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Wednesday 25 April 2018
25 April 2018 - NEWS UPDATE
Green Living

Osborne announces generous tax breaks likely for shale gas

Chancellor George Osborne today announced likely tax breaks for shale gas as his Cabinet colleague Ed Davey, the Energy Secretary, said he hoped drilling would resume soon.

Mr Osborne, speaking at the Conservative Conference in Birmingham said: "An enterprise strategy means investing in renewable energy, and opening up the newly discovered shale gas reserves beneath our land.

"We are today consulting on a generous new tax regime for shale so that Britain is not left behind as gas prices tumble on the other side of the Atlantic."

Earlier in the day, some of the best known companies in the UK, including Microsoft, PepsiCo and M&S had warned Mr Osborne that mixed signals on green energy policy risk undermining investment in renewable power.

More than 50 companies, investors and industry bodies had written to the chancellor ahead of his speech urging greater clarity on the Coalition's commitment to a lower-carbon economy.

The companies, which also include EDF and BT, called on Mr Osborne to back a 2030 target for decarbonising the electricity sector.

"It is essential for government to provide investors with the long-term confidence they need to transform our electricity market and make investments capable of driving wider economic growth," the letter said.

Gaynor Hartnell, Chief Executive of the Renewable Energy Association, (REA) added: "Today's letters from the business community warn that a failure to commit to green growth will cost the UK dearly. This builds on reports earlier this year by the CBI (which explained the green growth imperative) and ourselves (which revealed the potential for 400,000 jobs in renewables by 2020).

"It is now or never for the Coalition Government. We have the resource potential and engineering and financial expertise to be a global leader in renewables – but a lack of clarity from Government risks leaving us stuck at the back of the pack.

"Mainstream businesses, from our supermarkets to the big blue chip tech firms, know that renewables are the way forward for UK plc. This is not about saving the planet, it's about businesses planning for the future and maintaining their competitiveness in the 21st century."

Although the Chancellor said he wanted to invest in renewable energy he only referred to tax breaks for new shale gas technology.

The push for shale gas has become a controversial political issue in the UK because the 'rush to gas' is being seen as a way to mitigate rising energy prices and boost economic growth.

Prices have fallen in the US after production from shale fields made the country the world's largest gas producer. In Britain, reserves could meet 10 percent of demand for a century, according to a report by the Institute of Directors last month. Environmental campaigners say the process risks polluting water and the drilling and subsequent underground flooding causes earth tremors.

Earlier yesterday Energy Secretary Ed Davey said he hoped "to give a green light to shale." Companies are waiting for the results of a government report that may allow them to restart shale gas exploration.

The Department of Energy and Climate Change (DECC) has called for an assessment of hydraulic fracturing, as the process for extracting shale gas is known, after drilling last year by Cuadrilla Resources Ltd. caused two earthquakes in north west England. The company, which says the shale rock it's investigating has more gas than all of Iraq, suspended operations.

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