Axing levy poses ‘existential’ threat to hydrogen sector
Published 28 June 2023
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The UK’s nascent hydrogen industry is at an “existential moment” and its growth will be undermined if the government abandons plans to introduce a household levy to support the sector’s development, MPs have been warned.
In a last-ditch submission to the House of Commons committee scrutinising the Energy Bill, Hydrogen UK chief executive Clare Jackson urges MPs to safeguard the funding mechanism for hydrogen created by the legislation.
She writes: “This is an existential moment for the hydrogen industry in this country.
“MPs must safeguard the funding mechanism for hydrogen in the Energy Bill. Removing this mechanism of government support for hydrogen would undermine the future growth and jobs the industry is primed to deliver.
“Opposing a hydrogen levy in the Energy Bill risks current and future jobs and growth that the UK is well-placed to secure thanks to its mature portfolio of projects.”
Jackson notes recent reports, which suggest that the levy may be axed from the Energy Bill, have placed a strain on investor confidence in UK hydrogen projects.
The submission has emerged following a newspaper interview last weekend with Grant Shapps in which the secretary of state for energy security and net zero said that he doesn’t want to force households to support hydrogen’s development.
It adds that a levy is one of a number of potential mechanisms that could be used to support the hydrogen sector with others including the taxpayer and the UK emissions trading system.
But given how infrequent energy legislation is, Hydrogen UK urges the government to keep provision for a hydrogen levy in the bill in case it is required in the future.
The thinktank Onward estimated, in an analysis published last month, that reaching the government’s 10GW hydrogen target will require around £3.5 billion of support per annum. Raising finance to pay for this support through a levy would add £118 onto typical household customers’ bills, it calculated.
In its submission, Hydrogen UK counters that the hydrogen sector could boost the economy by up to £4.7 billion per annum and create 6,100 to 7,100 new jobs.
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