Dr. Mark McClelland
In a shift to the trajectory of UK energy policy, on 5 December 2012, the British government announced its new ‘Gas Generation Strategy’. The proposals establish a new Office of Unconventional Gas and Oil, encourage the construction of up to 30 new gas-fired power stations by 2030, and demonstrate renewed resolve to harness shale gas reserves in the UK. The ‘Autumn Statement’ by the Chancellor of the Exchequer, George Osborne – a close ally of Prime Minister David Cameron – received headlines for its extension of public spending cuts, yet it was accompanied by new energy proposals that are likely to prove more significant in the long term.
In the face of an extremely challenging macroeconomic environment, the financial crisis in the eurozone, and rising energy costs, Osborne increasingly sees shale gas production as an important factor in the long-term recovery of the UK economy. Having witnessed the dramatic expansion of the industry in the United States, it is clear that the government in London is seeking to emulate its success in the UK. Innovative hydraulic fracturing (fracking) techniques in the US have allowed large shale gas reserves to be exploited, causing the price of natural gas to plummet. This has had significant spin-off benefits for the industrial and manufacturing sectors, in addition to domestic consumers, who have all benefitted from low natural gas prices. (more…)