UK Budget 2013: Shale Gas Tax Breaks

UK Chancellor George Osborne will introduce generous tax breaks for shale gas exploitation (commonly known as ‘hydraulic fracturing’ or ‘fracking’) and other forms of onshore unconventional gas, to promote investment in the industry.  The 2013 UK Budget  delivered last week states that ‘a successful UK shale gas industry has the potential to provide new employment and support UK energy security, benefiting the economy, taxpayers and communities’.

The coalition’s plans for shale gas outlined in the Budget indicate that they want to see Britain’s gas industry develop into a ‘shale boom’, similar to the one taking place in North America.

Technical planning guidance will be produced for local authorities by July, and an effective planning system will be put in place by the end of the year.  Guidance will also be produced for the industry to ensure the planning system is properly aligned with the licensing regime, and regulatory regimes for health and safety and the environment.

Cuadrilla, the only company to have ‘fracked’ in the UK so far, have already halted operations following tremors in Lancashire and problems with planning.

The Budget also promises that the government will ‘provide detail of the objectives, remit and responsibilities of the Office of Unconventional Gas and Oil’ (OFUGO), and will ‘develop proposals by summer 2013 to ensure that local communities will benefit from shale gas projects in their area’.

Climate groups and environmentalists say that this will make it harder for the UK to meet climate targets, and will stifle the development of low-carbon technologies.

In early March Greenpeace UK set up a ‘frack pad’ protest in George Osborne’s Cheshire constituency office to highlight that licences for drilling had been approved in the area.  Polling in Tatton commissioned by Greenpeace showed that just over half of Osborne’s constituents would opt for wind or solar-generated energy; only 15% opted for gas.

The Budget report is available here (shale gas information at paras.93, p.36 and 2.129-2.132, p82.)

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1 Response to UK Budget 2013: Shale Gas Tax Breaks

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