UK Government Supports Growth of Electrolytic Hydrogen Production through Climate Change Levy Exemption
Key Ideas
- The UK government is committed to removing Climate Change Levy costs from electricity used in electrolysis to produce hydrogen, supporting the growth of low carbon electrolytic hydrogen production.
- This move aims to decarbonize the power system and address challenges in hard-to-electrify industrial and transport sectors, contributing to the country's clean power and net zero objectives.
- A wider review of the Climate Change Levy will be conducted to ensure it aligns with the evolving energy landscape and government missions, seeking input on areas that may need revision.
- The consultation seeks to determine the best legislative route to remove CCL costs from hydrogen production, emphasizing the importance of avoiding unintended consequences in achieving government objectives.
The UK government has announced its commitment to supporting the growth of low carbon electrolytic hydrogen production by exempting electricity used in electrolysis from the Climate Change Levy (CCL) costs. This decision, made at the Spring Statement 2025, aims to facilitate the decarbonization of the power system and address challenges in hard-to-electrify industrial and transport sectors. By removing these costs, the government intends to promote the development of electrolytic hydrogen, which is crucial for achieving clean power and net zero targets. Additionally, a wider review of the CCL will be carried out to ensure it remains aligned with the changing energy landscape and government objectives. The consultation seeks feedback on various areas where the CCL may require revisions to support developments in the energy sector and further the nation's clean energy transition.