'Shale Allowances' Feature in British Budget

British government policy will include measures to assist shale gas exploration, it was announced in London.

Chancellor of the Exchequer (Finance Minister) George Osborne told Parliament tax arrangements for companies involved in shale gas exploration would be "generous."  He was announcing his Budget for 2013, one of the most austere in years.

"Shale gas is part of the future and we will make it happen," Osborne said. He announced measures to support the new industry, including gas field allowances to promote early investment in the sector.

Osborne said his government wanted "to tap into new sources of low cost energy like shale gas."  Planning clarity would be available by the summer, he said.

Supporters say shale gas production in the UK could provide a cheap, secure source of energy, but opponents fear earthquakes and water pollution caused by hydraulic fracturing, or fracking. It could also lead to the development of shale wells in the countryside, potentially threatening house prices, and will make it harder for the UK to meet goals to cut emissions and tackle climate change, they argue.

The Chancellor said proposals would be developed to ensure that local communities would benefit from shale gas projects in their area.

While energy industry spokesmen were pleased, environmentalists criticized the support for shale.

Andrew Pendleton, Friends of the Earth's head of campaigns, said: "Shale gas is not the solution to rising energy bills - it's dirty, unnecessary and its extraction will have an earth-shattering impact on local communities across the UK."

Bob Ruddiman, head of natural resources at law firm Pinsent Masons, approved the move but said it was essential that the government moved consistently to develop unconventional energy. 
"Today's announcement of a ‘shale gas field allowance’ and a generous tax regime for shale will ultimately define how the industry will develop," he said.

“The Chancellor indicated there would be community participation in the shale revolution. History proves this is easier said than implemented...
there will be disappointment in the market if there is the same kind of delays and confusion as we've previously seen with energy policy. Lessons have been learned from mistakes made by successive governments in respect of both the oil and gas and renewable energy sectors.

"We hope to see a speedy and smooth running process leading to decisions being made and enabling shale gas to develop in the UK."