Gas boost 'fits with emissions aim'

Substantial investment in new gas power plants in the UK is "completely consistent" with targets to cut emissions, Energy Secretary Ed Davey insisted.

He also said he hoped it would be possible to give the green light to unconventional shale gas, which is extracted using the controversial process of "fracking".

Mr Davey's comments come as businesses lined up to warn the Government that support for future gas power and a failure to sign up to targets to slash emissions from electricity generation are undermining needed investment in the power sector.

In two separate letters, a range of major companies have urged the Government to set a target to decarbonise the power sector by 2030 to provide the long-term certainty needed to drive investment in energy infrastructure.

The coalition has been divided over future energy supplies, with the Lib Dem Energy Secretary seeing off Tory calls for significant cuts to onshore wind farm subsidies in the summer - at the price of support for gas up to and beyond 2030.

On Monday Mr Davey told the GasTech industry conference in London that the UK was "good at gas - we like gas". As the cleanest fossil fuel, which currently makes up more than a third of UK primary energy use, he said it was helping many countries including Britain cut carbon emissions, and would be as important for some years as it had been in the past. He said gas would play an important role in ensuring security of electricity supplies, which will need to increase as heating and transport are electrified to cut emissions, as well as be the key energy source for heating buildings.

But he sounded a note of caution over shale gas, a major industry in the US but one which raises concerns over contamination of water supplies, and has caused two small tremors near the only site where exploration is being attempted in the UK.

He said questions about regulatory oversight and the involvement of local communities needed to be answered, not simply dismissed, and any new energy source must be consistent with efforts to cut carbon emissions. "But in the context of the Government's green light for carbon capture and storage of fossil fuel plants and in the light of evidence of the best regulatory regime, I hope it will prove possible for me to give a green light to shale," he said.

At the Tory Party conference in Birmingham, Chancellor George Osborne said the Government was consulting on a "generous new tax regime for shale" so the UK was not left behind as gas prices fell in the US, where shale gas is being widely exploited. The Treasury said a targeted tax regime would help unlock investment in shale gas, which had the potential to create jobs and support energy security.

But Jim Footner, head of Greenpeace's energy and climate campaign, said: "Osborne needs to stop giving handouts to his mates in the gas industry and instead back his Lib Dem coalition partners and the CBI by supporting investment in renewable technologies that will help stabilise bills, reduce our reliance on energy imports and boost the economy."