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Green Gas Levy (GGL): How it works and its impact on energy bills
The Green Gas Levy (GGL) is a British environmental levy paid by all households and businesses with a mains gas supply. It is designed to fund the transition to low-carbon heating.
The impact of the levy on bills is currently only a few pounds per property each year, but is expected to increase as the gas grid transitions to renewable sources of gas.
Here’s what we cover in this guide to the Green Gas Levy:
- What is the Green Gas Levy?
- Why the Green Gas Levy was introduced
- How the Green Gas Levy works
- How the Green Gas Levy is calculated
What is the Green Gas Levy?
The Green Gas Levy is an environmental charge that the government applies to domestic and business gas connections in Great Britain.
This year, the GGL is expected to raise £75 million, which will be used to subsidise the generation and injection of green biomethane into the gas grid, a key part of the government’s strategy to decarbonise heating.
The GGL is paid by licensed gas suppliers but is passed on to customers through the standing charge on gas tariffs.
Green Gas Levy rates
The Green Gas Levy is charged as a fixed daily cost per gas meter at the following rates:
| Charge year | Per meter per day | Annual cost per gas meter |
|---|---|---|
| 2025-2026 | 0.821p/day | £3.00 |
| 2024-2025 | 0.105p/day | 38p |
| 2023-2024 | 0.122p/day | 45p |
Source: Gov.uk – Green Gas Levy rates and exemptions
Why the Green Gas Levy was introduced
The Green Gas Levy was introduced by the UK government to support its goal of reducing carbon emissions from heating in homes and businesses.
Around 80% of UK properties rely on a gas supply for boilers that provide heating and hot water. Most of this gas is fossil fuel-based and releases carbon dioxide when burned.
Revenue from the Green Gas Levy helps fund the production of biomethane, a renewable alternative to natural gas that can be injected into the grid to cut emissions from heating.
What does the Green Gas Levy fund?
The funds raised by the Green Gas Levy are used exclusively to support the Green Gas Support Scheme, a subsidy that promotes the domestic production of renewable biomethane.
In contrast the Climate Change Levy applied to business electricity prices is paid into the government’s general treasury fund, rather than being ring-fenced for renewable energy support.
Ofgem holds GGL payments and distributes them to participating anaerobic digestion plants that inject biomethane into the gas grid.
Find out more in our full guide to the Green Gas Support Scheme.
How the Green Gas Levy works
This section summarises the three steps used by Ofgem to collect Green Gas Levy payments.
Meter-point based charging
Unlike other types of business gas rates, the Green Gas Levy is not consumption-based. Instead, the GGL is charged as a simple daily rate on individual connections to the gas distribution network.
Each gas connection is associated with a unique Meter Point Reference Number (MPRN), which is used to calculate the number of chargeable supply points for the Green Gas Levy.
Payment by licensed gas suppliers
The Green Gas Levy is not incurred directly by businesses and households but is indirectly paid by licensed gas suppliers.
Each MPRN on the gas network is registered to a single licensed gas supplier, which provides a gas tariff to the corresponding property.
All domestic and business gas suppliers report to Ofgem each quarter the number of MPRNs they serve, and this information is used to calculate their levy payment.
Gas suppliers incorporate the GGL into the domestic and business gas standing charges that they apply to their customers.
Green Gas Levy collection
Green Gas Levy payments are collected by Ofgem, which is the scheme administrator for the Green Gas Support Scheme.
Ofgem issues an invoice to each gas supplier quarterly, calculating the amount due as follows.
Each supplier has ten days to make the GGL payment to Ofgem, which then holds the funds in a dedicated account used to finance payments under the Green Gas Support Scheme.
How the Green Gas Levy is calculated
The Department for Energy Security and Net Zero (DESNZ) is responsible for setting a new GGL rate each year.
This rate is designed to raise just enough money to fund payments due to registered biomethane producers under the Green Gas Support Scheme, as well as to cover Ofgem’s administrative costs.
The table below shows how the current Green Gas Levy rate has been calculated:
| Item | Amount (£) |
|---|---|
| Projected GGSS scheme expenditure | 86,316,999 |
| Ofgem’s total forecast administration costs | 3,925,000 |
| Interest accrued on levy funds held by Ofgem | -1,386,907 |
| Forecast scheme year-end surplus | -20,850,794 |
| True-up from the scheme year before last | -8,157,537 |
| Quarterly lag uplift | 14,320,754 |
| Built-in headroom | 2,193,953 |
| Total GGL revenue | 76,361,468 |
| Divided by: | |
| Number of MPRNs in Great Britain | 25,450,000 |
| GGL rate per meter (£) | 3.00 |
Source: DESNZ – GGL rates underlying variables 2024-25
How the Green Gas Levy appears on business gas bills
Typically, the Green Gas Levy does not appear as a separate line item on a business gas bill but is instead included within either:
- the daily standing charge, or
- non-commodity costs.
Non-commodity costs cover all the charges gas suppliers must pay to use the national gas grid and local Independent Gas Transporters.
Business energy suppliers typically add a margin to these underlying costs when charging their gas customers. This makes using a business energy comparison service essential for finding the most competitive rates.
Impact of the Green Gas Levy on businesses
The Green Gas Levy has minimal impact on most businesses because it is based on the number of business gas meters rather than on gas consumption.
Each meter is currently charged at around £3 per year, so a single commercial property pays the same as a household.
Large business energy users with multiple sites or extensive portfolios of MPRNs will face higher overall costs, but these remain very small compared with the wholesale gas costs that make up the unit rates in most business energy contracts.
What exemptions to the Green Gas Levy are available for businesses?
There are no direct Green Gas Levy exemptions for businesses, as the levy is paid by gas suppliers rather than directly by customers.
However, it is possible to choose a business gas supplier that is exempt from paying the GGL by selecting a green business energy tariff.
The Green Gas Levy does not apply to licensed suppliers that purchase more than 95% green gas on behalf of their customers.
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