Yesterday, the UK’s Chancellor of the Exchequer, George Osborne, used his last Autumn Statement before next year’s General Elections to restate his plan for a shale-based sovereign wealth fund to close the North-South divide.
In Great Britain, the term refers to the perceived economical and cultural divide between the more affluent south, including Greater London with its global financial centre, and the less-affluent north. Historically, the north was the centre of heavy industry and mining which, when it suffered a decline, resulted in high unemployment rate and lower incomes.
In his statement, the Chancellor vowed to create a “Northern Powerhouse” with a package of measures that seek to cement the north as a world leader in science and technology. The measures, which include new education and research centres and improvement to railway links, will be partially funded by “a new long-term investment fund established from tax revenues from shale gas extraction in the north.”
In the Chancellor’s words, the fund is “to capture the economic benefits of shale gas for future generations, and ensure that revenues are invested in the long-term economic health of the north to create jobs and investment.”
In the Autumn Statement, the Chancellor reiterated his support for shale gas exploration in the UK, stating that: “The government is taking steps to ensure that the UK leads the way with shale gas regulation. Shale gas could increase the UK’s energy security, support thousands of jobs, reduce carbon emissions, and generate substantial tax revenue.”
The government’s support for shale exploration was further strengthened by the following commitments:
- the government will allocate £31 million of funding to create world class sub-surface research test centres through the Natural Environment Research Council. This will establish world leading knowledge which will be applicable to a wide range of energy technologies including shale gas and carbon capture and storage,
- the government will establish a new £5 million fund for shale exploration to provide independent evidence directly to the general public about the robustness of the existing regulatory regime,
- the government will establish a long-term investment fund from tax revenues from shale for the north and other areas hosting shale gas developments. Proposals will be brought forward in the next Parliament.
The Chancellor’s support for shale gas was welcomed by Ken Cronin, chief executive of shale gas industry group UKOOG, who said the new developments would complement “some of the best regulations and regulators in the world and an excellent track record of onshore oil and gas extraction in the UK”.
“The UK public is exposed to many claims about the potential environmental impact of exploring for and developing the UK’s shale resource,” he said. “This programme offers the opportunity to provide independently verified evidence on the issues that matter most to local communities.”
Understandably, the Autumn Statement was met with scathing criticism from environmental groups.
“In what looks like the warmest year on record, George Osborne has strikingly failed to shield the UK economy from climate change and grasp the opportunities of a modern clean-tech economy,” Dr Doug Parr, chief scientist at Greenpeace UK told the portal Business Green.
“The Chancellor should have announced a nationwide programme to upgrade Britain’s draughty homes, making them fit for 21st century and creating jobs in every constituency. Instead we get a 1980s-style road building programme and tax breaks for fossil fuel giants that will entrench the high carbon economy we should be moving away from.”
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