Tax cut for shale gas firms planned

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The government has outlined plans to give tax breaks to companies involved in the UK's nascent shale gas industry. It has proposed cutting the tax on some of the income generated from producing shale gas - found in underground shale rock formations - from 62% to just 30%. The plans would make the UK the "most generous" regime for shale gas in the world, the government said. But they have been criticised by environmentalists, with Friends of the Earth calling them a "disgrace". Greenpeace added that communities affected by fracking - the technique for extracting shale gas - faced a lot of disruption for very little gain. Chancellor George Osborne said shale gas was a resource with "huge potential" for the UK's energy mix. "We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits," he said. "I want Britain to be a leader of the shale gas revolution because it has the potential to create thousands of jobs and keep energy bills low for millions of people." The UK is believed to have large resources of shale gas. A recent report from the British Geological Survey estimated there may be 1,300 trillion cubic feet present in the north of England alone - much of it in the Bowland Basin under Lancashire. Drilling companies have previously estimated that they may be able to extract around 10% of this gas - far in excess of the three trillion cubic feet of gas currently consumed in the UK each year. But currently the industry is still in its infancy with a handful of companies holding licences for shale gas exploration in the UK, none of which have begun extracting gas.