UK Government Proposes Tax Relief to Boost Hydrogen Production
Key Ideas
  • UK government pledges to remove Climate Change Levy costs from electricity used in electrolysis for hydrogen production, aiming to support low carbon hydrogen growth.
  • Consultation seeks public input on the best legislative approach to eliminate these costs effectively without unintended consequences.
  • Government plans a wider review of Climate Change Levy to align with the evolving energy landscape, clean power objectives, and net zero goals.
  • The consultation aims to gather opinions on areas beyond hydrogen production where Climate Change Levy may require adjustments for coherence with energy developments.
During the Spring Statement 2025, the UK government announced its commitment to facilitating the growth of low carbon electrolytic hydrogen production by removing Climate Change Levy (CCL) costs from electricity used in electrolysis. This move is seen as crucial in the decarbonization efforts across various sectors such as industry and transport. The government is seeking feedback through a consultation process to determine the most effective legislative approach to implement this tax relief without any unintended negative impacts. In addition to the specific focus on hydrogen production, the government is also acknowledging the evolving energy landscape and the need for the UK's tax system to adapt accordingly. As part of this initiative, a broader review of the Climate Change Levy is planned to ensure alignment with the changing energy dynamics and the government's objectives towards clean energy and achieving net zero emissions. The consultation document aims to gather insights not only on the hydrogen production aspect but also on other areas where adjustments to the Climate Change Levy might be necessary to stay in line with the evolving clean energy goals and missions of the government.
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