Osborne wins Government battle for cheaper gas

Posted on 6 Dec 2012

The Chancellor George Osborne won his battle with Prime Minister David Cameron and the Department for Energy and Climate Change by committing to a gas strategy that will result in new power stations and shale gas exploration.

Mr Osborne launched an Office for Unconventional Gas that sidesteps the Department for Energy and Climate Change (DECC) by pulling people together from different departments.

Barriers to investment in new gas will be addressed as the Government confirmed the major role gas will continue to play by 2030.

A source in The Commons told The Manufacturer has the “Treasury has taken over gas office of unconventional gas. DECC has been cut out on this. It’s quite evident that Osborne wants gas and Cameron wants green power. There is a problem at the heart of government.”

The Government is encouraging new gas-fired power stations to be built over the next two decades to replace retiring coal, older gas and nuclear power stations. Up to 26GW of new gas generating capacity could be required by 2030.

There will be greater flexibility and clarity for existing consents to support this.

ScottishPower has plans ready for two gas plants and others look set to follow if the Government can guarantee its commitment to previously ignored gas power before it invests.

“There will be a gas strategy to create lower cost gas power as we don’t want families and businesses left behind as gas prices tumble on other side of Atlantic,” said Osborne.

A large reason for the falling gas prices in the US has been the surge in shale gas extraction, which has led to boom towns across the country similar to Aberdeen. The Chancellor has promised new tax incentives for shale gas.

The Office for Unconventional Gas and Oil will join up responsibilities across Government and provide a single point of contact for investors and streamline the regulatory process.

The Government has signalled that shale gas is potentially an exciting new prospect for diversifying our energy supplies but stated that any development will have to meet high standards of safety and environmental protection.

A decision on whether to permit Cuadrilla to recommence fracking will be announced soon after mini earthquakes stopped activity in Blackpool.

Nigel Farage, leader of UKIP, said that “encouraging shale gas development is a great move” in an exchange with the Green party MP for Brighton Caroline Lucas on Twitter.