The UK government has confirmed plans to abolish a proposed hydrogen levy which could have resulted in customers paying extra on energy bills.
Tabled as part of the energy bill, research conducted by think tank Onward found that the introduction of this levy would raise energy bills by around £188 per year for the average dual fuel household.
Taking this into consideration, the government has made an amendment to the energy bill meaning the proposed hydrogen levy, which was to be used to support the growth of low-carbon hydrogen production, would not be imposed on British households.
Commenting on the hydrogen levy proposal back in May 2023, Jack Richardson, head of Energy and Climate at Onward stated: “The government is walking into a trap with the hydrogen levy. It would be a mistake that risks stalling the development of a British hydrogen economy. It would also be unfair to ask households that won’t benefit from hydrogen directly to pay for it.
“The government should think again. And the Treasury should get off the fence and back the role hydrogen can play in the economy.”
The UK government has been cautious in its approach to hydrogen. Despite major backing, its initial Hydrogen Strategy set a goal of just 5GW of low-carbon hydrogen production by 2030 – significantly lower than countries such as the US, Germany and Australia.
A negative response from industry prompted this figure to be increased to 10GW, with 5GW to come from green hydrogen.
You can find out more about green hydrogen and its potential in the UK market in a Current± blog here.