Last week, the government announced that those councils who choose to back fracking in their area would receive all of the business tax revenue generated, instead of the usual 50%. The announcement came soon after French oil giant Total announced that an investment of up to 30m in two gas exploration projects in Lincolnshire.
Fracking is a controversial method to extract shale gas from rocks that were once unreachable using extremely high pressures. The technique was developed in Texas in the 1990s, but in recent years, new technologies have made the extraction easier. North America already uses the technique commercially, and Prime Minister David Cameron has said that its use in the UK could be highly beneficial to the energy market.
While fracking could become a major source of low carbon energy production for the UK, it has been argued by pressure groups like Greenpeace that the method is dangerous, and leaves scars on the landscape. Rural communities have also expressed concern that it could cause environmental issues such as the destruction of wildlife habitats, noise and carbon pollution from the large machinery involved, as well as an increased risk of seismic activity and earth tremors. Over recent years, an increase in tremors has been recorded in Texas, where the technique was pioneered.
While on a visit to one of the sites in Lincolnshire, Mr Cameron said that the tax incentives could raise £2-3m a year for those councils that “get on board”, adding that any given well could raise up to £10m of revenue for the surrounding local communities over its lifetime. He also predicted that the shale gas industry could support up to 74,000 jobs, as well as providing cheaper energy for the future.
But is this simply a tactic to buy the support of councils? Greenpeace certainly seems to think so, branding the tax incentives as bribery. It certainly seems as though it is an attempt on the part of the government to buy support. And Cameron can’t expect the environmental concerns of campaigners to be forgotten just because of the financial benefits.And there are concerns that are perhaps more pressing than the destruction of the rural landscape. Fears have been voiced about the potential contamination of the millions of gallons of water involved in fracking, and the potential impact on the health of local communities. France, Bulgaria and multiple regions around the U.S. have already put a stop to fracking amid growing public opposition.
So the question has to be: Does the economic benefit outweigh the environmental impacts? Fracking is expected to allow the U.S to become energy self-sufficient before long – current forecasts predict that it will become a net energy exporter by 2020.
Commenting on the economic impact fracking is already having, Cameron said: “This change is doing so much good and bringing so much benefit to North America. I want us to benefit from it here as well”
Economically, the UK might become more prosperous long-term, and certainly stands to benefit from a greater level of self-sufficiency, which would bring better energy security, and could help ease the dramatic rise in energy prices the UK has experienced throughout the last decade. In the current economic climate, amid the ever-increasing cost of living, this can only be considered a good thing.
But what happens when all our sources of shale gas have been exhausted? It must be wondered whether we should concentrate our energy and investment on renewable energy sources such as wind, solar, and tidal energy production.
With suitable safety and sustainability precautions, fracking could well deliver huge and prolonged benefits to the UK economy. But it is of vital importance that Mr Cameron does not simply focus on the economic benefit, and that he amply takes into account the possible ramifications of ignoring the concerns of environmentalists.