Grant Shapps addresses delegates at London Tech Week. Photo: Leon Neal/Getty Images. Household bills could be canceled after the energy secretary acknowledged that hydrogen will not replace gas boilers.
Households could be subject to a £120 annual levy to fund low-carbon hydrogen development under the terms of the government's opening bill. Energy Act.
But Grant Shapps told Politico that it is “unlikely” that hydrogen will be used to heat homes in the future, and that he wanted to avoid “a situation where a tax penalizes people who don't use ”.
According to Mr. Schapps, the government is considering possible alternatives to finance the development of the hydrogen industry at the expense of households. This may include general taxation or the imposition of costs on industry.
Last year, the government doubled its hydrogen production target from 5 gigawatts to 10 gigawatts by 2030 as part of its response to the energy security crisis. .
The move increased the cost of hydrogen production to £3.5bn a year between 2030 and 2040, which think tank Onward estimates will add £118 to annual household bills.< /p> p>
The costs will be added to existing environmental and social levies of around £125 a year that fund onshore wind and thermal insulation schemes.
Significant resistance
The proposal to force households to pay for hydrogen development has been approved. with significant opposition among Conservative MPs and peers. The government's final decision on the role of hydrogen as a replacement for gas in home heating must be made by 2026 after village-wide trials.
But concerns have been raised about the availability of low-carbon hydrogen and the cost, which is projected to be at least 70 percent higher than gas. Concerns have also been raised about its relative safety and the impact of air pollution.
Mr Shapps told Politico that the government believes in a “hydrogen economy” but that it is better suited as a fuel for industry and transportation. .
The obvious turn towards the tax was welcomed by MPs and critics of the use of hydrogen as domestic heating fuel.
“I hope the indications that the hydrogen levy on household bills will be removed from the energy bill prove to be well founded,” said Craig McKinley, chairman of the Zero Purity Conservative MPs group. “Taking more tax on households under a different name would be highly unpopular.”
Jack Richardson of Onward said: “It's great that the Treasury and the Department of Energy Security and Net Zero are listening to House of Commons MPs who raised concerns about the hydrogen tax following the Onward report.”
He added that “the challenge is to avoid borrowing, raising taxes, or cutting spending elsewhere.” Onward has offered to fund its development with industrial carbon taxes.
Renewable electricity surplus
Low-carbon hydrogen can be produced using excess renewable electricity, or using natural gas and emissions capture, and is expected to play a significant role in reducing heavy industry emissions.
The government will likely retain the power to levy spending from households until a final decision on an alternative is made to provide reassurance to investors in the growing hydrogen industry, understands The Telegraph.
Juliet Phillips, of think tank E3G, said: “[Mr] Shapps is right that it is unfair to force households to bear the upfront cost of a hydrogen economy through a tax on energy bills.
“Hydrogen will be needed for heavy industry, not domestic heating. There is a growing consensus that hydrogen for heat generation will be more expensive and less efficient than other clean heating solutions.
“Instead of increasing bills, the government could support the hydrogen upsurge through a combination of regulations and subsidies . and industry incentives.”
A spokesman for Energy Security and Net Zero stated, “Our energy bill aims to provide a robust and reliable long-term financing mechanism for low-carbon hydrogen that will help keep electricity bills affordable for the people.
“Our energy security plans will provide access to cleaner, cheaper and safer energy sources, and we said we would consult on the project before imposing any fees.”
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