THE UK’S burgeoning shale gas industry is to benefit from a raft tax reliefs, under new government plans.
Under the proposals, tax imposed on income generated on shale gas would be cut from 62% to 30%, making the UK’s regime the most generous in the world for extraction of the gas.
The UK is understood to have large reserves of shale gas, with a recent report conducted by the British Geological Survey estimating there may be 1,300 trillion cubic feet of shale gas present in the north of England alone, the BBC reports.
Extraction companies expect to be able to access around 10% of that gas – far more than the annual consumption across the UK. However, the industry is still at a nascent stage, with only a small number of companies holding licences, none of which have begun extracting the gas.
The government cites the shale gas boom in the US as a major contributing factor in its decision to back the industry.
In a move designed to have a chilling effect on controversy and objections to proposed fracking locations, the government confirmed plans to give communities that host shale gas sites £100,000 per site, and up to 1% of all revenues from production.
Concerns have been raised that the fracking process – which involves pumping high pressure water, sand and chemicals into rock to force out the gas – can lead to water contamination and even earth tremors.
Chancellor George Osborne said shale gas was a resource with “huge potential” for the UK’s energy mix.
“We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits,” he said.
“I want Britain to be a leader of the shale gas revolution because it has the potential to create thousands of jobs and keep energy bills low for millions of people,” he said.
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