Osborne unveils Britain's gas strategy
5 Dec 2012
The Chancellor has announced the creation of a Government gas office alongside possible tax incentives for shale gas
Chancellor George Osbourne today announced the creation of a Government office for shale gas to encourage investment in fracking technologies.
The ‘Office for Unconventional Gas and Oil’ will aim to streamline the regulatory process while being the single point of contact for investors.
“We are consulting on new tax incentives for shale gas and announcing the creation of a single office so that regulation is safe but simple,” said Osborne.
He added: “We don’t want British families and businesses to be left behind as gas prices tumble on the other side of the Atlantic.”
The announcement comes a year after the Government placed a temporary ban on fracking following earth tremors measured in the northwest of England.
Gas will provide a cleaner source of energy than coal, and will ensure we can keep the lights on
A decision on whether to lift this ban is expected in the next two weeks.
However, Osborne has made it clear that he wants the UK to focus efforts in this area and confirmed that the Government is in consultation on new tax incentives for shale gas.
Meanwhile, the Department of Energy and Climate Change has drawn up plans for 30 new gas-fired power stations- totalling 26GW of capacity- in a gas generation strategy published today.
The bulk of the 26GW will be used to replace retiring coal, nuclear and older gas capacity, and it is expected there will be a net increase of around 5GW.
The report claims that gas could play a more extensive role, with higher load factors, should the 4th Carbon Budget be revised upwards in 2014.
Secretary of State Edward Davey said: “We have always said that gas will have a significant role in our electricity mix over the next two decades – this is not new.
“Gas will provide a cleaner source of energy than coal, and will ensure we can keep the lights on as increasing amounts of wind and nuclear come online through the 2020s.”
Environmental pressure groups, as well as the government’s independent climate change adviser, have warned the UK may risk missing its carbon cutting reduction targets if these plans go ahead.
To download a copy of the Government’s gas generation strategy, please click the icon at the bottom of the page.
Summary of Goverment measures to provide certainty for gas investors:
- Government will look at further measures to encourage gas storage, and will publish findings on this in Spring 2013.
- DECC will establish an Office for Unconventional Gas and Oil, which will join up responsibilities across Government and provide a single point of contact for investors and streamline the regulatory process.
- The Government has signalled that shale gas is potentially an exciting new prospect for diversifying our energy supplies. A decision on whether to permit Cuadrilla to recommence fracking will be announced by the Secretary of State shortly.
- HMT is consulting on an appropriate fiscal regime for shale exploration, and DECC will consult on the terms and duration of licenses, and on an updated Strategic Environmental Assessment for future onshore licensing.
- The Gas Generation Strategy confirms the Government’s commitment to supporting the development and commercialisation of Carbon Capture and Storage (CCS) technology, which will help to decarbonise gas, as well as coal, in future.
