UK Government publishes Hydrogen Strategy

2 min read

The UK government has published its first Hydrogen Strategy to kickstart a thriving UK hydrogen economy that could support thousands of jobs and unlock billion-of-pounds of investment.

The Hydrogen Strategy looks to drive 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.

Tens of thousands of jobs, billions of pounds in investment and new export opportunities could be unlocked through Government plans to create a thriving low carbon hydrogen sector in the UK over the next decade and beyond, according to the Business and Energy Secretary Kwasi Kwarteng.

According to government figures a UK-wide hydrogen economy could be worth £900 million and create over 9,000 high-quality jobs by 2030, potentially rising to 100,000 jobs and worth up to £13 billion by 2050. By 2030, hydrogen could play an important role in decarbonising polluting, energy-intensive industries like chemicals, oil refineries, power and heavy transport like shipping, HGV lorries and trains, by helping these sectors move away from fossil fuels.

Government analysis suggests that 20-35% of the UK’s energy consumption by 2050 could be hydrogen-based, and could be critical to meet our targets of net zero emissions by 2050 and cutting emissions by 78% by 2035 – 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 capitalising on cleaner energy sources as the UK moves away from fossil fuels.

The government’s approach mirrors that seen with offshore wind, where early government action coupled with strong private sector backing has effectively supported the sector. One of the main tools used to support the establishment of offshore wind in the UK was the Contracts for Difference (CfD) scheme, which incentivises 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.

As such, the government has 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, as hydrogen comes to play an increasing role in our lives.

Alongside this, the government is consulting on the design of the £240 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 fHydrogen 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; and
  • 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

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 government has already published its Industrial Decarbonisation Strategy, Transport Decarbonisation Strategy and North Sea Transition Deal, while its Heat and Buildings and Net Zero Strategies will be published this year.