The UK is considering setting up a wealth fund from the proceeds of the fracking industry. Communities would benefit, but many question whether fossil fuels like shale gas are the way forward. Nicole Goebel reports.

In January this year, British Prime Minister David Cameron said the UK was "going all out for shale," as the country's oil and gas operations in the North Sea age, with Britain becoming a net importer of oil and gas again in the mid-2000s.

The government has therefore set its sights on shale gas, which has seen a boom in the US. In Europe, it is controversial due to environmental concerns.

The UK government estimates that its nascent shale gas industry could create around 64,500 jobs. The industry is still in the exploration stages, with a focus on sites in the north of England.

The British Geological Survey estimates there could be 1,300 trillion cubic feet of shale gas in those regions.

Learning from the past?

Given the industry is in its very early stages and given the general public's reservations about extracting shale gas through fracking, floating the idea of a sovereign wealth fund (SWF) based on revenues from that industry, may seem a tad hasty.

But Lord Hodgson of Astley Abbotts, a Conservative peer in the House of Lords told DW that he is keen to get the ball rolling now. "What I'm interested in is finding ways that we make sure that where we have finite resources which, in my view, are not properly, any single generation's to spend. We should leave some of the proceeds for future generations to enjoy."

Because "as governments constantly exhort us to save more individually for our old age, governments might practice what they preach occasionally," he added.

Lord Hodgson has initiated an amendment to the UK government's infrastructure bill, to include the concept of a sovereign wealth fund based on shale gas revenue.

"The government have whole-heartedly and enthusiastically backed the concept. The Chancellor [of the Exchequer] has committed to repeating that commitment in his autumn statement and to bring forward a specific statement after the general elections next May," he told DW.

In fact, last week, British Finance Minister George Osborne told BBC Radio that such a fund would be a way of "making sure money is not squandered on day-to-day spending".

Shortly after the UK began drilling for oil and gas in the North Sea in the late 1960s, the idea of a wealth fund was first floated, but it never saw the light of day. As a result, many feel that oil and gas revenues were "wasted" without any benefit to future generations.

Role model Norway?

Lord Hodgson's amendment recommends that 50 percent of what the government takes in from fracking shale gets invested in the fund annually and that only up to 4 percent can be taken out of it per year. Further details have not been worked out yet.

The obvious role model here is Norway. Its Government Pension Fund Global (GPFG) has assets worth $893 billion (716.4 billion euros) - almost twice the size of Norway's gross domestic product for 2013.

It owns 1.3 percent of the world's companies, according to figures from Norges Bank Investment Management, which manages the fund on behalf of Norway's central bank.

Norway's Finance Ministry is ultimately responsible for the fund, which has not only become the world's biggest sovereign wealth fund since its inception in 1996, it has also become known for taking a stance on corporate governance.