George Osborne will promise to make Britain an “even more attractive place” for the oil and gas industry in a blow to Liberal Democrat ambitions to shift away from fossil fuels.
The Chancellor will today praise “remarkable” oil and gas companies for making the most “significant contribution” to the UK economy in the energy sector.
Mr Osborne will say gas is crucial to meet the UK’s electricity demand throughout the next decade and beyond.
His comments come the day after Nick Clegg, the deputy Prime Minister, insisted that the Coalition is united in its efforts to “support the shift by traditional industry to cleaner sources of energy”.
Mr Osborne lost a battle with the Liberal Democrats over his efforts to reduce subsidies for onshore wind farms. However, the Chancellor is determined to make the UK a “gas hub” with at least £500 million in tax breaks for companies drilling for gas.
He will today unveil a new research centre at Manchester University sponsored by BP, the oil company, with dozens of new academic jobs.
He will also announce more than 500 new jobs linked to the new Cygnus gas field, the largest development in the North Sea of recent years.
Mr Osborne will say Britain is committed to “making the most of our remaining oil and gas reserves”.
“This has long been one of our great industrial success stories, supporting a third of a million jobs, and extracting the equivalent of over 40 billion barrels of oil to date,” he will say.
“We will provide more detail in the autumn on steps we will take to make the UK an even more attractive place for gas investors.”