Net-zero hydrogen tax plan could push energy prices up to £120 a year: report


Analyzes show that the additional tax on hydrogen could increase household costs by £118 a year, a 10% increase over dual fuel costs under the government’s net zero plan.

report from Center-right think tank Onward announced on Thursday It argues that the tax to pay for support for hydrogen production would increase the average dual-fuel household’s utility bills by about £118 a year.

Funding the new hydrogen industry is seen as key to the UK’s plan to decarbonize all sectors of the economy by 2050, a goal signed into law.

Onward said this type of financing investment “has a negative impact on businesses, raises home energy bills and risks long-term investments by undermining support for net zero.”

“The government is falling into the hydrogen tax trap.

“It is also unfair to require households who do not directly benefit from hydrogen to pay for it. it is,” he added.

The report was co-authored by the European Climate Foundation, a ‘philanthropic effort to promote the development of a net zero emission society’. Funders include the Bloomberg Family Foundation, the Children’s Investment Fund Foundation, and the Rockefeller Brothers Fund.

energy security bill

under energy security bill, The purpose of the tax on consumer claims is to provide long-term funding for hydrogen business models, so that “hydrogen producers can overcome the operating cost differential between low-carbon hydrogen and fossil fuels. ”.

The government said the levy is not expected to take effect until 2025 (subject to legislation) and it does not expect it to affect consumer claims before then.

But the report said the Treasury Department is trying to avoid direct costs of supporting the hydrogen industry.

“In a tight financial environment, this makes sense. But the levy would be regressive and unfair, especially if households are unlikely to use hydrogen for heating.” added.

A subsequent poll found that 43% of the general public were reluctant to pay the hydrogen tax on their energy bills. A quarter of people expect to pay up to £10, beyond which support declines sharply.

net zero scrutiny group

The report also said that asking parliamentarians to vote on a higher bill at a time of current economic hardship “jeopardizes political support for hydrogen and the broader net-zero agenda.”

The report suggested that governments should “ensure an investment climate conducive to lower strike prices” in order to reduce the fiscal costs of supporting the hydrogen industry as much as possible.

In May, former Conservative minister Alec Sherbrooke criticized the hydrogen tax plan.

“The cost to the public must be kept to a minimum,” he said.

“I think it’s misplaced and in the wrong place. We have to get the public on this. .”

economic impediment

A May Citizens Advice report found that UK homeowners face financial hurdles in upgrading their homes at net zero, with initial costs and interest in borrowing a major factor. mentioned lack.

Citizens Advice has warned that the average £15,000 cost of retrofitting homes to make them green is unmanageable for most homeowners.

In February, a Royal Society report examined one aspect of hydrogen and warned that there is no clear single alternative to jet fuel that could support flights on a scale similar to current use.

It found that half of the farmland would have to be given up to produce enough alternative aviation fuel for the UK to reach its net-zero target.

He added that producing sufficient amounts of green hydrogen fuel would require 2.4 to 3.4 times more renewable energy in the UK in 2020, that is, wind and solar power.

“This is one of those cases where net-zero rhetoric collides with the realities of our lives,” Andy Meyer, an energy analyst at the Economic Research Institute, a free market think tank, told The Epoch Times at the time. .

A spokesperson for the Ministry of Energy Security and Net Zero told The Epoch Times:

“We will continue to ensure that our bills are affordable in the long term and that the costs of the energy transition are fair and affordable for all consumers,” he added. .

“Our plan to power up the UK will ensure access to cleaner, cheaper and safer energy sources, including our work in developing a hydrogen tax,” he said. I can do it,” he said.

PA Media contributed to this report.