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Energy prices will rise because of new levy to fund untested green technology, ministers warned

Household energy bills will be pushed even higher under Government plans to impose a “hydrogen levy” on consumers to pay for future green technology, MPs have warned.

Ministers are planning to charge every household for the costs of building a new hydrogen network to fuel businesses and homes without producing carbon dioxide emissions.

Under provisions contained in the Energy Bill, currently passing through Parliament, they would have the power to impose a hydrogen levy of whatever size they wish. The Government has refused to say how much they expect the levy to be – existing levies on bills add £165 per year to the average household’s costs.

MPs from the Conservatives, Labour and smaller parties have all criticised the plans, warning it will increase the burden on consumers. Former business secretary Jacob Rees-Mogg told i: “The bill increases costs in a variety of ways during the cost of living crisis and this cannot be sensible.”

As the bill was debated in the House of Commons on Tuesday evening, Labour’s Justin Madders said: “This experiment just does not stack up, and the idea that my constituents would end up paying for it through a hydrogen levy just adds insult to injury.”

Caroline Lucas of the Green Party added: “There is real concern about putting a hydrogen levy on household bills at a time when so many people are already struggling to pay those bills.”

And Alec Shelbrooke, the Conservative MP for Elmet and Rothwell, called the hydrogen levy “misguided”, adding: “We have to take the public with us on this – we cannot keep adding to people’s bills to try to make things work.”

Most existing levies on bills either pay for technology such as wind power which is likely to cut household bills in future, or provide funding for schemes to help the poorest households with their energy costs. But experts expect that large businesses will benefit the most from the development of hydrogen power because it may prove too difficult to pipe the gas into homes.

Responding to MPs in the Commons, Energy Minister Andrew Bowie said: “The purpose of the hydrogen levy is to provide long-term funding for the hydrogen production business model. I reiterate that the provisions in this bill will not immediately introduce a levy. We will consult on the detailed levy design, and the decision to introduce a levy will take into account the affordability of energy bills.”

Peers removed the provision for a levy in the House of Lords earlier this year but the Government is expected to seek to restore the clause in the Commons over the coming weeks.

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