The UK government has launched a Hydrogen Strategy intended to create a thriving low-carbon hydrogen sector—blue and green—in the UK over the next decade and beyond.
The UK’s first Hydrogen Strategy drives forward the commitments laid out in the Prime Minister’s 10 Point Plan for a green industrial revolution by setting the foundation for how the UK government will work with industry to meet its ambition for 5GW of low-carbon hydrogen production capacity by 2030—which could replace natural gas in powering around 3 million UK homes each year as well as powering transport and businesses, particularly heavy industry.
The government says that a booming, UK-wide hydrogen economy could be worth (£900) million (US$1.24 billion) and create more than 9,000 high-quality jobs by 2030, potentially rising to 100,000 jobs and worth up to £13 billion (US$18 billion) by 2050. By 2030, hydrogen could play an important role in decarbonizing polluting, energy-intensive industries such as chemicals, oil refineries, power and heavy transport such as shipping, heavy-duty trucks and trains, by helping these sectors move away from fossil fuels.
With government analysis suggesting that 20-35% of the UK’s energy consumption by 2050 could be hydrogen-based, this new energy source could be critical to meet UK targets of net zero emissions by 2050 and cutting emissions by 78% by 2035, the government said—a view shared by the UK’s independent Climate Change Committee.
In the UK, a low-carbon hydrogen economy could deliver emissions savings equivalent to the carbon captured by 700 million trees by 2032 and is a key pillar of capitalizing on cleaner energy sources as the UK moves away from fossil fuels.
The government’s approach is based on the UK’s previous success with offshore wind, where early government action coupled with strong private sector backing has earned the UK a world-leading status. One of the main tools used by government to support the establishment of offshore wind in the UK was the Contracts for Difference (CfD) scheme, which incentivizes investment in renewable energy by providing developers with direct protection from volatile wholesale prices and protects consumers from paying increased support costs when electricity prices are high.
Accordingly, the government has also launched a public consultation on a preferred hydrogen business model which, built on a similar premise to the offshore wind CfDs, is designed to overcome the cost gap between low carbon hydrogen and fossil fuels, helping the costs of low-carbon alternatives to fall quickly.
Alongside this, the government is consulting on the design of the £240-million (US$333-million) Net Zero Hydrogen Fund, which aims to support the commercial deployment of new low-carbon hydrogen production plants across the UK.
Other measures included in the UK’s first Hydrogen Strategy include:
Outlining a ‘twin track’ approach to supporting multiple technologies including ‘green’ electrolytic and ‘blue’ carbon capture-enabled hydrogen production, and committing to providing further detail in 2022 on the government’s production strategy.
Collaborating with industry to develop a UK standard for low-carbon hydrogen giving certainty to producers and users that the hydrogen the UK produces is consistent with net zero while supporting the deployment of hydrogen across the country.
Undertaking a review to support the development of the necessary network and storage infrastructure to underpin a thriving hydrogen sector.
Working with industry to assess the safety, technical feasibility, and cost effectiveness of mixing 20% hydrogen into the existing gas supply. Doing so could deliver a 7% emissions reduction on natural gas.
Launching a hydrogen sector development action plan in early 2022 setting out how the government will support companies to secure supply chain opportunities, skills and jobs in hydrogen.
By supporting the creation of a UK home market, today’s announcement is a very welcome step in helping British companies cement their positions as world leaders in hydrogen technology. The industry needs a policy landscape in place that identifies priorities and support mechanisms for rolling out green hydrogen production in the UK and that’s just what today’s Hydrogen Strategy sets out.—CEO of ITM Power Dr Graham Cooley
Prioritizing and supporting polluting industries to slash their emissions significantly, the government also announced a £105-million (US$146 million) funding package through its Net Zero Innovation Portfolio that will act as a first step to build up Britain’s low-carbon hydrogen economy. The investment will help industries to develop low carbon alternatives for industrial fuels, including hydrogen, which will be key to meeting climate commitments. This includes:
£55-million (US$76-million) Industrial Fuel Switching Competition. Funding will support the development and trials of solutions to switch industry from high to low carbon fuels such as natural gas to clean hydrogen, helping industry reach net zero by 2050.
£40-million (US$55.5-million) Red Diesel Replacement Competition. Providing grant funding for the development and demonstration of low carbon alternatives to diesel for the construction, quarrying and mining sectors, with the aim of decarbonising these industries reliant on red diesel, a fuel used mainly for off-road purposes such as in bulldozers. With red diesel responsible for the production of nearly 14 million tonnes of carbon each year, the investment supports the UK government’s budget announcement removing the entitlement to use red diesel and rebated biodiesel.
£10-million (US$14-million) Industrial Energy Efficiency Accelerator (IEEA). Offering funding to clean technology developers to work with industrial sites to install, test and prove solutions for reducing UK industry’s energy and resource consumption.
This comes as the Transport Secretary unveils the winners of a £2.5-million (US$3.5-million) R&D competition for hydrogen transport pilots in the Tees Valley area, which will lead to supermarkets, emergency services and delivery companies trialing hydrogen-powered transport to move goods and carry out local services.
Hydrogen can be made as safe as natural gas, the government notes. As the hydrogen economy develops, all necessary assessments will be carried out and measures put in place to ensure that hydrogen is stored, distributed and used in a safe way.
The UK government is already working with the Health and Safety Executive and energy regulator Ofgem to support industry to conduct first-of-a-kind hydrogen heating trials. These trials along with the results of a wider research and development testing program will inform a UK government decision in 2026 on the role of hydrogen in decarbonizing heat. If a positive case is established, by 2035 hydrogen could be playing a significant role in heating people’s homes and businesses, powering cars, cookers, boilers and more – helping to slash carbon emissions from the UK’s heating system and tackle climate change.
The Hydrogen Strategy is one of a series of strategies the UK government is publishing ahead of the UN Climate Summit COP26 taking place in Glasgow this November. The UK government has already published its Industrial Decarbonization Strategy, Transport Decarbonization Strategy and North Sea Transition Deal, while its Heat and Buildings and Net Zero Strategies will be published later this year.