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Fracking companies should not get tax breaks, says No 10 adviser Fracking companies should not get tax breaks, says No 10 adviser
(2 months later)
Shale gas fracking companies should not be granted tax breaks, a leading Downing Street adviser has said, because their operations are likely to be profitable without such incentives – even as the government prepared to offer developers a new "pad allowance" for the wells they drill, to encourage more of the controversial exploration.Shale gas fracking companies should not be granted tax breaks, a leading Downing Street adviser has said, because their operations are likely to be profitable without such incentives – even as the government prepared to offer developers a new "pad allowance" for the wells they drill, to encourage more of the controversial exploration.
Peter Lilley, the climate sceptic Tory MP who is an adviser on foreign policy in No 10, said in a debate on shale gas in Westminster Hall on Thursday afternoon: "I think tax breaks are unnecessary for fracking, based on my knowledge of the oil and gas industry." Lilley has been an energy industry analyst for more than 20 years, and has a financial interest in central Asian oil and gas.Peter Lilley, the climate sceptic Tory MP who is an adviser on foreign policy in No 10, said in a debate on shale gas in Westminster Hall on Thursday afternoon: "I think tax breaks are unnecessary for fracking, based on my knowledge of the oil and gas industry." Lilley has been an energy industry analyst for more than 20 years, and has a financial interest in central Asian oil and gas.
The debate, called by the UK's only Green MP, Caroline Lucas, was frequently fractious – with the Tory minister Michael Fallon accused by Lucas of showing an attitude towards women that she "absolutely deplored". There were accusations that male MPs and the minister had been "chuntering" while women spoke, and had patronised some of the female speakers. At one point, Fallon asked Lucas to "contain herself".The debate, called by the UK's only Green MP, Caroline Lucas, was frequently fractious – with the Tory minister Michael Fallon accused by Lucas of showing an attitude towards women that she "absolutely deplored". There were accusations that male MPs and the minister had been "chuntering" while women spoke, and had patronised some of the female speakers. At one point, Fallon asked Lucas to "contain herself".
Lilley's intervention came as ministers were still finalising potential tax breaks and other incentives to shale developers, as well as setting out a consultation on the sort of incentives that should be offered to local communities to encourage them to accept shale gas drilling in their area.Lilley's intervention came as ministers were still finalising potential tax breaks and other incentives to shale developers, as well as setting out a consultation on the sort of incentives that should be offered to local communities to encourage them to accept shale gas drilling in their area.
Fallon, the Conservative energy minister, said the tax breaks would be set out in detail soon, and would take the form of a "pad allowance" that would apply to each well. He said the government expected between 20 and 40 new exploration wells to be drilled in the next two years, and local people should also "get their fair share" from the exploration. Ministers are determined to offer local incentives, possibly similar to those unveiled on Wednesday for the sites of new nuclear power stations.Fallon, the Conservative energy minister, said the tax breaks would be set out in detail soon, and would take the form of a "pad allowance" that would apply to each well. He said the government expected between 20 and 40 new exploration wells to be drilled in the next two years, and local people should also "get their fair share" from the exploration. Ministers are determined to offer local incentives, possibly similar to those unveiled on Wednesday for the sites of new nuclear power stations.
"The pad allowance [for fracking developers] will unlock investment and provide support during the critical exploration phase," Fallon told MPs. "There will be a new round of onshore licensing next year, which we expect to attract a lot of interest.""The pad allowance [for fracking developers] will unlock investment and provide support during the critical exploration phase," Fallon told MPs. "There will be a new round of onshore licensing next year, which we expect to attract a lot of interest."
He promised planning guidance on the circumstances in which fracking wells should be allowed would be published "very soon".He promised planning guidance on the circumstances in which fracking wells should be allowed would be published "very soon".
But Lucas slammed the coalition for failing to put out the planning guidelines on Thursday as expected, and said it was "appalling" that the guidelines would come into force without public consultation, which she said would deny affected communities the chance to have their say. She said: "It's clear that ministers and fracking firms – increasingly indistinguishable – are keen to press on rapidly."But Lucas slammed the coalition for failing to put out the planning guidelines on Thursday as expected, and said it was "appalling" that the guidelines would come into force without public consultation, which she said would deny affected communities the chance to have their say. She said: "It's clear that ministers and fracking firms – increasingly indistinguishable – are keen to press on rapidly."
She added: "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."She added: "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."
Lucas also cited 55 recent incidents of pollution from North Sea oil and gas operations as evidence that the UK's regulatory regime is flawed. "The idea that our regulations when it comes to drilling are so much better than elsewhere is questionable."Lucas also cited 55 recent incidents of pollution from North Sea oil and gas operations as evidence that the UK's regulatory regime is flawed. "The idea that our regulations when it comes to drilling are so much better than elsewhere is questionable."
The debate also showed how polarised the debate on the controversial fuel has become, with MPs from all parties and sometimes from neighbouring constituencies disagreeing violently over whether widespread drilling should go ahead and what safeguards there should be. The split was not purely on party lines, as members of the coalition and opposition spoke up in favour of shale, while others from all parties voiced their concerns over the environmental impacts.The debate also showed how polarised the debate on the controversial fuel has become, with MPs from all parties and sometimes from neighbouring constituencies disagreeing violently over whether widespread drilling should go ahead and what safeguards there should be. The split was not purely on party lines, as members of the coalition and opposition spoke up in favour of shale, while others from all parties voiced their concerns over the environmental impacts.
Many MPs were concerned about the potential impact on local water supplies, the possibility of pollution, of methane leaks, and the question of whether burning large quantities of shale gas would be compatible with meeting the UK's climate change targets. Fracking requires the pumping of water, sand and chemicals at very high pressure into dense shale rocks thousands of feet underground, releasing tiny bubbles of methane that can be captured at the surface. Shale drilling in Lancashire caused two small earthquakes two years ago, and the casing of the well was damaged, though there was no leak of fluid or gas. Ministers were not informed by the drilling company, Cuadrilla, until months after the event, Guardian research revealed.Many MPs were concerned about the potential impact on local water supplies, the possibility of pollution, of methane leaks, and the question of whether burning large quantities of shale gas would be compatible with meeting the UK's climate change targets. Fracking requires the pumping of water, sand and chemicals at very high pressure into dense shale rocks thousands of feet underground, releasing tiny bubbles of methane that can be captured at the surface. Shale drilling in Lancashire caused two small earthquakes two years ago, and the casing of the well was damaged, though there was no leak of fluid or gas. Ministers were not informed by the drilling company, Cuadrilla, until months after the event, Guardian research revealed.
But other MPs said environmental concerns were exaggerated, strong regulation would be in place to prevent leaks and other accidents, and there was unlikely to be an adverse impact on house prices in fracking areas. They argued that shale gas could provide a cheap indigenous source of fuel and help with the "reindustrialisation" of the economy, providing jobs and an economic boost. In the US, widespread fracking has produced a glut of gas, pushing down energy prices.But other MPs said environmental concerns were exaggerated, strong regulation would be in place to prevent leaks and other accidents, and there was unlikely to be an adverse impact on house prices in fracking areas. They argued that shale gas could provide a cheap indigenous source of fuel and help with the "reindustrialisation" of the economy, providing jobs and an economic boost. In the US, widespread fracking has produced a glut of gas, pushing down energy prices.
Fallon said the government had established "the right framework" for shale development to go ahead safely, and the coalition's plans for "accelerated shale" would not mean overriding local concerns.Fallon said the government had established "the right framework" for shale development to go ahead safely, and the coalition's plans for "accelerated shale" would not mean overriding local concerns.
Recent estimates by the British Geological Survey have suggested the UK could have 1,300 trillion cubic feet of shale gas in the major shale areas in the north of the UK, enough to last for decades if it can be extracted at a profitable rate. Fallon said further estimates of the amount of shale gas in the Weald basin in the south of England would be published next March.Recent estimates by the British Geological Survey have suggested the UK could have 1,300 trillion cubic feet of shale gas in the major shale areas in the north of the UK, enough to last for decades if it can be extracted at a profitable rate. Fallon said further estimates of the amount of shale gas in the Weald basin in the south of England would be published next March.
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