UK Government Unveils World's 'Most Generous' Tax Breaks for Fracking

A fracking protest in Lancashire.
(Photo: JustinWoolford/cc/flickr)

UK Government Unveils World's 'Most Generous' Tax Breaks for Fracking
July 20, 2013 | Common Dreams | Andrea Germanos

Environmental groups slam "tax hand-outs to polluting energy firms that threaten our communities and environment"

The British government unveiled the world's "most generous" tax breaks for fracking on Friday, hoping it can "be a leader of the shale gas revolution."

 "Shale gas is a resource with huge potential to broaden the UK’s energy mix," stated Chancellor George Osborne, head of the treasury.  "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. This new tax regime, which I want to make the most generous for shale in the world, will contribute to that."

"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," continued Osborne.

Fracked gas has yet to be produced in the UK, though exploratory drills are underway.

The new tax rate would chop the current rate in half, as "shale gas producers will pay just 30 per cent tax on their profits, compared to the 62 per cent that the oil and gas industry has traditionally paid," the Independent reports.

The UK's Friends of the Earth's Head of Campaigns, Andrew Pendleton, said in a statement that

Promising tax hand-outs to polluting energy firms that threaten our communities and environment, when everyone else is being told to tighten their belts, is a disgrace.

Ministers should be encouraging investors to develop the nation's huge renewable energy potential. This would create tens of thousands of jobs and wean the nation off its increasingly expensive fossil fuel dependency.

And Lawrence Carter, an energy campaigner for Greenpeace, noted in an op-ed on Friday:

The International Energy Agency has described how “huge subsidies and tax breaks are tilting the global energy market in favour of fossil fuels” and have labelled them “public enemy number one for green energy”.

Today’s announcement just tilted that balance even further.

On Thursday, a day before Osborne's announcement, Caroline Lucas, UK's only Green MP, took part in a debate on fracking with MPs and said:

It's clear that ministers and fracking firms – increasingly indistinguishable – are keen to press on rapidly.

The direct carbon content of shale gas means widespread use [of it] is incompatible with the climate change targets of the UK. Shale gas is a high-carbon fuel.