«Cheaper energy bills for UK citizens»

The Shale gas revolution

Cameron’s government is hoping that investments in Shale gas will create new employment and cut energy bills. Are you looking to follow the US’s trail? What are the potential threats to the environment?

The revolution which occurred in the US has brought many benefits in terms of cost reduction. In our country, as well as in Poland and Romania, we are looking to develop shale, but we do not know how difficult its extraction may be. The problems we may encounter can be both of geological nature as well as in terms of cost-efficiency, as the US experience shows. We are still at the beginning of the process, there are about a dozen companies who are working through the bureaucracy and are studying the geology of the sites. At the moment we can only say that, as many recent studies have confirmed, the shale gas fields in the UK are around two to three times bigger than previous estimates. The issue now is to understand how to extract this gas safely, as in the US. The companies involved have estimated that, over the next 2 to 3 years, they can explore around 20 to 40 fields.

What are the incentives that the government is planning to give to local authorities whose areas are rich of shale gas fields?

We believe that the profits should not be confined to extraction companies, just as tax revenue cannot only go to the Treasury: the benefits should be extended to citizens. This is why these companies will pay a compensation of around 1000 pounds  for the inconveniences caused by their field explorations. Furthermore, 1% of their revenues  will go to local communities. These revenues are estimated to be around 5 to 10 million pounds for whole life cycle of the field. Finally, as for solar panel fields and wind farms, 100% of the tax revenue coming from these companies will be devolved to local authorities.

At the World Economic Forum in Davos London mayor Boris Johnson has affirmed that London is not experiencing real estate bubble. Do you agree?

The BoE’s Financial Policy Committee was set up to monitor the formation of bubbles around certain assets. Their job is to warn the Monetary Policy Committee – whose job is to set interest rates – which will in turn, restrict credit as soon as they observe the first signs of a bubble. This new mechanism was set up after the explosion of the recent financial crisis, and I am sure that they are absolutely vigilant in making sure that bubbles do not form. Obviously this is not to say that prices, especially in central London, have not increased dramatically. This is because London is perceived as a safe haven. All the world, including Italy, is investing in London.

Are you worried about the anti-Europe movement Ukip, led by Nigel Farage?

We look at Europe with a certain dose of preoccupation because we want to protect the European single market. We are EU members but we have chosen to stay out of the Euro, for this reason we have the good functioning of the single market at heart. For us, it is important to reinforce the governance of the main Eurozone institutions, in order for member countries to start sharing fiscal sovereignty. For this reason, protecting and expanding the single market ( to cover the energy and digital services sectors) is crucial. These are important points in the government and in the Tori’s agenda. On the other hand, Nigel Farage is not interested in reforming Europe, his goal is simply to exit the Union, thinking that the UK can make it on its own. This is very different from our position: we have been EU members for 40 years, we need a Europe which is more competitive but to achieve this goal we also need strong consensus from our voters. The Tories are the only party that can achieve these objectives. Farage’s party does not have any member in parliament , and thus does not have any power. Of course, now the European elections are coming up.

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