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Spanish government aims to win support for fracking with new tax

Areas where oil and gas are located to receive money from exploitation activities

Fracking has met with significant opposition in parts of Spain.
Fracking has met with significant opposition in parts of Spain. AFP

The Spanish government is using taxes to try to break local and regional reticence over oil exploration and fracking.

The Cabinet on Friday agreed to send Congress a change to hydrocarbons legislation that includes a new tax on oil and gas exploitation.

Part of the proceeds will be transferred to regional and municipal governments where the sites are located, if they are on land. If the gas or oil fields are under the seabed, the nearest municipality will benefit.

The goal of the reform is “for revenues derived from hydrocarbon sites to revert to the whole of society,” government sources said

Industry Minister José Manuel Soria said occupation fees would also be reviewed to ensure that landowners receive one percent of the value of annual production for as long as exploitation remains underway.

The goal of the reform, which is pending congressional approval, is “for economic revenues derived from hydrocarbon sites to revert to the whole of society,” according to government sources.

The ruling Popular Party (PP) is seeking to break down opposition to oil surveys and hydraulic fracturing (fracking) techniques expressed by some regional authorities, which claim the practices damage the environment and local tourist-based economies.

Detractors say the techniques pose a risk of triggering earthquakes, as well as causing air and noise pollution and contaminating ground water.

The Canary Islands regional government has been particularly vocal in its opposition to these hydrocarbon industry initiatives.

Some regions are passing legislation of their own to stop the practices. Andalusia has just implemented a two-year moratorium on fracking, while the northern regions of Cantabria, Navarre and La Rioja have banned the practice altogether.

At the local level, around 400 towns have approved motions rejecting these controversial exploration techniques, according to environmental group Ecologistas en Acción.

So far, the courts have been ruling on the side of the central government. Both the Supreme Court and the Canary Islands regional High Court have endorsed the prospecting licenses the government awarded Spanish oil firm Repsol, while the Constitutional Court has placed regional anti-fracking legislation on hold.

But given that Spain is a highly decentralized country where regional governments hold great power over environmental and land zoning issues, widespread opposition to hydrocarbon exploration could significantly hinder these projects.