Grant Shapps faces Tory mutiny over hydrogen levy plans

“When I was in the department for business, energy and industrial strategy, there was some countervailing pressure from the business side to say is this economic?” he said. “But if they are just net zero zealots this is unlikely to be very economic.”

More Tory MPs have raised concerns that the levy would harm the economy.

Andrew Lewer, the Tory MP for Northampton South, said: “Anything in this current climate – just as it looks like bills will maybe start to come down – that will put them up again, will obviously cause a large number of people a great deal of concern.”

Marcus Fysh told the Telegraph: “I would be concerned about anything that was going to increase inflation at the moment, and it is inherently inflationary to put lots of new taxes on things.”

He also raised concerns about the viability of the “unproven” gas, saying: “I am concerned that hydrogen, unless it is really well thought through as an idea, is slightly problematic as it takes an awful lot of energy to make it in the first place.”

Energy bills have more than doubled since 2021, even after the government’s Energy Price Guarantee, and they are expected to stay high in the long term.

The Government has targeted the development of 10GW of low carbon hydrogen production capacity by 2030. The gas, which can be made using electricity or methane, could help decarbonise several sectors, including industry, fertiliser and heavy transport.

A decision has yet to be made about its use as a replacement for natural gas in home boilers. But dozens of recent studies suggest it will have limited use, partly because of costs, which are predicted to be at least 70 per cent higher than gas prices.