Rishi Sunak explains why energy rebate is paid per household

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The Department for Business, Energy & Industrial Strategy has announced a £31million in new support to help companies lower their bills by reducing their reliance on fossil fuels. The post-pandemic recovery boom, combined with Russia’s invasion of Ukraine has sent the wholesale price of fossil fuels like oil and natural gas to record highs over the past year.

Now, even UK households are facing the effects of this crisis, as Ofgem announced last month that the price cap for energy bills could be raised to £2,800 per year by October.

In an effort to move British industries away from their reliance on expensive and highly polluting fossil fuels, the UK has announced major funding that includes over £6.6million to help industry move away from using red diesel.

Red diesel, also known as gas oil, refers to a type of fuel commonly used for off-road vehicles and heavy machinery, specifically in the quarrying, mining, and construction sectors.

These kinds of vehicles and machines are notorious for being gas guzzlers, using tremendous amounts of energy compared to traditional cars.

The funding, which is part of the Red Diesel Replacement competition, will seek to accelerate the development of alternative fuels like e-fuels and green hydrogen.

It will also focus on technologies which boost energy efficiency by capturing and storing fuel that would ordinarily be wasted from a vehicle.

The Government also announced over £5.5million in funding to “develop technologies that support industry to cut back use of high carbon fuels and switch to cleaner power sources, such as hydrogen, electrification or fuel from biomass and waste products”.

This cash prize in particular is meant to focus on the move to replace natural gas hydrogen in industrial processes, and design heat pumps for use in manufacturing sites.

Green hydrogen, which is tipped to be the climate-friendly replacement for natural gas in the future, is currently very expensive to produce at the scale needed to replace the fossil fuel.

Energy and Climate Change Minister Greg Hands said: “As we accelerate the UK’s energy independence by boosting clean, home-grown, affordable energy, it’s crucial that our industries reduce their reliance on fossil fuels.

“This investment will help them to not only cut emissions, but also save money on energy bills, on top of supporting jobs by encouraging green innovation across the UK.”

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The UK has previously offered support to boost green innovation and technologies through the £505 million BEIS Energy Innovation Programme, which included £100 million for industrial decarbonisation and carbon capture usage and storage (CCUS).

This latest funding also supports innovation in the CCUS field, as winners from the first stage of the CCUS Innovation 2.0 competition will receive a share of over £12 million for “trailblazing projects aiming to advance next-generation CCUS technology to deploy at-scale by 2030.”

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