The UK government will create a £36 million funding boost for the nascent shale industry by investing in research test centres over the next tax year and public engagement.
Chancellor George Osborne’s final Autumn Statement said the government would be “taking steps to ensure that the UK leads the way with shale gas regulation” by allocating £31 million in funding for “sub surface research test centres” as well as £5 million in funding to better engage with the public on the shale industry’s regulatory process.
The Natural Environment Research Council will fund the test centres which will produce research relevant to both the shale and carbon capture and storage industries.
The government will also fund a £5 million drive to “ensure the public is better engaged” with the shale development regulatory process through independent evidence on “the robustness of the existing regulatory regime”.
Plans were also confirmed to establish a long-term investment fund for communities in the north, hosting shale gas development with revenue from shale tax to ensure economic benefit continues for years to come.
“The pace of shale gas exploration has been painfully slow with no planning applications approved yet,” said EY partner Chris Lewis.
“With that in mind the announcement of a sovereign wealth fund in the North with a focus on shale gas is a welcome move that should increase support locally, as well as ensure that communities benefit from skills and jobs,” he added.
In his last Autumn Statement before next year’s general election Osborne showed strong backing for fossil fuel development – and little mention of the ‘green economy’ – with tax breaks offered to developers in the declining offshore oil and gas industry also announced.
Osborne promised offshore developers “an immediate 2 per cent reduction in the rate of the supplementary charge, from 32 per cent to 30 per cent, taking effect on 1 January 2015,” and said government would aim to reduce the rate further in an affordable way, to encourage additional investment and sustain offshore tax receipts over the long term.