New Budget Sets Up ‘Dash for Gas’

budget gas fracking incentives

George Osborne’s budget, announced on Wednesday, has confirmed the government’s commitment to shale gas, with the chancellor claiming: “Shale gas is part of the future. And we will make it happen.”

A number of benefits will be offered as incentives to fracking companies looking to develop gas fields, including the right to offset exploration costs against tax. However, it is possible that these tax receipts will be used to compensate local communities in areas where drilling is taking place. Osborne promised to “develop proposals by summer 2013 to ensure local communities will benefit from shale gas projects in their area”.

However, climate campaigners are arguing that continued focus on the exploitation of fossil fuels will have both environmental and economic repercussions. Greenpeace’s Lawrence Carter said:

Bungs to the gas industry make it harder for Britain to meet its climate targets and stifle the low-carbon sector, which provided one-third of all UK growth in 2011-12. Osborne needs to stop playing Britain’s JR Ewing [...] It is also unfair on struggling households, when everyone from the energy regulator Ofgem to BP to energy secretary Ed Davey say UK fracking won’t bring down bills.

Controversially, Osborne also increased exemptions from carbon taxes for heavy polluting industries, sighting the numbers employed in such fields as motivation:

Creating a low-carbon economy should be done in a way that creates jobs rather than costing them.

These arguments were countered by various voices pointing to the economic benefits to be gained by investing in the green economy, which is growing at a rate of 5% a year and already provides work for a million people. Mark Kenber, chief executive of the Climate Group said:

[Osborne] keeps on making the fundamental mistake of thinking that investment in renewable energy and clean tech ‘costs’ jobs. There is solid evidence from every corner of the world that investment in the low-carbon economy actually creates jobs.

Meanwhile, Andrew Raingold, executive director of the Aldersgate Group lamented the missed opportunity to build on Britain’s position as one of the world leader’s in green technology:

The chancellor has prioritised increasing exports to the fast-growing regions of the world but there is little support in the budget for green industries that have a strong foothold in these markets and a trade surplus of £5bn.

However, whilst many were critical, some business groups were much more positive about the announcements. Gareth Stace from EEF, the organisation for UK manufacturing companies, said:

Tax incentives for investment in indigenous gas resources and stronger safeguards for energy-intensive industries are welcome and show the government is continuing its shift towards a more balanced energy policy.

Green Steve’s Reaction

While Osborne’s decision to incentivise fracking for gas doesn’t surprise me, it also doesn’t make me happy at all. It wasn’t too long ago that a think tank concluded that Britain would be better off by moving away from gas but does Georgie boy listen? Does he FRACK!

This dash for gas approach is short-sighted and unnecessary in my opinion and there is so much more that could be done with this money. As I have said before, a lower carbon economy needs to begin with ZERO carbon energy production which gas certainly isn’t.

I tend to agree with George Monbiot’s recent assessment of our obsession with fossil fuels – why try harder to get more out of the ground when we can’t even burn what we already have access to without endangering the environment.

Steve (156 Posts)

I am chief writer and editor on Green Steve. Blogging since 2011, I like to delve into a wide number of topics to help people reduce their carbon footprint. You should follow me on Twitter here. And add me to your Google+ circles here.

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