According to BusinessGreen, George Osborne believes shale gas production could create wealth funds for north of England. A plan to generate new shale gas tax revenue could be deployed as a UK sovereign wealth fund.
Ed Davey, energy and climate change secretary, said that the fund could be set-up once commercial production Starts. He said, “It’s about storing the financial benefits of shale production and putting it towards a low-carbon energy future. He went on to add, “Its part of our strategy to strengthen our security of supply in a cost-effective way”.
According to a spokeswoman at the DECC (Department of Energy and Climate Change), the fund size will be decided by the scale of resources. She also stated that the benefits to the communities, who host shale gas production, are an addition to the existing on offer – lump sum of £100,000 for each test completed successfully, plus 1% of revenue generated from the site.
However, who are the actual beneficiaries of this plan? According to Ed Davey this is a “great opportunity for the whole of the UK” but according to the chancellor the funds will be targeted to the north of England. It is estimated that the north of England holds around 1300 trillion cubic feet of shale gas and test licenses have been granted in Lancashire, Merseyside, Greater Manchester and Cheshire.
Whilst on BBC radio 4’s Today programme, George Osborne said “you could create a sovereign wealth fund from the money that comes from shale gas production, particularly in the north of England”, he added, “That’s a way of making sure this money doesn’t get squandered on day-to-day expenses but invested in the long-term economic health of the north to create jobs and investment”.
Unexpectedly, this news has led to green groups arguing that the exploitation of the shale gas reserves could increase the level of pollution in the water, greenhouse gas emissions and take away investment from clean energy processes. Helen Rimmer from the Friends of the Earth said that fund was “a desperate attempt to win over communities”. Rimmer told the BBC “A better solution for the northern economy is to invest in renewables and energy efficiency, which can create thousands of new jobs for the region and tackle climate change at the same time”. The green concern has been further increased as the government plans to invest £15bn expanding the road network, with over 100 improvement projects set to be fast tracked. .
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