The Department of Energy and Climate Change (DECC) have announced plans to establish a sovereign wealth fund for shale gas tax revenues. The proposed fund will be debated in the House of Lords on Monday 17th November 2014.
In announcing details of the wealth fund, Ed Davey, the Energy Secretary said, "The sovereign wealth fund is a great opportunity for the whole of the UK – everyone will reap benefits from it and I'm pleased to announce my department will be establishing it when commercial production begins."
The Energy Minister, Matthew Hancock added, "With the sovereign wealth fund, everyone in the community will benefit, adding to known wider benefits of shale, such as increased tax revenues, growth and jobs."
The wealth fund will be in addition to existing benefits proposed by government for local communities hosting shale gas developments. At present, these include a lump sum of £100,000 for each test well and 1% of revenues from the development. INEOS have extended this offer with a promise to give 6% of its shale gas revenues to homeowners, landowners and communities who live above its shale gas operations.
How the wealth fund resources will be allocated remains to be seen. There are suggestions that the fund may focus on the north of England, where the majority of shale gas reserves exist. Others however, have pointed to Ed Davey's comment that it will benefit the whole of the UK. Further clarification of the wealth fund proposals is anticipated shortly.
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