As the Gas Shipper Obligation (GSO) is essentially a mechanism to raise finance for the hydrogen
production business model, the EIUG believes it would be more appropriate and efficient for this model to be funded directly through the Exchequer, rather than an obligation on gas shippers. Placing the burden on gas shippers represents poor value for money, is inherently regressive, and risks replicating a range of negative unintended consequences, many of which have already been observed under the Renewables Obligation imposed on electricity suppliers. A more equitable and transparent funding approach is essential to ensure broad stakeholder support and long-term policy stability.
The EIUG considers that the GSO will put gas-intensive industries at risk of carbon leakage and Government must therefore exempt gas quantities shipped to these industries from its charges. The EIUG strongly considers that the GSO poses a serious risk of carbon leakage by increasing energy costs for gas-intensive industries, thereby undermining their global competitiveness. it is essential that gas volumes supplied to such industries are fully exempted from GSO-related charges. Without such an exemption, there is a clear risk of production moving abroad, investments going elsewhere and job losses occurring, which would further weakening the UK’s industrial base.