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 Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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