Draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026

James Wild Excerpts

Wednesday 4th March 2026 General Committees

[James Wild (North West Norfolk) (Con)]

I am grateful to the Minister for setting out the scope and the impact of the draft regulations. We support the approach to update the legislation to put it beyond doubt that electricity used in electrolysis processes to produce hydrogen will count as a non-fuel use, and therefore benefit from the exemption from the levy.

I also acknowledge that the inclusion of the production of sodium bicarbonate came as a result of the consultation, so there we have it: a Government who listen. Sadly, there are a host of issues on which the Government have not yet listened that I could talk about, were they in scope, from the farm tax to the jobs tax. We live in hope.

I do not propose to detain the Committee unduly, but I would like to raise a couple of points. First, as Members will know, the consultation proposed three options to deal with the issue. The Government justified selecting option A on the basis that it was the quickest to implement. It is a sensible procedure to adopt, but option B included support for a broader category of methods of producing hydrogen. Will the Minister confirm the proposed timetable for the consideration of broader treatment as part of the wider review of the climate change levy to which the Government have committed? I note that the Finance (No. 2) Bill, which the Minister and I discussed in Committee, increases the overall levy, adding £2 billion to the cost on British industry.

My second point concerns the costings in the tax information and impact note and the explanatory notes, which refer to this change as having a negligible impact. Given the ambitions for hydrogen across the economy, and the ramping up of its production, can the Minister share any projections of the potential benefits for the sector?