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UK Promises Shale Gas Tax Breaks, Public Benefits

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Karolin Schaps and Sarah Young, Reuters

Britain said on Wednesday it will introduce generous tax breaks for shale gas and tackle the nascent industry’s public perception problem by making sure local communities benefit from resources found in their areas.

Chancellor George Osborne said in his annual budget announcement he will introduce a new gas field tax allowance for shale gas, an industry that he expects can help kick-start Britain’s stagnant economy.

“Shale gas is part of the future and we will make it happen,” he said while delivering his 2013 budget in parliament.

Britain, Europe’s largest gas consuming nation, lifted a ban on shale gas fracking in December and is counting on huge shale gas reserves to help cut its dependence on expensive gas imports and to contribute to state coffers.

In the United States, the discovery of abundant shale gas reserves has caused a plunge in gas prices and put the nation on the path towards energy independence.

However, environmental concerns regarding fracking, the technology which involves injecting water and chemicals to break rock formations and extract shale gas, and its potential to trigger earthquakes has led to growing public opposition.

Britain will now try to stem public concerns about shale gas by announcing proposals by this summer on how local communities will benefit from shale gas projects in their areas.

“While the finance directors of the developers might be quite keen on getting tax breaks, the PR and the local communities issues are probably the bigger hurdles for them to jump over and the government seems to be doing something to help that pressure,” said Ben Stansfield, senior associate at law firm Clifford Chance.

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