Shale gas reserves offer possibility of ‘new North Sea’

Friday 24 May 2013

The Institute of Directors recently issued a new report, ‘Getting Shale Gas Working’, which outlines the benefits that shale gas exploitation could bring to the UK economy (http://www.iod.com/influencing/policy-papers/infrastructure/infrastructure-for-business-getting-shale-gas-working). There is little doubt, despite the controversy that fracking creates, of the potential for shale gas change the UK energy picture, just as it has in the US. Shale gas, particularly if combined with aggressive energy efficiency policies, could secure UK’s energy future for the foreseeable future and significantly help in resolving the policy ‘trilemma’ of balancing the needs for improved energy security, reduced energy costs and reduced environmental impacts.

I do find it interesting, however, that one of the key issues is cited as establishing ‘an acceptable tax regime’ for which I read some kind of generous tax break. We also saw in the government’s 2013 Budget a promise to introduce a shale gas field allowance and other support. The fossil fuel industry in the UK and globally is receiving massive tax breaks and subsidies, something like $1.9 trillion a year globally according to the IMF. Meanwhile, improved energy efficiency, which has been proven to be cheapest, cleanest and fastest to deploy energy resource we have, receives very little if anything in tax relief or subsidies.

We need to deploy shale gas for sure, but we also need to put all energy resources including energy efficiency on an equal tax basis and eliminate tax breaks and subsidies for fossil fuels – in the UK and everywhere.

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Dr Steven Fawkes

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