Cautious support for Government’s hydrogen strategy

The UK Government has pledged to support the advancement of both green and blue hydrogen as part of plans to create a “thriving” low-carbon sector.

That will be underpinned by a hydrogen sector development action plan, due to be launched in early 2022, which will set out support for companies to secure supply chain opportunities, skills and jobs in the industry.

The Government made the commitments in its long-awaited Hydrogen Strategy, which is designed to drive the development of a hydrogen economy in the UK.

It is hoped the document will unlock tens of thousands of low carbon jobs, £4bn in investment and new export opportunities by the end of the decade.

Energy industry chiefs have welcomed the publication of the strategy, praising ministers for bringing “much-needed speed and scale” to the sector. But a minority have criticised the programme for lacking ambition and focus.

The strategy builds on Boris Johnson’s 10 Point Plan for a green industrial revolution, published last year, setting out how government will work with industry to meet its ambition for 5GW of low carbon hydrogen production capacity by 2030.

According to the strategy, a “booming” hydrogen economy could be worth £900m to the UK and create over 9,000 “high-quality jobs” in the coming years. And those figures could rise to £13bn and 100,000 jobs by 2050.

Hydrogen provides a means for decarbonising energy-intensive, hard to abate sectors such as chemicals, oil refineries, power and heavy transport, like shipping, HGV lorries and trains.

Government analysis suggests that 20 per cent to 35 per cent of the UK’s energy consumption could be hydrogen-based by the middle of the century.

Kwasi Kwarteng, Business & Energy Secretary, said: “Today marks the start of the UK’s hydrogen revolution. This home-grown clean energy source has the potential to transform the way we power our lives and will be essential to tackling climate change and reaching Net Zero.

“With the potential to provide a third of the UK’s energy in the future, our strategy positions the UK as first in the global race to ramp up hydrogen technology and seize the thousands of jobs and private investment that come with it.”

A total of £105m is being provided to would-be hydrogen consumers through the Net-Zero Innovation Portfolio, the Strategy confirms. £55m will go to an Industrial Fuel Switching Competition, supporting trials in industries such as cement and chemicals. £40m will go to a Red Diesel Replacement Competition, funding R&D into specialist equipment such as tractors and bulldozers that run on alternative fuels. Finally, a further £10m will be funnelled into the existing Industrial Energy Efficiency Accelerator (IEEA), as hydrogen should be used in energy-efficient operations to maximise the benefits. £1.7m of this package has gone to delivery partner Carbon Trust.

Measures laid out in the Hydrogen Strategy include a commitment to develop a  “twin track” approach to support multiple technologies, including green and blue hydrogen production.

Low carbon hydrogen is separated into two main sects, green,which is made using water and renewable energy, andblue, which comes from natural gas, with carbon capture and storage (CCS) used to deal with emissions – with much debate in the sector around which should be prioritised.

Ministers have also pledged to work with industry to develop a “UK standard for low carbon hydrogen” in order to give certainty to producers.

To support the development of necessary networks and storage infrastructure, a review into the current arrangements will be carried out.

To drive uptake of the fuel, the “safety, technical feasibility, and cost effectiveness” of mixing 20 per cent hydrogen into the existing gas supply will be assessed. Doing so could deliver a 7 per cent emissions reduction.

The Hydrogen Policy is designed to replicate the UK’s “previous success” with offshore wind by coupling early government action with private sector backing.

As such, the Government has launched a public consultation on a preferred hydrogen business model, influenced by the existing Contract for Difference (CfD) scheme.

It would aim to “overcome the cost gap” between low carbon hydrogen and fossil fuels, helping the price of the former to fall quickly.

Alongside this, ministers are consulting on the design of a £240m Net Zero Hydrogen Fund, which aims to support the commercial deployment of new hydrogen production plants across the UK.

Anne-Marie Trevelyan, energy & climate change minister, said: “Today’s Hydrogen Strategy sends a strong signal globally that we are committed to building a thriving low carbon hydrogen economy that could deliver hundreds of thousands of high-quality green jobs, helps millions of homes transition to green energy, support our key industrial heartlands to move away from fossil fuels and bring in significant investment.”

Keith Anderson, chief executive of ScottishPower said: “The strategy’s industry support scheme is a clear and welcome sign of the UK’s ambition to be a hydrogen leader. It will provide much-needed speed and scale, enabling the industry to kick off world-leading green hydrogen projects over the next two years.”

But Andy Prendergast, national secretary for trade union GMB, urged ministers to be “bolder”, while also criticising the assertion that the offshore wind industry has been a triumph. “GMB welcomes this strategy as a key step in the development of hydrogen. But we have concerns that the programme is not ambitious enough and will be insufficient for hydrogen development to become a cornerstone of both our energy policy and the transition to net zero.

“5GW of low carbon hydrogen production capacity is nowhere near enough – we need to go further and need to be bolder.

“It’s also a mistake to highlight the so called ‘success’ of the UK’s offshore wind industry. Turbines and jackets are made overseas, robbing UK manufacturing of much needed investment and skills.

“Our burgeoning hydrogen industry must not make the same mistakes – we must ensure these jobs are on shored. Hydrogen is crucial to meeting our net zero targets and crucial for ensuring a proper transition for gas workers.”

Dan McGrail,RenewableUK CEO, said the UK Government should use the consultation period to “amend its plans” to set out a “clear ambition” for green hydrogen. “While we welcome positive steps like the new Net Zero Hydrogen Fund, overall the strategy doesn’t focus nearly enough on developing the UK’s world-leading green hydrogen industry.

“In the year when the UK is hosting the biggest climate change summit for years, we fear that international investors in renewable hydrogen may compare this strategy to those of other countries and vote with their feet.”

Mike Foster, CEO of the Energy and Utilities Alliance(EUA) commented:“The UK’s Hydrogen Strategy represents a huge step in the right direction for the introduction of the technology, something the heating industry is rallying behind in the decarbonisation process. The Government’s commitment to hydrogen is a promising step, which will help to create thousands of jobs and decarbonise homes for millions of consumers with minimal disruption.”

CEO and founder of Protium, Chris Jackson, said:“While there are components within the UK’s first hydrogen strategy that the industry should welcome today, it’s critical to question the government’s ‘twin track’ approach. By investing in Blue Hydrogen, the government will ensure that the UK is locked into a fuel import strategy, that by design cannot be a net zero solution and that will channel billions to the largest energy companies on earth instead of supporting and growing leading UK SMEs.”

Jeff House, head of external affairs at Baxi Heating, added: “As an energy carrier, hydrogen has many uses that will help to decarbonise heating, transport and industry. We therefore welcome the government’s assurance to the public today that hydrogen can be made as safe as natural gas.”