Friday, 24 January 2014

Share the risk, save the rewards - nationalise the fracking industry?

If the government is convinced that fracking offers huge economic benefits for Britain, and not environmental disaster, why doesn't it directly invest in the industry?

Although nationalisation may be unpalatable to the current government, it would ensure the country shares the risk, but - importantly - shares the benefit. It would also strengthen the UK’s own fuel security by literally controlling the pipeline.

With high-level research into the environmental impact of the process, nationalisation or direct investment of public funds could also help to placate the opposition. Kentcentric isn’t a lawyer or economist, but in simple terms – if the country controlled the industry, it could set the price and go some way to helping tackle the issue of fuel poverty. 

David Cameron’s recent announcements have been described as offering cash-strapped local authorities little more than a bribe. If they sign up to allow fracking in their area they would also be eligible for a package of financial benefit. The package includes:

· £100,000 when a test well is set up
· An estimated £5m-£10m from a typical fracking site over its lifetime based on one per cent of revenues 
· 100 per cent of the business rates collected from shale gas schemes 

Given the scale of the opposition to fracking in many communities, as seen in Balcombe, West Sussex, it’s unlikely that local authority leaders with one eye on future elections will risk damaging their relations with voters.

Rather than simply granting licences to frackers, why not make the whole process a nationalised activity, or three way joint venture partnership between the state, frackers and landowners. This would bring together exploration, operation and environmental protection and regulation, as well as the landowner.

This could also send a more positive message to opponents in that the state would monitor impacts on the environment, and yet also secure benefits for the public purse, rather than the derisory one per cent of revenues or business rates. Nationalisation would ensure that when it comes to fracking, we really would be ‘all in it together’.

The PM’s announcement coincided with the news French fuel giant Total is to become the first major oil company to invest in the UK’s shale gas industry. Under the deal, Total will make a £30m investment to acquire stakes in firms with drilling licences in Lincolnshire. Total’s investment comes at a time when fracking as a process is banned in France.

Nationalisation would also ensure a new industry remains in British hands, with the prospect of promoting homegrown technologies and skills on a wider global stage. 

We recognise it doesn’t sit well with Conservative policy, but if the country is to embrace new technologies, the government needs to lead by example – and how better than to invest itself. 

What do you think?

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