UK opens consultation on Green Gas Levy to support biomethane

The U.K. government has opened a public consultation an initiative that aims to scale up the production of renewable natural gas (RNG), also referred to as bioemethane or green gas, for use in heating applications.

According to the U.K. Department for Business, Energy and Industrial Strategy, heating homes, businesses and industry is responsible for one-third of the U.K.’s greenhouse gas (GHG) emissions. Decarbonizing heat is one of the biggest challenges the country will face in meeting its net zero target by 2050.

The new consultation, launched on Sept. 22, focuses on the U.K.’s Green Gas Levy, which was announced in the March 2020 budget, and will fund support for biomethane injection into the gas grid through the new Green Gas Support Scheme. According to the consultation, both the Green Gas Support Scheme and the Green Gas Levy are expected to launch in fall 2021. The Green Gas Levy would first be collected in April 2022.

The consultation on the Green Gas Levy sets out proposals for the new levy to be placed on licensed gas suppliers to fund biomethane injection into the U.K. gas grid through the Green Gas Support Scheme.

Under the proposal, the levy costs would be split across suppliers based on the number of meter points that they serve, with each meter point incurring the same charge regardless of gas consumption or meter type. Payments would be made quarterly. The BEIS said the government plans to transition to a volumetric levy in 2024-’25, or as soon as possible thereafter. The impact of the levy on consumer bills is expected to be relatively small, estimated to be at around £1.4 ($1.78) per year initially and rising to approximately £6.90 per year by 2028. That cost would equate to approximately 1 percent of the expected average household gas bill in 2028.

The BEIS is seeking public input on the design of the Green Gas Levy; the budget control and financial management of the Green Gas Levy; an explanation of the anticipated impact on gas bills for domestic and non-domestic customers; the administration, compliance and enforcement of the scheme; how payments will be made on the Green Gas Support Scheme ahead of the first Green Gas Levy collection; and a future transition to a volumetric approach to the design of the Green Gas Levy.

The U.K. Renewable Energy Association has spoken out in support of the initiative. “The REA welcomes today’s announcement about this key consultation, as the Green Gas Levy will be the funding mechanism that enables more biomethane plants to be built under the future Green Gas Support Scheme, and more biomethane to be injected into the gas grid,” said Frank Gordon, head of policy at the REA.

“Decarbonizing the U.K.’s extensive grid with biomethane – from AD and thermal gasification – is vital to achieving net zero, as well as to delivering wider benefits to farming, industry and the waste sectors.”

Public comments on the consultation can be filed through Nov. 2. Additional information is available on the BEIS website.