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 (almost 40 trillion cubic meters) 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."

Blackpool in the north of England is to become one of the fracking hotspots

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

In Wednesday's Autumn Statement the British Finance Minister, George Osborne, said "we’re announcing a new Sovereign Wealth Fund for the North of England so that the shale gas resources of the North are used to invest in the future of the North," as part of the government's plans to boost the economy in the north of the country.

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

Last month, 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.

"In 2006, Norway's GPFG had less than $300 billion in assets. No one in the media paid much attention, until post-GFC [global financial crisis - the ed.] with regard to Norway. This is when other countries began talks of creating SWFs and many fell in love with Norway's size, transparency and corporate governance model," Michael Maduell, president of the Sovereign Wealth Fund Institute told DW in an e-mail.

The fund has already criticized various companies, like Goldman Sachs, Fiat or Burberry, for not complying with its governance principles, and it is looking to step up efforts in that direction.

Although he doesn't believe that a UK fund could become as big as that in Norway, which has much bigger reserves, he says the UK could match Norway in terms of "management and style." He also notes that London is a major financial center that is already "home to many SWF and pension offices."

"If I were to advise the UK government, I would emphasize the true purpose of the SWF, proper withdrawal rules, sound and robust corporate governance and forming an independent investment management team free from investment consultants," he told DW.

Lord Hodgson says the Norwegian model is "interesting, but you can't push the metric too far, Norway has a population about one tenth the size of the United Kingdom's…They have commensurately large reserves of oil and gas and a commensurately smaller population," he told DW.

Why invest in shale?

The process of extracting gas from shale by hydraulic fracturing, or fracking, is highly controversial, especially in Europe, due to environmental concerns.

During fracking, a mix of water and chemicals is pumped into the ground at high pressure. The technique fractures the rock, allowing the underground gas to be released. Environmental groups are concerned about water contamination and air pollution, whereas proponents of fracking say the concerns are overblown.

Other critics say shale gas exploration is unlikely to take off until 2020 and that it's "also unlikely to be of sufficient scale to significantly reduce the UK's import dependence or to have a significant impact on UK gas prices," according to a recent report by the government funded UK Energy Research Centre (UKERC).

So, are the government's plans for a shale gas sovereign wealth fund "a desperate attempt to win over communities," as Friends of the Earth's Helen Rimmer put it last week?

Melissa Stark, global managing director of new energy business at Accenture Stark doesn't think so. She believes the UK, along with Poland, is best placed in Europe to develop shale technology. The UK government, she says "is doing the right thing in lining up incentives for all the players," including the local communities who will face disruption where shale gas sites are being developed.

A sovereign fund is one of those incentives that could benefit the community. "I don't see what's wrong with that," she told DW.

Stark points out that fossil and renewable sources will have to run side by side for quite some time.

She also points out that overall demand for fuel is "leveling off" and that efficiency will continue to improve. However, we still need a mix of fossil and renewable energy sources to meet both private and commercial demand.

Big trucks, for example, will not run on renewables anytime soon, the battery technology just isn't there. Fossil back-up is also still needed when wind or solar sources cannot generate power for a few days. But gas from shale extraction could replace the much dirtier diesel most of those vehicles run on.