George Osborne will promise to make Britain an “even more attractive place” for the oil and gas industry in a blow to Liberal Democrat ambitions to shift away from fossil fuels.
The Chancellor will today praise “remarkable” oil and gas companies for making the most “significant contribution” to the UK economy in the energy sector.
Mr Osborne will say gas is crucial to meet the UK’s electricity demand throughout the next decade and beyond.
His comments come the day after Nick Clegg, the deputy Prime Minister, insisted that the Coalition is united in its efforts to “support the shift by traditional industry to cleaner sources of energy”.
Mr Osborne lost a battle with the Liberal Democrats over his efforts to reduce subsidies for onshore wind farms. However, the Chancellor is determined to make the UK a “gas hub” with at least £500 million in tax breaks for companies drilling for gas.