Dec. 5 (Bloomberg) — The U.K. will consider tax breaks for
shale-gas exploration as the government seeks to reduce
dependence on energy imports and hold down household power
bills, Chancellor of the Exchequer George Osborne said.
The use of hydraulic fracturing, the process known as
fracking that uses pressurized water to drive gas out of shale
rock, was suspended after Cuadrilla Resources Ltd. set off two
earthquakes last year in northwest England. The government,
which has said the ban will end soon, will set up an Office for
Unconventional Gas to regulate the industry, Osborne announced.
Osborne wants the U.K. to give priority to gas as a power
source because it’s cheaper than renewables and less
environmenatlly harmful than coal. At the same time, the U.K.
wants to curb reliance on natural gas imports that have almost
doubled since 2007 as domestic production dwindles. U.S. natural
gas prices dropped 87 percent from 2008 to April this year as
production from shale fields boomed.
“We don’t want British businesses and families to be left
behind as gas prices tumble on the other side of the Atlantic,”
Osborne said in his Autumn statement to parliament.
Osborne’s shale plans may place Britain ahead of efforts on the
continent, where nations have hesitated to endorse the technique
because of concerns it may pollute water.
The Czech Republic proposed a temporary ban on exploration
of shale deposits in September and France decided that month to
maintain a ban on fracking.The Netherlands has said it plans to
conduct a study of the environmental impact of shale- and coal-
gas exploration.
Environmental Impact
“Europe is a very, very different situation to the U.S.,”
said Paul Ekins, professor of resources and environmental policy
at University College London. “The U.S by itself will not have
the kind of impact on the world’s gas market that would allow
our prices to fall significantly.”
Cuadrilla says the shale rock it’s exploring in northwest
England has more gas than all of Iraq. Exploitation of the
U.K.’s shale-gas reserves may meet 10 percent of U.K. demand for
more than 100 years, according to the Institute of Directors.
The Department of Energy and Climate Change set out plans
for as many as 30 new gas-fired power stations with 26 gigawatts
of capacity in a gas generation strategy published today,
designed to shore up new supplies as aging coal and oil plants
retire.
Environmental pressure groups Greenpeace and WWF, as well
as the government’s independent climate change adviser, have
warned Britain may miss its legally binding carbon cutting
targets if it presses ahead with its gas plans.
To contact the reporter responsible for this story:
Sally Bakewell in London at
Sbakewell1@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
