Budget 2013: Osborne rolls out support for fossil fuels

8th April 2013


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The fledgling shale gas industry in the UK was one of the "winners" in George Osborne's fourth budget, with the chancellor announcing that he will introduce a "generous" new tax regime to support the exploration of unconventional sources of gas

“Shale gas is part of the future. And we will make it happen,” declared the chancellor. He promised that new planning guidance on shale gas would be available by the summer, and that an effective planning system would be established by the end of the year to help develop the industry.

Osborne also pledged to bring forward, by the summer, specific proposals to ensure that local communities benefit from shale gas projects in their area.

Cuadrilla Resources, the first company to explore shale gas reserves in the UK, welcomed the plans. “The government’s decision to introduce tax reforms for shale gas will greatly incentivise companies such as Cuadrilla that are undertaking and investing in exploration work,” commented chief executive Francis Egan.

Companies using large amounts of energy also received a boost from the chancellor, who told MPs that he will introduce exemptions from the climate change levy (CCL) for energy used in metallurgical and mineralogical processes from 1 April 2014.

“Creating a low-carbon economy should be done in a way that creates jobs rather than costing them,” he said. Osborne also promised further measures in the next spending round to help energy intensive industries (EIIs) cope with rising energy costs.

New analysis by Decc reveals the impact of the government’s energy and climate change policies on companies’ energy bills. Medium-sized businesses currently face energy costs that are, on average, 21% higher as a result of such policies, said the energy department.

Energy costs for large energy-intensive users are currently between 1% and 14% higher, on average, and could be 36% higher by 2020.

Energy secretary Ed Davey said the exemptions from the CCL announced in the budget and plans by the government to compensate EIIs for some policy impacts would help address rising prices.

“Nothing would be gained from forcing industry, jobs and emissions abroad,” he said.

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