Last reviewed 25 September 2020

The Government is planning to introduce a Green Gas Levy to reduce emissions from the gas grid and help the UK reach its net zero target by 2050.

The Department for Business, Energy & Industrial Strategy (BEIS), which is launching the scheme, says the new gas levy will be placed on gas suppliers across the UK to build more biomethane production plants and help decarbonise the gas grid.

Launching the proposals, Energy Minister, Kwasi Kwarteng, said: “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.”

Biomethane is produced from biogas which is derived from organic matter, such as food waste, agricultural materials and sewage, where carbon dioxide, hydrogen sulphide and other impurities are removed to produce a high-caloric green gas. 

Biomethane is compatible with the UK’s current gas grid and the Government estimates that its additional support for the biomethane sector will lead to carbon savings of 21.6MtCO2e over the lifetime of the scheme.

Charlotte Morton, Chief Executive of the Anaerobic Digestion and Bioresources Association (ADBA), said she welcomed the proposals to integrate biomethane into the UK’s net zero strategy.

“Fully deployed, the biomethane industry could deliver a 6% 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.”

The new gas levy will apply to gas suppliers in Scotland, Wales and England, but the costs will be passed on to businesses, consumers and other gas users, which the Government claims could be as low as 11p per month.