In a move that would see the Conservative party respond to Ed Miliband’s promise of an energy price freeze, tax revenue from companies granted licences to frack could be used to lower energy bills.
The initiative would enable the government to reduce the level of green subsidies which currently make up roughly one tenth of consumer energy bills.
Speaking on the proposals, a Cabinet minister told the Telegraph: “Fracking should deliver major tax revenues, so one idea is to rely on that money to fill the gap left by reductions in the environmental levies.”
Up to 40 drilling sites in next two years
Last week, Energy Minister Michael Fallon said he thought up to 40 shale gas wells would be created in the UK over the next two years. He added that a recent study has shown there were two to three times more shale gas reserves in the country than previously thought and that it would be “irresponsible” not to take advantage of the resource.
Energy secretary Ed Davey has previously raised concerns about fracking’s ability to drive down energy bills, although he has stated the process could be part of the move towards a “green future”.
A map of UK sites deemed suitable for exploratory drilling is set to be published by the government in November.
Fracking remains controversial
Should Chancellor George Osborne decide to employ the scheme and allow fracking to take place in certain areas of the UK, he is likely to anger a number of citizens and environmental groups.
Fracking remains a controversial process and recent exploratory drilling in Balcombe, West Sussex, caused large scale protests and consequent arrests. Energy company Cuadrilla, which was drilling in the area, was forced to delay proceedings.