Plans to set up a sovereign wealth fund with future revenues from the extraction of shale gas has been announced.
Energy Secretary Ed Davey said it is part of the UK Government’s “broader strategy to strengthen our security of supply in a cost-effective way for future generations”.
Britain is betting on shale gas to help boost energy production however there have been local opposition over the extraction method’s environmental impact.
So far possible sites for the extraction of shale gas have been identified across the north of England, with test drilling licences granted in Lancashire, Cheshire, Merseyside and Greater Manchester.
The British Geological Survey estimates the sites could hold 1,300 trillion cubic feet of shale gas.
Mr Davey added: “The sovereign wealth fund is a great opportunity for the whole of the UK – everyone will reap benefits from it and I’m pleased to announce my Department will be establishing it when commercial production begins. It’s about storing the financial benefits of shale production and putting it towards a low carbon energy future.”
In a separate statement, Chancellor George Osborne said the fund would be a way of “making sure money is not squandered on day-to-day spending”.
Oil-producing nations such as Norway, Kuwait and Abu Dhabi have set up sovereign wealth funds intended to save and invest the proceeds from the extraction of fossil fuels for future generations.