10 Downing Street has talked a big game on fracking in recent months, but local opposition has stymied efforts to explore Britain’s estimated 1.3 trillion cubic feet of shale gas. As heating bills spiral ever upward, British politicians are flailing about trying to find ways to bring energy costs down. On Thursday, in his Autumn Statement, Chancellor Osborne outlined tax incentives meant to jump-start the country’s shale gas production. The FT reports:
The move reduces the tax rate on a portion of a company’s profits from 62 per cent to 30 per cent to reflect the challenges of shale gas exploration. Companies will receive an allowance equal to 75 per cent of capital spent on projects….[The Treasury] cited research by oil consultancy Wood Mackenzie which showed the allowance means the effective tax rate for shale gas projects in the UK will be lower than in the US – home to a booming shale industry.
Tax incentives will help lure investment in British shale, but that’s only one part of the problem. Local opposition remains intractable in many places, though David Cameron has promised affected communities compensation for their troubles.Britain’s shale future depends on whether or not its government can convince the British public that fracking can be done safely, and there’s every indication that it can when properly regulated. British households would welcome cheaper heating bills; they should welcome a shale revolution, too.