarbon era.

First, is the rate of flow. Unlike the monster oil fields of Saudi Arabia, which have gushed under their own pressure for decades, shale gas fields require a huge technological effort to bring up a relatively small amount of usable fossil fuels.

Second, the depletion rate of those shale fields is extremely high, with up to 80% of the ‘prize’ remaining in any given well. This means that thousands of new wells are being drilled all the time in order to maintain production levels.

Finally, the net energy return from shale gas – energy recovered minus energy extracted – is tiny.

The report comments: “Shale gas production has been on a plateau since December 2011 — 80% comes from five plays [wells], several of which are in decline. The very high decline rates of shale gas wells require continuous inputs of capital — estimated at $42 billion per year to drill more than 7,000 wells — in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32.5 billion.”

Wall Street valuations of fracking companies appear to be based on the quantity of shale gas being extracted right now – 40% of US domestic gas supply – rather than looking at the huge number of wells being drilled, the high depletion rates and the vertiginous cost per unit of energy recovered.

“Put simply,” says Richard Heinberg, author of Peak Everything, “the shale gas frenzy is a pyramid scheme. It’s a mark of desperation, not the sign of new dawn of hydrocarbon-fuelled economic growth. Far from being a ‘fuel of the future’, shale is already looking like a fuel that is nearing its use-by date.”

Ironically, the US shale gas bubble has depressed the price of coal, the original fossil fuel that powered the industrial revolution and launched humankind on an arc of development unparalleled in history. Because shale gas is being used in US power stations, cheap US coal has been flooding on to world markets.

Coal is one of the reasons why the UK’s CO2 emissions went up 4.5% last year – despite the double-dip recession. According to the International Energy Agency, there are 948 billion tons of economically recoverable coal reserves in the world, enough for at least 100 years at current consumption rates.

However in 2010 the science journal Energy published a study pointing out that net energy from coal (energy recovered minus energy extracted) had been falling in the US since the 1990s and suggesting that Peak Coal, the point of maximum global production, was close.

In other words, we’ve burned all the high energy coal. What’s left is lower quality and harder to dig up. Then there are the other costs. Digging for coal kills miners and devastates landscapes. Burning coal turns buildings black, causes acid rain and heats up the atmosphere. Coal is radioactive when set alight and the fumes from burning it are toxic when inhaled.

Third generation US coal miner, Carl Shoupe, has become an outspoken critic of the coal industry that he says is killing his native Appalachian landscape. “When I was a kid we could camp out in the forests and drink fresh water from the streams,” he says. “That was before mountaintop removal and strip-mining flattened the landscape and bulldozed the mountains into the rivers, destroying much of it.”

Carrie Ray of Appalachian Transition says: “We’re trying to get folks to think differently about what Appalachia is and can be in the future. The transition from a coal-based economy is an opportunity to shape our own economic future, one that’s home-grown, built on our strengths and benefits as many people as possible.”

One way to turn our backs on shale gas, coal and other dirty fossil fuels is to switch energy supplier and support renewables companies like Ecotricity or Good Energy. In the US, community groups, churches, colleges and local government are going one step further – they’re dumping shares of fossil fuel extraction companies and carbon-intensive industries.

One of the leading proponents of divestment, Bill McKibben, of US climate campaign group 350.org, says: “Our job is to help people understand that these are now rogue industries – that, quite literally, if their business plans are followed, the planet tanks.”

In the Transition movement the emphasis is on planning for a world where there’s less usable energy of any sort, but also on seeing energy descent as a positive. As Rob Hopkins says in his recent book Transition Companion: “If we plan and act early enough, and use our creativity and cooperation to unleash the genius within our local communities, we can build a future far more fulfilling and enriching, more connected to and more gentle on the Earth, than the life we have today.”

By Jason Heppenstall & Alexis Rowell. First published in Transition Free Press 2 (Summer 2013).

Jason Heppenstall used to be a gas analyst for a big UK energy firm. He blogs at www.22BillionEnergySlaves.blogspot.com and is learning to be a woodlander in Cornwall.