- The UK government is planning to introduce a new “hydrogen levy” on energy bills, through the Energy Bill now in Parliament.
- The planned levy would charge consumers to cover the costs of industry producing hydrogen, adding to bills when the price of energy is already at an all-time high.
- The government is yet to quantify the potential cost of the levy to consumers, arguing this information is not relevant to the MPs and peers deciding whether to grant the Secretary of State new powers.
- A new report from independent think tank E3G finds that hydrogen is most likely to be used for industrial processes and is increasingly unlikely to be used to heat homes because of its high costs and inefficiency. Using hydrogen for heating could double heating bills.
- E3G says that money should not be taken from consumers’ energy bills to pay for a technology which they are very unlikely to use in their homes.
The government has proposed an additional charge on consumers’ bills, despite growing concerns about the record bills domestic consumers face.
Experts have criticised the move, as hydrogen looks increasingly unlikely to play a role in the UK’s net zero heating mix. A new briefing from independent think tank E3G finds that hydrogen is most likely to be used in industrial processes. Household consumers should not be charged to support a technology with no direct benefits.
Hydrogen has been proposed as an alternative energy input for a wide range of activities that currently rely on fossil fuels. But the vast majority of hydrogen produced today is made from fossil gas, which means it contributes to climate change. The government wants producers to scale up the production of both “blue hydrogen” – which would include new carbon capture technology to mitigate the harmful emissions – and “green hydrogen” – which is made by using electricity to split water into hydrogen and oxygen, and does not produce emissions.
The report concludes that while green hydrogen is a potentially promising option to decarbonise certain industrial processes, such as high-temperature manufacturing and chemicals production, the weight of independent evidence shows that hydrogen will be too expensive and inefficient to produce at the scale needed to heat homes. Using hydrogen for heating would likely lead to heating bills doubling.
It says that the government’s proposal to have commercial hydrogen production subsidised by domestic consumers, therefore, makes little sense. E3G has urged ministers to reconsider the levy, and MPs to vote down the proposals when the Energy Bill comes to the Commons from the House of Lords later this month.
Read E3G’s report, The Case Against the Hydrogen Levy.
Juliet Philips, Senior Policy Advisor at E3G said:
“It is a total rip-off for households to be charged a hydrogen levy when the case for hydrogen for heating has fallen apart. Worryingly, the key beneficiaries of this levy would be the fossil fuel industry. The levy must be scrapped.”
James Dyson, Senior Researcher at E3G said:
“When energy bills are at an all-time high, there is no room to impose a regressive levy on consumers to fund commercial hydrogen production. If the government wants to help create a hydrogen economy, it must find a fairer way to pay for it.”
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Notes to Editors
- E3G is an independent European climate change think tank with a global outlook. We work on the frontier of the climate landscape, tackling the barriers and advancing the solutions to a safe climate. Our goal is to translate climate politics, economics and policies into action. About – E3G
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