Reinvesting fracking funds into renewables

Lee_Petts

The Prime Minister recently intervened to ensure that a consultation into how the government’s proposed Shale Wealth Fund operates includes the option for residents in shale gas communities to receive direct financial benefits.

Campaigners opposed to fracking say it’s a bribe, says Lee Petts, managing director at Remsol.

However, it should be seen as a positive move: according to the most recent DECC Public Attitude Tracker, 46 per cent of people were neither for or against shale gas and 21 per cent were supportive. We can therefore assume that 67 per cent of people living near shale sites will be at least neutral if not in favour – and, inevitably, some of them would probably welcome the idea of being able to obtain some sort of direct financial benefit, particularly those on zero-hours contracts and low wages.

In fact, according to some recent polling conducted on our behalf by ComRes, if there was to be a major energy development in their local area, including shale gas, British adults are least likely to think the community should benefit via payment to local councils to allocate to projects in the area.

Fracking

There is, however, another way that local people could benefit directly without being handed cash payments and it’s a model that environmental NGOs should feel comfortable embracing.

As well as the government’s Shale Wealth Fund, the industry itself has pledged to share one per cent of its production revenues with local communities too, but since it was first announced in 2013, there hasn’t been a great deal of discussion about that might work.

In our latest policy paper, we suggest that it could be best spent on installing renewable energy and energy efficiency measures in nearby homes. It shows that doing so would create jobs (at a time when renewables subsidy cuts are being blamed for job losses), cut household carbon emissions and boost house values – in fact, owner-occupiers could secure total benefits of over £40,000 when the capital contribution, lifetime energy savings and property value increases are taken into account. What’s more, because it’s based on a percentage of revenues not a proportion of taxes on profits like the Shale Wealth Fund, it will be available much sooner.

Whereas opponents say that fracking will deter investment in renewables and energy efficiency, we show that it can act as an enabler.

A more radical option would be for communities to obtain shares in individual shale gas wells. This may sound far-fetched, but there’s already an analogue in the onshore wind industry: residents in the village of Fintry in Scotland bought a wind turbine as part of a nearby wind farm development and are set to benefit to the tune of around £5m over 25 years. They, too, have used the money wisely to invest in renewables and energy efficiency for villagers.

The biggest question that will arise is just how ‘community’ gets defined, and it’s something our policy paper hasn’t attempted to answer. Because they will range in both size and property type across the country, I suspect this will have to be determined on a case-by-case basis – although, intuitively, you’d have to say that the people living closest to an energy development like shale gas must benefit first as they’ll be the ones that see and hear it the most.

If it goes ahead, maximising the social, environmental and economic advantages of shale gas would be the responsible thing to do.

Using the proceeds of shale to fund local renewables is one way of doing just that, and I can’t help thinking that it’s a massive opportunity staring us all in the face – one I hope doesn’t become a missed opportunity if shale gas does eventually proceed.

Of course, in the end, it’s for local communities themselves to decide. They need to have all the alternatives laid out before them and they need to be given a proper say – which is precisely what the Prime Minister has just facilitated with her changes to the Shale Wealth Fund consultation. Whatever they decide, it needs to be something that everyone in the community can enjoy and it should have.

Lee Petts is managing director at Remsol Limited, and a sustainability and CSR consultant