The Green Gas Levy was announced in the UK governments March 2020 budget and will be the funding source for the Green Gas Support Scheme (GGSS). The GGSS will replace the non-domestic Renewable Heat Incentive (RHI) scheme which is due to come to an end in April 2021. The GGSS will only support Biomethane produced from anaerobic digestion (AD) of biomass feedstocks injected into the gas grid.
Currently, heating our homes, businesses, and industry is responsible for a third of the UK’s greenhouse gas emissions. Decarbonisation of heat is recognised as one of the biggest challenges we face in meeting our climate targets. In order to meet emission reduction targets, we need to move away from the burning of fossil fuels to heat our buildings. Biomethane injection into the gas grid accelerates the decarbonisation of gas supplies by increasing the proportion of green gas in the grid and as such, reducing Carbon Emissions.
It is proposed that the levy costs are split across suppliers according to the number of meter points they serve, with each meter point incurring the same charge regardless of gas consumption or meter type. It is anticipated that suppliers will be passing on the costs meaning that gas users will pay for the costs of decarbonising the gas grid. It is proposed that the levy should be applied to all licensed fossil fuel gas suppliers, with the exception of off-gas-grid fossil fuel supplies such as oil and LPG which will not be impacted by the Green Gas Levy.
The “Consultation on a Green Gas Levy” released by the UK government on 22nd September 2020 states that, based on the proposed levy design approach of 1p per meter/per day levy charge, and an indicative 15-year tariff/support period for biomethane, it is estimated the impact on the average gas bill may be around £1.40 per annum in the first year of the scheme. This is expected to rise to around £6.90 per annum by 2028. This equates to approximately 1% of the expected average household gas bill in 2028.
It is also worthwhile noting that it is the government’s intention to transition to a volumetric levy in 2024/25 which would likely see a larger burden placed on non-domestic users and could see prices increase between 1-2%.
The levy is expected to launch in Autumn 2021 with the first collection being made in April 2022. You should expect to see a charge line on your invoice to specify this charge.