UK Sets Up Office for Unconventional Gas, Considers Tax Breaks
The UK's Chancellor of the Exchequer, George Osborne, has indicated that his government will consider tax-breaks for shale gas exploration, however, the government has yet been given the expected green light for shale gas exploration to continue.
The United Kingdom will also set up an Office for Unconventional Gas to regulate the industry, it has been announced.
The widely anticipated announcements accompanied the Chancellor’s Autumn Statement, which were delivered in the House of Commons Wednesday.
"We are consulting on new tax incentives for shale gas and announcing the creation of a single office so that regulation is safe but simple," Osborne said.
He gave a wider-ranging speech, which is effectively the smaller of the two Budget announcements, which come annually from Westminster.
Fracking, the short-term for hydraulic fracturing which uses pressurized water to drive gas out of shale rock, was suspended after Cuadrilla Resources set off two small earthquakes last year in northwest England.
The gas strategy unveiled alongside the Autumn Statement predicts construction of 26 gigawatts of new gas power plants - up to 30 power stations - by 2030, many of which will replace old coal, nuclear and gas plants. More detail appeared in the Gas Generation Strategy document, published on the Department of Energy's website as the Chancellor spoke.
The Chancellor said the gas strategy would “ensure we make the best use of lower cost gas power, including new sources of gas under the land.”
The new shale gas regulator is being established to ensure a “simplified and streamlined regulatory process” for the development of the UK's shale gas resources as well a to ensure that regulation was “safe but simple” with a nod to the significant economic impact that cheap gas has provided to American industry. Osbourne added: “We don’t want British families and businesses to be left behind as gas prices tumble on the other side of the Atlantic.
Despite the introduction of the new oversight body and potential incentives, the government appeared to avoid a straightforward declaration of intent to assist shale-gas investment, the statement accompanying the Strategy document said the UK government was committed "to supporting the development and commercialization of Carbon Capture and Storage technology, which will potentially enable both gas and coal to have a significant role in the future electricity market."
An announced on whether and when Cuadrilla can continue its operations is expected to come from the DECC next week.
The chief executive of Cuadrilla backed the creation the new regulatory body: “We welcome the Government’s initiative to help the emerging shale gas industry get established, " commented Francis Egan.
“Exploration is necessary to have a better understanding about how shale gas can be developed safely and sensibly from the Bowland Basin."