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Grant Shapps will potentially scrap hydrogen levy on UK energy bills

by | Jun 6, 2023

According to a recent report, Grant Shapps, the UK Government’s Secretary of State for the Department for Energy Security and Net Zero is considering scrapping a proposal to add a £120 (U$149) levy to people’s energy bills to fund the country’s transition to hydrogen.

The decision regarding the levy – which was designed to support the UK hydrogen industry – is believed to have been made following criticism from Conservatory members about the rising costs of living and the financial impact this is already having on people living within the country.

An analysis carried out by the Onward think-tank has estimated that to achieve the Government’s target of 10GW of hydrogen production capacity by 2030, a total investment of £50bn (U$62.2bn) would be needed, equating to an extra £118 (U$147) annually for dual-fuel households. At present, the average person’s yearly dual-fuel bill consists of £165 (U$205) of social and environmental levies.

The proposed levy – which is scheduled for implementation by 2025 – is anticipated to grow by 2030 to aid the UK Government in achieving its hydrogen targets. Furthermore, it has also been suggested that the Energy Bill may be subject to significant changes.

In addition, Department for Net Zero documents suggest that the proposed hydrogen levy seeks to ‘bridge the gap’ between low-carbon hydrogen and fossil fuels to provide long-term funding for the hydrogen business model.

Despite the hydrogen economy being vital in helping the country to achieve net-zero emissions, the UK Government and policymakers must ensure that the financial impact on people living within the country is both manageable and fair in a period where most other costs are also rising. Getting these elements correct will be vital to ensure the public supports the transition towards cleaner forms of energy.

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