Energy Suppliers announce opposition to Green Gas Levy plans

What is the Green Gas Levy?

The Green Gas Levy was announced on March 11^th as part of Rishi Sunak’s 2020 budget and is a tax designed to support the push towards greener heat sources.

The Department for Business, Energy and Industrial Strategy (BEIS) proposed the Green Gas Support Scheme in order to provide finances for the injection of more biomethane (green gas) into the grid and to support the Clean Heat Grant Scheme.

Some forecasters have predicted that for the UK economy to hit its NetZero target the government will have to spend £1 trillion (minimum). The Green Gas Levy is likely to be just one tax on energy suppliers that will be imposed upon everyone to hit their climate goals. 

Opposition

Energy suppliers Eon, Ovo and Octopus are just the latest companies to join Citizen’s Advice and the growing backlash against the Green Gas Levy.

They have written to the government’s energy minister Kwasi Kwarteng to warn him that the proposals for the Green Gas Levy are ‘highly regressive’ and unfair on the most vulnerable in society.

The levy will see every gas customer in the UK regardless of their wealth charged up to £6.90 a year, irrespective of how much gas they use. This would mean that large businesses that use a lot of gas will end up paying the exact same amount as a single person living in a tiny flat. 

Price of Green future

In the letter, the energy suppliers write: “Under the current approach, a low-income consumer who uses as little energy as possible to keep their bills down will pay the same fixed charge as a customer in the highest income The government has been urged to rethink a new “green gas” scheme under which every gas customer in Britain would be charged a flat levy of up to £6.90 a year, irrespective of how much energy they use.”

Citizens Advice has also raised their concerns over the levy writing, ‘We recognise that consumers will need to contribute to decarbonisation to achieve net-zero and we support this, however, it needs to be implemented fairly and transparently across all users.

‘We do not agree with the rationale for the proposals for the Green Gas Levy to be charged on a per meter per day basis according to gas supplier meter points. The current proposals for a green gas levy would set a risky precedent for future flat-rate cost levies in which domestic consumers would be bearing a disproportionate share of costs and signals to improve energy efficiency would be dulled.

‘This levy needs to be fair for all gas consumers, cost reflective in terms of gas usage and provide the right signals for the environmental policy landscape needed to achieve net-zero.’

The consultation on the Green Gas Levy ended on November 2^nd and as the government pushes its green agenda we can expect to see more levies and taxes being imposed on energy suppliers, which in turn will increase pressure on them to raise energy prices for their customers. 

Further Reading

Government plans new tax on Gas suppliers to support its green energy drive

Energy Price Forecast 2021: Covid-19, Brexit and much more

Is ‘Green Energy’ really good for the environment?

Dyball Associates are proud to help new supply businesses successfully launch in the UK market.

Between our energy market consultancy services and the software we’ve developed, we’re supporting new UK electricity and gas suppliers to get set up and start supplying.

For more information, get in contact with us today. 

Follow us on Twitter and LinkedIn to keep up to date with the latest news and updates in the energy industry.