Government proposes new tax on energy suppliers to fund green gas production – here’s how it could affect your bills

New levy aims to decarbonise the gas grid

(Image credit: Getty)

The Government has announced that it has opened consultation on a Green Gas Levy, which it claims will help prevent upwards of 21.6 million tonnes of CO2 entering the atmosphere. 

The levy – which was first mentioned in the March 2020 budget – will now be reviewed over the consultation period to determine how the final initiative will be designed, and how it will be implemented. However, it’s expected that the funding raised will lead to the building of more biomethane plants and the increased production of green gas for the UK grid. 

The tax also forms part of the wider Green Gas Support Scheme - which was proposed back in April this year. It’s hoped that from these initiatives we will see the following benefits:

  • Scaled up green gas production to heat around 230,000 homes
  • The use of the environmentally friendly gas to power more industrial processes
  • Lower overall carbon emissions in England, Scotland and Wales
  • More investment in rural areas and job opportunities in this sector

Chief executive of the Anaerobic Digestion and Bioresources Association (ADBA), Charlotte Morton, praised the potential of the levy and support scheme. “Fully deployed, the biomethane industry could deliver a 6per cent reduction in the UK’s greenhouse gas emissions by 2030 and provide heating for 6.4 million homes, creating tens of thousands of jobs and boosting energy and food production security," she said.

“As biomethane is already compatible with our current gas grid, it is also a particularly cost-effective way to decarbonise the UK’s heating infrastructure. We welcome this consultation and the commitment shown by BEIS to integrate biomethane into the government’s net zero strategy." 

"With the right policy support, there is much more this industry could contribute to the green economy and to achieving the UK’s 5th Carbon Budget, over the next decade, but this represents a significant step in the right direction.”

How might this affect your energy bills

Questions have been raised around how the new tax could affect consumers, and the reality would be an increase in our gas bills. However, the Government has said this would be ‘minimal’ and starting at ‘just 11 pence per month’.

“Reaching net zero means reducing emissions across our entire energy system, including the way we heat our homes and businesses," said Energy minister Kwasi Kwarteng.

“This new funding will support an ambitious scheme to decarbonise the gas grid that will prevent millions of tonnes of carbon dioxide from entering the atmosphere - another step towards reaching net zero by 2050 at minimal cost to UK bill payers.”

Other ways to go green and save

While this slight increase isn’t necessarily welcome news for all, the fact that it could be helping to improve the country’s green credentials and production of renewables is certainly a positive. The Government did also highlight that its Green Homes Grant can be used to improve the efficiency of our homes, ultimately helping to bring down our energy consumption and costs. 

More green gas availability could also make the renewable energy markets more competitive in the long run, and we may well see cheaper rates and tariffs from the energy suppliers that offer them. 

If you’re looking to make savings now and go greener with your utilities, you can run an online energy comparison to compare the market. Using our comparison service you’ll be able to find out who the best green energy suppliers are right now, and what the best energy deals are near you. 

With popular and affordable renewable tariffs from firms like Octopus, Bulb Energy and Pure Planet, it’s highly likely you’ll to find something to switch to that will help you reduce your energy bills and is better for the environment.

Find the best energy deals for your home

Find the best energy deals for your home
If you don't need a fixed-rate deal, you may be able to save even more money by switching to a variable tariff. Either way, a simple energy comparison, which takes just a couple of minutes, will tell you which tariffs are cheapest for your home - and help you switch with ease. Save money now

Richard Hart

Rich is a freelance copywriter and content strategist with over 10 years' experience. His career has seen him work in-house and in various agencies, producing online and offline content marketing campaigns and copywriting for clients in the energy industry.