Osborne confirms fracking tax breaks
FRACKING may have caused minor earthquakes in Lancashire but Chancellor George Osborne is preparing to support the industry with tax breaks.
In the Autumn Statement he said the Treasury was consulting on tax incentives for shale gas which is extracted by pumping large quantities of water into the ground at high pressure to displace gas.
More detail is expected after a moratorium on hydraulic fracturing, or fracking – imposed following the Lancashire earthquakes – is lifted.
The firm spearheading the industry in the UK is Cuadrilla Resources which has been operating near Blackpool.
Chief executive Francis Egan said on the weekend that the firm expects to be producing shale gas by March.
The Chancellor said: “We are consulting on new tax incentives for shale gas and announcing the creation of a single Office for Unconventional Gas so that regulation is safe but simple.
“We don’t want British families and businesses to be left behind as gas prices tumble on the other side of the Atlantic.”
A report by the Department for the Environment and Climate Change, published earlier in the year, recommended that Cuadrilla’s activities could go ahead with a monitoring system in place that includes a “traffic light control” regime. This would mean that once seismic activity reached a level of 0.5 or above the company would have to stop fracking and make sure remedial action is taken.
Adam Nell, director in the construction and energy and infrastructure group at law firm DWF, said: “It is expected the moratorium on fracking will be formally lifted in a couple of weeks’ time. Politically, this will be controversial. Economically, shale gas could potentially be a huge benefit for the Government.
“By harnessing two mature technologies – fracking and gas-powered electricity generation – it ensures greater security and continuity of energy supplies. This addresses a problem which Governments of both colours have struggled to tackle over a number of years.
“However, there are substantial public concerns about the technology. If the Government wishes to reap the benefits of the new initiative it will need to take action to reduce these concerns.