DECC sets up £1bn shale gas community benefit fund for England’s Northern Powerhouse and grants UK oil regulator power to fine N. Sea firms up to £1m for ‘non-collaboration’

OGA logoThe Dept for Energy yesterday published details of its planned spend of £3.3 billion to 2020 and updated Govt. policy for the remainder of this parliament in what it is, in effect, a refreshed UK and England energy strategy.

DECC aims to deliver secure, affordable and clean energy supplies via an infrastructure ‘fit for the 21st century’ which is both clean and cheap to keep household energy bills as low as possible.

 To do so, DECC has already abolished state subsidies for onshore wind turbine parcs and reduced subsidies for solar and other renewable energies.

Andrea Leadsom, the junior British Energy Minister – and current UK prime ministerial candidate – said: “This Government is committed to keeping bills low for families and businesses – and to acting as a consumer champion. I fully expect that to remain an objective of energy policy in this country for years to come.”

And in what is also in effect and English Energy Strategy, the UK government is committed to developing a domestic shale energy industry and to building new nuclear power stations.

Andrea Leadsom
Andrea Leadsom

Leadsom added: “This Government will not duck the difficult decisions about investment in our energy infrastructure. We have been clear that we expect to bring on power generation from both new nuclear and new gas plants.

“That’s why we are commissioning the first new nuclear power station in a generation, and working with developers, who have set out proposals to develop 18GW of new nuclear power stations at six sites across the UK.

North Sea oil and gas are crucial to maintaining security of energy supplies – and to give teeth to its mandatory power to force, if need be, major oil operators to collaborate to deliver MER (Maximise Economic Recovery) the Govt. has given the Aberdeen-based Oil and Gas Authority to fine non-collaborative oil companies up to £1 million if they refuse to collaborate.

 A DECC spokesman said: “We aim to establish the OGA as a Government Company by Summer 2016.

“The OGA will have powers to maximise the economic recovery of the UK’s oil and gas, including the ability to access data, resolve disputes and impose fines up to £1 million.

“We recently concluded a consultation on a strategy to Maximise the Economic Recovery of the North Sea and this strategy will set the boundaries of people’s obligations and provide a framework for the OGA as it carries out its role.

“To supplement production from the North Sea, we will also continue to support the safe development of shale gas, which will strengthen UK energy security.

DECC graphic on shale well depth
DECC graphic on typical shale well depth in comparison to the (tiny) Big Ben clock tower, bottom left.

“We will ensure that communities that host shale exploration benefit directly; the government has therefore established a Shale Wealth Fund from up to 10% of shale tax revenues, which will invest up to £1 billion in the North <of England> and other shale producing areas over the next 25 years.

“This will also contribute to the government’s commitment to build the Northern Powerhouse.

“We will continue to ensure that shale exploration is developed safely, cleanly and responsibly, including, where appropriate, through support for independent environmental monitoring, and that the protections in place are properly explained to local communities.

“We will continue to work with industry and other key stakeholders to identify remaining barriers to exploration and how these might be resolved, and to ensure that developers communicate fully and effectively with local communities.”

The OGA is also responsible for licensing shale gas energy onshore exploration fields in England.

Scotland will get nothing from shale energy as the minority-led SNP government imposed a ‘temporary’ moratorium on shale gas exploration in January 2015.

In England, DECC also intends to bring together heat with energy efficiency in buildings, to reduce carbon through a combination of demand reduction and efficient generation.

In the short term it is looking at the performance of boilers and conventional heating systems.

The spokesman added: “We will continue to develop a long-term strategy to drive low carbon and renewable heat through a stable, coherent and affordable framework

“On carbon capture and storage, we will consider the advice from Lord Oxburgh’s CCS Advisory Group as we explore our future approach to this technology for both power and industrial processes.

“And offshore wind could potentially also make an important contribution, if the technology can move quickly to cost-competitiveness.

And Leadsom added: “We see a strategic case for the UK to build more offshore wind power, and so we have committed to support up to 10GW of new projects in the 2020s – provided the costs continue to come down.

“At the Budget earlier this year, we announced funding of up to £730m a year, for three auctions during the course of this parliament in which offshore wind projects can compete. We have achieved record levels of investment in renewable energy: in 2014, 30% of all Europe’s renewable energy investment took place in the UK.

“We have surpassed our own expectations: solar power capacity has now reached over 10GW, with 99% of that having been installed since 2010.

“And we are on track for 35% of our electricity to come from renewables by 2020 while our overall emissions have fallen by a third since 1990.”

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