UK to Set up Sovereign Wealth Fund to Finance Low Carbon Projects

A new report, written by Professor David Mackay, chief scientific advisor to the Department of Energy and Climate Change, and Dr Timothy Stone, Senior advisor to the Secretary of State, has intricately accessed how the greenhouse gas emissions that would be released from developing shale gas in the UK, would affect the country's emission targets.

Ed Davey, the Energy and Climate Change Secretary, explained that the report conclude that with the right safeguards, the level of greenhouse gases emitted during shale gas production would be relatively low, and would have a far lower carbon footprint than coal of imported liquefied natural gas (LNG).

Davey stated that the "report shows that the continued use of gas is perfectly consistent with our carbon budgets over the next couple of decades. If shale gas production does reach significant levels we will need to make extra efforts in other areas. Because by on-shoring production we will be on-shoring the emissions as well. And, as this report recommends, we will still need to put in place a range of techniques to reduce emissions."

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The report should "help reassure environmentalists like myself that we can safely pursue UK shale gas production and meet our national emissions reduction targets designed to help tackle climate change."

Ed Davey, Energy Secretary

Davey also reiterated arguments that other shale gas supporters have mentioned; that it could reduce demand for coal, and therefore reduce carbon emissions on a large scale; and it could create jobs by increasing the size of the oil and gas industry in the UK. However, unlike many, such as Prime Minister David Cameron, Davey was more reluctant to make any claims that UK shale gas could drive down the cost of energy bills.

He claimed that uncertainties over the size and accessibility of shale gas resources in the UK mean that shale gas cannot be relied upon to solve all of our energy problems in the near future.

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Davey also made a point to reassure clean energy supporters that the shale gas industry would not steal investment from renewable energy projects, and actually suggested that the UK would set up a sovereign wealth fund, similar to Norway, which would take revenues from the oil and gas industry, to invest in low carbon alternatives.

"Let me be clear - here at home we must not and will not allow shale gas production to compromise our focus on boosting renewables, nuclear and other low-carbon technologies. UK shale gas production must not be at the expense of our wider environmental aims - indeed, if done properly, it will support them. I am determined to make that happen."

By. James Burgess of Oilprice.com