Government’s hydrogen levy: A ‘risky trap’ for British hydrogen economy

The government’s proposed hydrogen levy risks hindering the development of the British hydrogen economy and burdening households, according to a report

The UK’s pursuit of a thriving hydrogen industry could face a significant setback as the government walks into a potential “trap” with its proposed hydrogen levy.

That’s according to a new report by the think tank Onward which suggests the plan not only poses a risk of stalling the development of a British hydrogen economy but also raises concerns about the fairness of burdening households that won’t directly benefit from hydrogen.

The authors of the report have urged ministers to reevaluate this strategy.

Recognising the value of hydrogen, the government has set an ambitious target of achieving ten gigawatts of low carbon hydrogen production by 2030.

However, questions arise concerning the costs associated with this goal.

Calculations indicate that supporting the production of 10GW of low carbon hydrogen could amount to a staggering £53 billion over a 20-year period.

The hydrogen industry would require substantial financial assistance, with the hydrogen levy alone contributing £3.5 billion annually from 2030.

Unfortunately, this would result in an increase of approximately £118 per year in energy bills for the average dual fuel household, according to Onward.

The think tank notes that funding hydrogen investment through such a levy could prove detrimental to businesses, burden households with higher energy costs and risk undermining long term support for achieving the net zero agenda.

Head of Energy and Climate at Onward, Jack Richardson, has warned against the implications of the hydrogen levy, emphasising the need for a secure supply of low carbon hydrogen in the UK.

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