UK banking on tax breaks to boost its shale gas industry

The plans involve various tax breaks, including a proposal to cut the tax on some of the income generated from producing shale gas from 62 percent to 30 percent. The government claims that this would make the UK the most generous regime for shale gas in the world.

Chancellor George Osborne said shale gas was a resource with "huge potential" for the UK's energy mix. "We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits," he said. "I want Britain to be a leader of the shale gas revolution because it has the potential to create thousands of jobs and keep energy bills low for millions of people."

In backing shale gas exploration, the UK government points to the experience of the US, where a shale gas boom has had a dramatic effect on the energy sector. Under its plans, the tax break would apply to a proportion of the income generated from shale gas production. What that proportion is will be determined after a consultation.

The government has also confirmed plans to give communities that host shale gas sites £100,000 per site and up to one percent of all revenues from production. That is designed to offset some of the controversy surrounding the process of fracking.