The future of shale gas in the UK

The exponential growth in US shale gas production has been a boon for the country’s energy security over the past few years. Now the UK is looking to follow suit, with the government and big oil throwing their weight behind the dash for gas. But at what c

This morning David Cameron announced plans to give a greater share of tax revenues to those councils which support shale gas schemes. Under the proposed plans, local authorities would receive 100 per cent, as opposed to the usual 50, of business rates from shale gas projects, which could amount to up £1.7million extra per site for councils every year.

Over the weekend Total UK, one of the world’s largest oil companies, also announced that it would be investing in the UK’s shale gas industry, starting with the drilling of two exploratory wells in a project worth £30 million.

Such a vote of confidence in shale gas in this country is bound to encourage others to invest, but judging by the opposition from local communities witnessed so far, the industry still has a long way to go before it allays the fears surrounding the controversial fracking process used to extract the gas.

Ever since videos of flaming taps began appearing on YouTube in 2010, shale gas has been in the spotlight for its potential to contaminate groundwater and cause seismic disturbances. The mining industry has tried to respond to people’s fear by offering one per cent of revenues from shale projects to the local community. Responding to this morning’s announcement, the Local Government Association remained unimpressed:

Given the significant tax breaks being proposed to drive forward the development of shale gas and the impact drilling will have on local communities, these areas should not be short-changed by fracking schemes ... One percent of gross revenues distributed locally is not good enough; returns should be more in line with payments across the rest of the world and be set at 10 per cent.

This back and forth comes at a time when the UK is in need of fresh energy supplies to ward off the looming ‘energy gap’, in whatever form they might come. Without new electricity generation capacity, experts have been warning for several years that the UK is likely to suffer blackouts in the next decade as old power plants are taken offline and not replaced.

Emulating the successes of the US shale gas industry is clearly a sound means of warding off the energy gap, given the fantastic success achieved across the pond. In fact, 2012 saw 25.7 billion cubic feet of shale gas extracted per day in the US, making up a massive 39 per cent of its total natural gas production. Energy self-sufficiency, something thought impossible just a few years ago, could become a reality within the next two decades.

But you have to wonder what cost this renewed dependence of fossil fuels will have on the UK’s green commitments. David Cameron has already downsized funding for renewable energy in order to get household energy bills under control. By reducing the green levies that consumers have added to their bills, this vital source of support for the nascent renewable energy industries has been drastically cut.

To add insult to injury, several wind farm developers have recently cancelled or curtailed their plans for new offshore wind energy capacity in British waters, with RWE Npower Renwables announcing last week that its Triton Knoll project off the Lincolnshire coast will have its capacity almost halved, following news in November that it would also no longer develop the £5.4billion Atlantic Array project. This is compounded by the government’s recent decision to back several new nuclear power plants around the country, instead of investing in other green energy sources. New reactors will be built in Oldbury, Wylfa, Sizewell and Hinkley Point.

It seems that the path the government thinks best for achieving Britain’s energy security will be shale gas and nuclear, regardless of the concerns of local communities and of environmentalists.

Placards adorn the road alongside the campsite of anti-gas fracking activists next to The IGas Energy exploratorygas drilling site at Barton Moss. Photograph: Getty Images.

Mark Brierley is a group editor at Global Trade Media

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Lord Geoffrey Howe dies, age 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.