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UK plans to pass a hydrogen tax

Inspenet, September 1, 2023.

The UK government has proposed an amendment to the Energy Act that would give it the ability to drop its current plans to tax hydrogen, resulting in lower costs for households.

Grant Shapps, the Secretary for Energy Security and Net Zero, has filed an amendment to a clause that would redistribute the costs of financing investments in the hydrogen industry, away from falling on “gas carriers.”

Initially, it had been proposed that such a tax be included in national energy bills from 2025. However, this proposal met some resistance and a report issued by a UK think tank in May 2023 suggested that such a tax could increase average household dual power bills by £118 per year.

The amendment proposed by the UK government

Regarding the proposed amendment, a representative from the Department of Energy Security and Net Zero told H2 View: “Our amendment to the Energy Bill places equity as a fundamental element in our plans to promote low-cost hydrogen production. carbon emissions . This will help improve energy security and reduce long-term costs on bills.”

The new tax would target the gas transportation industry and help ensure those who profit from hydrogen can support its growing UK economy, with the potential to create more than 12,000 new jobs by 2030.

Hydrogen UK, a trade association, has previously defended the aforementioned tax. Its chief executive stressed in an earlier interview with H2 View that if the country does not pass an energy bill that provides for an “adequate financing mechanism” for hydrogen, it would be a significant setback.

Following the announcement of the planned amendment, Hydrogen UK has informed H2 View that it will seek input from its members to assess its impact.

Troy Aharonian, Head of Public Affairs for Hydrogen UK, commented: “In our discussions with the government, we have repeatedly stressed the importance of the energy bill incorporating a robust financing mechanism for hydrogen, preferably designed broadly and with details defined through consultation and secondary legislation”.

As the bill contains vital measures such as the introduction of business models for the production and transport and storage of hydrogen, speedy passage remains Hydrogen UK’s priority.

The energy bill is expected to be reintroduced in Parliament on September 5, 2023.


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