UK scraps proposed hydrogen levy on energy suppliers

The UK government has scrapped its previous plan to add a hydrogen levy to customer gas bills to fund the adoption of the clean energy carrier via energy suppliers, instead proposing to raise the required money from the gas shipping industry.

The government has tabled an amendment to the Energy Bill, currently going through parliament, to move the levy from energy suppliers higher up the energy supply chain.

"The new levy would be aimed at the gas shipping industry and will help to ensure those who benefit from hydrogen can support the UK's growing hydrogen economy," a Department for Energy Security and Net Zero spokesperson said in an email Aug. 30.

DESNZ said the revised legislation sought a fairer approach higher up the energy supply chain, allowing scope for costs to be spread to sectors that are expected to benefit most from early hydrogen deployment.

The spokesperson said the government had listened to concerns raised about additional levies on energy suppliers.

DESNZ is to consult on the scheme and work closely with industry before introducing such a levy.

Platts, part of S&P Global Commodity Insights, assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capex) at GBP5.21/kg ($6.63/kg) Aug. 29, based on month-ahead grid power prices. PEM electrolysis production was assessed at GBP6.12/kg, while blue hydrogen production by autothermal reforming was GBP2.19/kg (including capex, CCS and carbon).