The government is eager to get the UK’s shale gas industry going, and this morning announced improved financial incentives for local authorities willing to permit fracking. But local governments’ initial responses are lukewarm.
The UK’s fledgling shale gas industry has faced opposition from environmental campaigners and community groups in recent months. But Prime Minister, David Cameron, hopes the government’s latest community benefit plans will be enough to assuage fears about an industry he says is central to the government’s “long term economic plan”.
More money for communities
The government had already announced that communities are to benefit financially from any shale gas wells in the local area. But it’s not just Joe Public the government has to persuade: local councils have to sign off any plans before energy companies move in and start drilling. Today’s announcement was designed to get the planners on board.
Cameron announced that local authorities would receive 100 per cent of the business rates – a tax levied on any non-domestic properties – from shale gas wells. Normally, the local council only receives 50 per cent, with the other half going to the treasury.
The prime minister claimed this could mean local authorities receive up to £1.7 million from a ‘typical’ site with 12 drilling rigs. Local authorities, the reasoning goes, could then spend the money improving services, such as transport or education.
That income would come in addition to proposed from the drilling companies: a one-off payment of £100,000, and a one per cent share of the well’s subsequent revenue.
The government previously proposed that money from companies would go toward community improvements – such as building a new leisure centre, for example. But in another change, the government now says they could instead be given out in cash to households affected by the drilling.
Local authorities don’t seem convinced by the improved package, however.
The Local Government Association, which represents 421 local authorities and councils, is holding out for a better deal. It wants energy companies to give communities closer to 10 per cent of revenues, should shale gas be found in their areas. It says this is closer to the amount communities in other countries receive.
Not just about money
Moreover, research suggests that simply paying communities to accept fracking may not be the best way to overcome opposition.
Research by Geoff Wood from the University of Dundee’s Centre for Energy, Petroleum, and Mineral Law and Policy suggests that payments aren’t the only – or even the best – way to get the public on board with new energy plans. He told us public participation is key in the early stages of planning to smooth the path.
He told Carbon Brief:
“[W]hen people feel more involved in the planning process, they are more likely to start looking for available options rather than just opposing developments per se”.
That’s a lesson the shale gas industry and government may need to learn in a hurry.
A University of Nottingham poll from September shows that while a majority of the public still thinks shale gas extraction should be allowed in the UK, opposition is on the rise. The Nottingham researchers note there “there has been a noticeable drop in approval ratings” since Cuadrilla’s shale gas exploration sparked protests in Sussex last summer.
The protesters mainly focused on environmental and community concerns – such as shale gas’s impact on the climate, and water contamination – rather than whether the industry is sharing its profits or not. So it’s unclear whether increasing the financial incentive will be enough to win the public over.
Government polling suggests there could be an opportunity to bring the public round, however.
It shows that about 70 per cent of people were concerned that the UK wasn’t doing enough to develop technologies to take advantage of the UK’s hydrocarbon reserves, including shale gas. Meanwhile, 80 per cent were concerned that the UK is becoming too dependent on energy imports.
Going on the government’s current rhetoric, it seems to hope a combination of improved community benefits and arguing that shale gas is “crucial” to the country’s energy security will convince the public to accept fracking.
The government had already announced community payments in an attempt to get communities on board, now it’s offering local authorities something to sweeten the pill. But today’s lukewarm response suggests attitudes to fracking are more complex than the government seems to assume.
Local authorities don’t think the government’s financial offer is good enough – suggesting their price for hosting a well is higher than the government anticipated. Meanwhile, public desire for greater involvement in the early stages shows there are some things people prize higher than cash payments or a new community centre.
The government will need to work out how to satisfy those demands if it is going to successfully stimulate the UK’s burgeoning shale gas industry.