The government has outlined plans to give tax breaks to companies involved in the UK's shale gas industry, which uses controversial 'fracking' extraction methods, in a bid to encourage greater exploitation of an alternative source of energy.
It has proposed halving the tax on some of the income generated from producing shale gas from 62% to just 30% to create the 'most generous' regime for shale gas in the world, according to Chancellor George Osborne. This compares with a top rate of 62% on new North Sea oil operations and up to 81% for older offshore fields.
Under the Treasury's plans, a new shale gas allowance would apply to a proportion of the income generated from shale gas production. What that proportion is will be determined after a consultation.
A recent report from the British Geological Survey revealed there was twice as much shale gas in the north of England as previously thought.
Osborne said: 'Shale gas is a resource with huge potential to broaden 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. 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.'
Environmental campaigners and others have raised concerns about a 'dash for gas', warning that the process for extracting shale gas, by hydraulic fracturing rock with high-pressure liquid to release the gas, or 'franking', can cause earthquakes, pollute water supplies, blight the countryside and affect house prices.
