Grant Shapps ‘poised to ditch’ plan for £120 bill levy to fund hydrogen drive

Grant Shapps is poised to ditch a plan to add around £120 to Brits’ energy bills to fund the transition to hydrogen.

The Net Zero Secretary is understood to be ‘not at all convinced’ that the levy should go ahead, after fierce criticism from Tories.

The government has been accused of heaping more pain on struggling consumers with the proposals for a charge to fund the fledgling industry.

Analysis by the Onward think-tank suggested hitting a target of 10GW of hydrogen production capacity by 2030 will cost £50billion.

That would mean around £118 extra per year for dual fuel households, with complaints that everyone will pay the same no matter how rich they are.

The levy is due to take effect by 2025, with the government admitting it would ‘ramp up’ by 2030. 

But there is mounting speculation that the Energy Bill – which is set for committee stage after clearing second reading in the Commons – will be overhauled. 

Department for Net Zero documents accompanying the legislation said: ‘The purpose of the levy is to provide long-term funding for the hydrogen business model, which will enable hydrogen producers to overcome the operating cost gap between low carbon hydrogen and fossil fuels.

‘The levy is not expected to be implemented until 2025 (subject to legislation being in place) and so we do not expect it to have impacts on consumer bills before then. 

‘Once introduced, we expect its impacts will ramp up as we look to deliver our 2030 hydrogen ambitions to improve energy security. 

‘As policy development on the levy is ongoing, with a number of key decisions still pending, there is uncertainty regarding the precise impact of the levy on consumer bills.’