What is the Green Gas Levy and what are the impacts for businesses?
12 February 2023 | 4 minutes
Find out more about the Green Gas Levy and what it means for business energy consumers.
The Green Gas Levy (GGL) is part of a portfolio of solutions launched by the government and administered by Ofgem to support the development of greener fuels to meet its ambitions to achieve ‘net zero’ by 2050. In this case, the GGL has been established to fund the Green Gas Support Scheme (GGSS).
The Green Gas Levy explained
Both the GGSS and the GGL have been designed to support the government’s low carbon heating ambitions and encourage the deployment of biomethane gas - a ‘green’ gas that is produced through anaerobic digestion, a process that transforms organic matter like animal manure and food waste into biogas. By sealing waste in an anaerobic digestion plant and removing the oxygen, microorganisms break down the material to produce biomethane which is then transmitted to the gas grid by producers.
The GGSS has been set up to aid in the deployment of green gas by paying the gas producer for each unit it injects into the grid. Most of the gas currently on the UK network is fossil-fuel based and known as brown gas. The Green Gas Levy is raised through all UK licenced gas suppliers and energy consumers and incentivises the production of more biomethane gas through investment in the process and infrastructure.
The GGSS is expected to save 8.2 million tonnes carbon dioxide equivalent (MtCO2e) of carbon savings over its lifetime and play a significant role in the decarbonisation of Great Britain’s gas supplies.
How does the Green Gas Levy impact business energy consumers?
All business energy consumers of the UK gas network pay the levy as a very small part of the daily charges included in their bills that are related to non-gas costs such as transmission and distribution charges. The government announces the new GGL rate each year which could increase or decrease the amount businesses pay as part of their standing charge. The latest GGL rate, for the 2023-2024 scheme year (1 April 2023 to 31 March 2024), is 0.122p per meter per day, equivalent to 45p per meter over the period. The levy is charged to customers by all suppliers and, as administrator of the scheme, Ofgem is accountable for collecting the levy payments from energy suppliers on a quarterly basis.
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