UK Government Considers Green Hydrogen Subsidies Funded by Gas Company Levy
Key Ideas
  • The UK government is consulting on using a Gas Shipper Obligation levy to fund green hydrogen production subsidies, aiming to raise around £150 million per year by 2028.
  • Gas shippers can pass on the levy costs to customers, with potential added costs of £2.60-£4.50 per year on average dual fuel household energy bills over a 10-year period.
  • The government views hydrogen as a key enabler of a low carbon energy system, with investments expected to create new job opportunities and enhance energy security.
  • The consultation period, lasting 12 weeks until April 9, 2025, is seen as a crucial moment for the UK hydrogen sector's growth and the country's long-term economic development.
The UK government has initiated a consultation on funding green hydrogen production subsidies through a proposed levy on gas companies known as the Gas Shipper Obligation (GSO). The levy will be based on the quantities of gas shipped by gas shippers in the country, with the aim to raise approximately £150 million per year by 2028. Gas shippers can transfer these costs to customers, potentially increasing average dual fuel household energy bills by £2.60-£4.50 per year over a 10-year period. The government sees hydrogen as crucial for a low carbon and renewables-based energy system, envisioning it as a key enabler of a Clean Energy Superpower and Growth missions. The consultation period, open until April 9, 2025, is part of the government's Hydrogen Production Business Model, aiming to create new job opportunities and enhance energy security. CEO of Hydrogen UK, Clare Jackson, emphasizes the importance of investing in clean energy to drive long-term economic growth. The government issued contracts for three green hydrogen projects under HAR1 last month, signaling progress in the sector's development.
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