New shale consultation deepens fracking controversy

Payments for communities near fracking wells will not be circulated until a new well site begins operating and producing gas, the Government has confirmed in a consultation published on the shale wealth fund.

The Shale Wealth Fund publication, published yesterday (9 August), revealed that payments of up to £10m during a site’s lifetime will not be provided for communities until a new fracking well is up and running – at least five years after initial exploration.

Government officials also confirmed that direct payments of up to £10,000 per household for living near a well will not occur until the fracking industry is operating at full-scale. The news follows an announcement from Theresa May that part of the tax revenues from fracking would be distributed to private households as well as local authorities.

Speaking before the consultation at the weekend, the Prime Minister said: “As I said on my first night as prime minister: when we take the big calls, we’ll think not of the powerful but of you. This announcement is an example of putting those principles into action. It’s about making sure people personally benefit from economic decisions that are taken – not just councils – and putting them back in control over their lives.”

‘Sweeten the pill’

Former Chancellor George Osborne confirmed support for the creation of the shale gas industry in last year’s Autumn Statement by ensuring that communities benefit from the fund, which will see up to 10% of the tax revenues from shale gas spent in local areas and “could be worth up to £1bn”.

The Government’s new cash payments plan has been criticised by environmental groups, claiming that it would act as a bribe to diminish community hostility to the technology.

Doug Parr, Greenpeace UK chief scientist, said: “The government has tried to sweeten the fracking pill with cash payments before, and it didn’t work. Over the last two years, public opposition has soared and support for shale has tanked. People’s concerns about climate change and their local environment cannot be silenced with a wad of cash.”

The shale wealth fund consultation suggested that some of the tax revenues from fracking could be used to accelerate the low-carbon transformation in the North of England. Projects such the electrification of the Trans-Pennine railway and additional funding in flood defence zones could receive spending as part of the Government’s ‘Northern Powerhouse’ initiative.

The fund is expected to be financed through a fraction of the tax revenue generated from shale gas exploration, but with no test drilling currently undertaken the exact amount to be made available is still unknown.

Renewables boost

According to sustainability consultancy Remsol, the shale gas industry’s voluntary community benefits scheme could be best used to fund renewable energy and energy efficiency measures for local homes in areas that host shale gas sites.

In a policy paper today, Remsol set out a proposal which suggested that implementing renewable energy and energy efficiency measures for local properties, industry-funded shale gas community benefits could:

– Deliver direct and indirect financial benefits of over £41,000 for nearby owner-occupiers

– Act as an enabler of renewables and create jobs for local installers, whilst helping to cut climate change emissions

– Boost house prices in areas that host shale gas sites

The company’s managing director believes that alongside the broader economic benefits of local supply chain creation and the distribution of mony from the Government’s proposed shale wealth fund, investment in renewable energy and energy efficiency would provide local residents with direct, meaningful and lasting benefits.

Remsol’s managing director Lee Petts said: “Until now, there hasn’t really been a great deal of discussion about just how the 1% of revenues could be spent. With our policy paper, we wanted to show that it’s possible for substantial numbers of local people to benefit directly from hosting shale gas in their communities.

“Opponents of shale gas regularly say that it will reduce investment in renewables, and lead to increased emissions but, as our paper shows, it’s possible to use the industry’s community benefit payments to actually boost renewables deployment and create climate change benefits.”

‘Swept under the rug’

The latest fracking developments come at a time of uncertainty for Britain’s future energy supply, with many large business energy users fearing that the recent removal of the Department of Energy & Climate Change (DECC) will leave energy issues “swept under the rug”.

The proposed new nuclear plant at Hinkley suffered a fresh setback last week, as the government delayed an approval decision of the £18 billion nuclear project until the autumn.

The newly-formed Department for Business, Energy & Industrial Strategy (BEIS) was last week urged to reverse a cut to renewable energy subsidy support initiated by its governmental predecessor.

Meanwhile, three further contracts for difference (CfD) auctions are scheduled to take place during the current parliament, however it remains unclear when the latter two auctions will take place, or what technologies will be eligible to bid in them.

George Ogleby

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