LONDON Jan 13 British local councils that allow
shale gas developments will keep 100 percent of a levy they
collect from the sites under a government move to persuade
communities to accept the fracking process used to extract the
The local tax, known as business rates, is levied by
councils on commercial properties in England and Wales. Councils
use business rates to pay for local services.
Britain's shale gas industry is still at the stage of
exploration, not commercial production, but energy companies see
it as one of Europe's strongest prospects.
The government is pushing for further exploration despite
fierce local and environmental opposition to the hydraulic
Prime Minister David Cameron's office said in a statement on
Monday that the full business rates take, up from 50 percent
under previous rules, could be worth up to 1.7 million pounds
($2.8 million) a year to councils for a typical site.
Local councils have lost big chunks of the grants they
receive from central government since 2010 as the
Conservative-Liberal Democrat coalition tries to reduce
Britain's budget deficit. Hence any potential increase in
alternative sources of revenue could be an incentive for them.
The Local Government Association (LGA), which represents all
but two of the 375 councils in England and Wales, said the
announcement on business rates was a step in the right direction
but not enough to satisfy communities affected by fracking.
Environmental campaigners say fracking, which involves
pumping water and chemicals into the ground, can pollute water
supplies and cause earthquakes.
"Local areas will be keen to hear more details on how the
community benefits package will be strengthened to fairly
renumerate those who will be most affected," the LGA said in a
"Given the significant tax breaks being proposed to drive
forward the development of shale gas and the impact drilling
will have on local communities, these areas should not be
short-changed by fracking schemes."
The central government has already announced measures aimed
at encouraging companies to invest in British shale gas.
Those include a cut in tax payable on any profits from shale
gas - a separate tax from business rates - to 30 percent from 62
percent, confirmed by finance minister George Osborne in
Geological studies show Britain has large scale shale
reserves that could reverse a rising dependency on energy
imports, but more drilling is needed to see whether the deposits
are commercially viable.
France's Total is set to become the first major
oil company to invest in the industry in Britain when it commits
30 million pounds to drilling for shale gas in Lincolnishire,
central England, sources told Reuters on Saturday.
Shale gas, which has helped transform the U.S. energy
market, is gas trapped in dense rock formations.
Three companies are leading the charge to develop Britain's
shale gas resources: Australia's Dart Energy which is
partnered with GDF Suez, London-listed IGas Energy
and Cuadrilla, a privately owned business partnered
with British utility Centrica.
Britain will launch its latest licensing round to allow
companies to explore for shale gas in early summer.