Gas Shipper Obligation: Funding mechanism for the Hydrogen Production Business Model
This consultation is open for responses
Respond to this consultationSummary
DESNZ proposes a Gas Shipper Obligation to fund hydrogen production projects through charges on gas shippers. The mechanism would support the Hydrogen Production Business Model for initial projects, with potential extension to future hydrogen developments. Consultation seeks views on design choices for this funding approach.
Why it matters
This creates another cross-subsidy mechanism in gas markets to support nascent hydrogen production, socialising costs across gas consumers rather than pricing hydrogen competitively. The obligation transfers value from existing gas users to hydrogen developers without market discovery of demand or willingness to pay.
Key facts
- •Gas Shipper Obligation funding mechanism
- •Supports Hydrogen Production Business Model
- •Targets initial hydrogen production projects
- •May extend to future hydrogen projects subject to decisions
Areas affected
Related programmes
Memo
The purpose of this consultation is to set out our proposed design for the Gas Shipper Obligation (GSO), a funding mechanism for the HPBM and related costs. The GSO is intended to be the long-term funding mechanism for initial hydrogen production projects. It may also fund further hydrogen projects, subject to future decisions on the hydrogen programme and the funding of future hydrogen production projects. We are seeking views from stakeholders on proposed design choices. Read the [consultation document on GOV.UK](https://www.gov.uk/government/consultations/funding-mechanism-for-the-hydrogen-production-business-model-proposed-design-of-the-gas-shipper-obligation).