Tuesday, 1 November 2016

Is UK shale gas policy about to change?


Recent developments indicate that  implementation of  the UK –government`s pro-shale gas policy is being accelerated. In December2012 the administration of then Prime Minister David Cameron decided to lift a pre-existing moratorium on shale gas extraction http://www.decc.gov.uk/en/content/cms/news/wms_shale/wms_shale.aspx . As a reaction,  Scotland joined Northern Ireland in putting into place a moratorium on shale gas extraction.

In England, however, shale gas extraction is encouraged by the executive. In order to overcome resistance of local councils towards one particular technical component of shale gas extraction, hydraulic fracturing or `fracking`, Whitehall put into place a number of tax-incentives.  Councils may, inter alia, keep 100 per cent (as opposed to the hithereto 50 per cent) of business rates (in effect property taxes) that they collect from shale gas sites.[1] This right could be worth up to 1.7 million pound per year per site.[2] That move has been labelled by Gordon/McHeigh/Paterson as an `apparent attempt to encourage English authorities to approve fracking applications`.[3] There have been indications that the policy works. For instance,  North Yorkshire Council in May 2016 gave the green light for the first exploratory works to be carried out at a shale gas site in England.[4]

Despite this punctual success, legal scholars warned that councils overall `continued to hesitate before approving fracking applications (…)`.[5] The UK government is now apparently on the brink of changing its `carrot` to a `stick`-approach. According to the Guardian,  Communities secretary Sajid Javid just accepted an appeal by the shale gas company Cuadrilla against an earlier decision of Lancashire council to reject  plans to frack. This means exploratory fracking of four wells in the area is now possible. The council cited visual impact and noise when it turned down the company’s two planning applications to frack on the Fylde last year, but a month later Cuadrilla submitted an appeal https://www.theguardian.com/environment/2016/oct/06/uk-fracking-given-go-ahead-as-lancashire-council-rejection-is-overturned. It remains to be seen whether this is a one-off decision. According to the NGO `Frack Off`, several other applications for exploratory shale gas drilling could be subjected to the same procedure in the future www.frack-off.org.uk/locations .



[1] Jill Morgan `Sustainability and stakeholder participation: shale gas extraction in the United Kingdom` in John C Dernbach and James R May (eds.) `Shale Gas and the Future of Energy Law and Policy for Sustainability` (Edward Elgar Publishing, Cheltenham, 2016) 150 (hereinafter: Morgan); Greg Gordon and Aileen McHarg and John Paterson `Energy Law in the United Kingdom` in Martha M Roggenkamp et al. (eds.) `Energy Law in Europe` 3rd edition (Oxford University Press, Oxford 2016) paragraph 14.30 (hereinafter: Gordon/McHarg/Paterson).
[2] UK Government `Local Councils to Receive Millions in Business Rates from Shale Gas Developments` 13 January 2014 available at: http://www.gov.uk/government/news/local-councils-to-receive-millions-in-business-rates-from-shale-gas-developments  [accessed 10/June/2016].
[3] Gordon/McHarg/Paterson paragraph 14.34.
[4] Josh Halliday, The Guardian `North Yorkshire Council backs First UK Fracking Test for Five Years` available at http://www.theguardian.com/environment/2016/may/23/north-yorkshire-council-backs-first-uk-fracking-tests-for-five-years?CMP=fb_gu [accessed 10/June/2016].
[5] Gordon/McHarg/Paterson paragraph 14.34.

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