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Shale gas tax break faces opposition

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The Institute of Directors welcomed the chancellor’s announcement that the government was consulting on a ‘generous new tax regime’ to help development of the shale gas industry. But the chairman of the Aldersgate Group, an alliance of businesses and politicians, warned that investment in renewables could be undermined.

‘The government has said that gas will continue to be an important part of the UK energy mix,’ HM Treasury said after George Osborne’s speech at the Conservative party conference. ‘A successful UK shale gas industry has the potential to create jobs and support UK energy security, benefiting the economy and taxpayers. With the shale gas industry at an early stage of development, the government believes that a targeted tax regime will help unlock investment.’

The IoD’s director general, Simon Walker, said: ‘The chancellor is right to hail the potential of shale gas. As we have argued, shale gas represents a really valuable asset, right on our own doorstep.’

Ed Davey, the energy secretary, is expected to ‘give the green light to fracking – the controversial process of extracting shale gas – as part of the government’s broader “gas strategy” later in the year’, the Financial Times reported. But Peter Young, chairman of the Aldersgate Group, warned that generous backing for shale gas could undermine renewables investment. ‘We will need gas until 2050 at least … but subsidies to the mainstream gas industry would be better spent on low carbon energy sources,’ he said.

The group describes itself as ‘an alliance of leaders from business, politics and society that drives action for a sustainable economy’. Members include ACCA, Grant Thornton and Reed Elsevier.

Craig Bennett, Friends of the Earth policy and campaigns director, said: ‘Generous shale gas tax breaks show the chancellor clearly isn’t listening to the increasingly vociferous warnings from leading politicians, businesses and climate experts about his reckless dash for gas. The green economy is one of the fastest and only growing parts of the overall economy – and with government support it could create thousands of jobs and business opportunities.’