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Autumn Statement - Expert comment on shale gas

Professor Michael Bradshaw, Professor of Global Energy, researches the European energy sector and is co-author of UKERC report on the UK’s gas challenge. He gives his thoughts on shale gas in the UK ahead of the Autumn Statement.

Professor Bradshaw said: “Earlier this year the Government announced tax incentives to promote exploration and development. The industry has come up with an offer to make payments to the local communities and provide a share of future income. The Government is also to allow those communities to keep 100 per cent of business rates (twice the normal allowance), a scheme that is also available for onshore wind farms. This all makes sense, though it remains to be seen if the incentives to local communities are sufficient.

“The Chancellor has also talked about creating a sovereign wealth fund with the proceeds from taxing shale gas production. The Energy Minster Ed Davey has suggested that such funds should be used to promote low carbon energy. Presumably to allay the fears of the environmental NGOs that investment in shale gas will reduce investment in renewables, though there is no evidence of this in North America. This is laudable, and one wonders why we never did it with North Sea revenues, but it is premature in the extreme, as we do not yet know if we have a commercial opportunity. For now the focus should be on gaining public acceptance for exploratory drilling, rather than on spending money that may never materialise.”

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