Dentons

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Categories:Energy,Environment,UK

Why won’t UK shale be subject to the renewable energy community stake requirement?

By Humphrey Douglas

As noted in our recent post on shared ownership, the UK Department for Energy & Climate Change (DECC) has published its Community Energy Strategy, which anticipates that by 2015 it will be normal for new renewable energy developments to offer project stakes to local communities (and which could be enforced by an enabling power in the draft Infrastructure Bill 2014). At a recent renewable energy industry event, it was asked why shale developers are not similarly targeted by the Community Energy Strategy to offer stakes to local communities?

In short, because it would likely be argued to be unfair. Shale developers have already paid and committed to fulfil minimum work obligations on shore under a petroleum, exploration and development licence, in order to have the right to explore for and later extract hydrocarbons from the sub-surface (and off the Crown). Any later requirement to give a royalty or equity interest to a local community could be regarded as being analogous perhaps to an unexpected new tax. In addition, having to obtain DECC consent or adding say a community interest company (CIC) vehicle to a hydrocarbon licence could be administratively cumbersome…

Click on the link below to read the rest of the Dentons briefing.

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