George Osborne announced a “generous” new tax regime for shale gas yesterday so that Britain can keep up with the success of the Americans in bringing down gas prices.
The Chancellor’s speech at the Conservative Party conference in Birmingham which is likely to fuel speculation he backs a “dash for gas”.
His comments come on the same day as Cabinet colleague Ed Davey, Secretary of State for Energy attended the gas industry’s conference GasTech in London.
Acknowledging the economic hardship faced all around the world, the Chancellor lamented: “The rise in world oil prices has been larger than anyone forecast.”
Name-checking green energy before gunning it on gas, he told the conference: “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.”
Although little detail emerged during the speech, the Treasury said a “targeted tax regime will help unlock investment” in the shale gas sector because it is at an early stage of development.
Tax help could take a similar shape to that for North Sea, according to the Treasury: “The use of field allowances to encourage investment in the North Sea has demonstrated the effectiveness of a targeted tax regime in stimulating investment and production that would not otherwise have gone ahead.”
Critics of the Chancellor’s support for gas reacted furiously and claimed he was “giving handouts” to friends.
The Chancellor’s father-in-law is said to be a lobbyist for shale gas firms in Poland.
Jim Footner, Head of Greenpeace’s Energy and Climate Campaign said: “Osborne needs to stop giving handouts to his mates in the gas industry and instead back his Lib Dem coalition partners and the CBI by supporting investment in renewable technologies that will help stabilise bills, reduce our reliance on energy imports and boost the economy.”
The CBI itself said going for gas alongside investment in renewable energy were on the Chancellor’s “very important list of growth priorities”.
John Cridland, the business group’s Director-General said: “It makes sense to maximise the amount of energy we can produce at home at reasonable cost. Incentivising the exploration of shale gas sits alongside investment in renewables. I don’t want all my eggs in one energy basket.”