Question

To ask the Secretary of State for Energy and Climate Change, whether he plans to make Government subsidies available to the fracking industry during exploration, gas extraction and land reclamation.

I have been asked to reply.

The Government does not propose to make any subsidies available to the onshore oil and gas industry.

Along with our EU partners in the G20, the UK uses the following definition of a fossil fuel subsidy: "A fossil fuel subsidy is any government measure or programme with the objective or direct consequence of reducing, below world-market prices, including all costs of transport, refining and distribution, the effective cost of fossil fuels paid by final consumers, or of reducing the costs or increasing the revenues of fossil-fuel producing companies".

Under this definition the UK has no fossil fuel subsidies. At Autumn Statement 2013, the Government introduced the onshore allowance to incentivise early exploration in shale gas. The allowance exempts a portion of a company’s profits, equal to 75% of capital expenditure the company incurs, from the supplementary charge. The allowance reduces the tax rate on that portion from 62% to 30%. We do not consider differential rates of tax to be a subsidy. Companies continue to pay Ring Fence Corporation Tax (which is higher than the main Corporation Tax rate) even where income is covered by the allowance.