Government Commits to Kick Starting the UK’s Hydrogen Economy by 2030

Government Commits to Kick Starting the UK’s Hydrogen Economy by 2030

As the countdown to COP26 continues, hydrogen is an area where the UK is aiming to lead by example with the publication of the Government’s Hydrogen Strategy. Starting the process now is necessary if the Government’s 5GW production ambition by 2030 is to be attained, helping to meet the Sixth Carbon Budget and Net Zero commitments. Hydrogen is one of a handful of new, low carbon technologies that will be critical for the UK’s transition to net zero. As part of a decarbonised, renewable energy system, low carbon hydrogen could be a versatile replacement for high-carbon fuels used today.

Launching a public consultation on a preferred hydrogen business model, the presentation from business and energy secretary Kwasi Kwarteng, marks a clear shift in interest, with the Government formally embracing the premise of the technology. This it states has the potential to generate thousands of new jobs, billions of pounds in investment and new export opportunities, as well as crucially reducing the UK’s carbon emissions to deliver Net Zero by 2050.

Prioritising and supporting polluting industries to significantly cut their emissions, as part of this hydrogen strategy report the government announced a £105 million funding package through its Net Zero Innovation Portfolio. £55 million of which will be used as funding to support the development and trials of solutions to switch industry from high to low carbon fuels such as natural gas to clean hydrogen. The investment is intended to help industries to develop low carbon alternatives for industrial fuels, including hydrogen, which will be key to meeting climate commitments.

The strategy outlines plans and investments to meet the ambition for 5GW of low carbon hydrogen production capacity by 2030 – the equivalent of replacing natural gas in powering around 3 million UK homes each year as well as powering transport and businesses, particularly heavy industry.  Concerns have been raised though, that the 5GW target is not ambitious enough, proving insufficient for hydrogen development to become a cornerstone of both our energy policy and the transition to Net Zero.

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 Net Zero emissions targets by 2050 and cutting emissions by 78% by 2035 – a view shared by the UK’s independent Climate Change Committee.

By 2030, hydrogen could play an important role in decarbonising polluting, energy-intensive industries by helping them move away from fossil fuels. The envisioned low-carbon hydrogen economy could deliver emissions savings equivalent to the carbon captured by 700 million trees by 2032.

Kwasi Kwarteng, business & energy secretary, said;

“With the potential to provide a third of the UK’s energy in the future, 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.”

The report also stated that expectations for the UK-wide hydrogen economy may see its worth bloom from £900 million by 2030, potentially rising up to £13 billion by 2050.

To achieve this requires the overcoming of the cost gap between low carbon hydrogen and fossil fuels, which remains a stumbling block for many commercial projects, especially those based around refurbishment. To aid a fall in costs of low-carbon alternatives the government is consulting on the creation of a £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 a “twin track” approach to supporting multiple technologies including ‘green’ electrolytic and ‘blue’ carbon capture-enabled hydrogen production. Though some question the approach, with investment in “blue” hydrogen, arguing this will lock the UK into a fuel import strategy, that by design cannot be a Net Zero solution.

Plans are also in place for developing a UK standard for low carbon hydrogen to ensure Net Zero consistency of production and usage.

A core deliverable will also be the review of necessary network and storage infrastructure, which will  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.

The UK government also reported that it is working with the Health and Safety Executive and energy regulator Ofgem to support industry to conduct hydrogen heating trials. These trials along with the results of a wider research and development testing programme will inform a UK government decision in 2026 on the role of hydrogen in decarbonising heat. If a positive case is established, by 2035 hydrogen could be playing a significant role in heating businesses to help reduce carbon emissions from the UK’s heating system and tackle climate change.

“16 successful projects have been instrumental in securing the first industrial demonstration of a wide range of innovative technologies, with the future potential to deliver up to 10 million tonnes of cumulative carbon savings over 10 years,”

commented associate director for the Carbon Trust, Paul Huggins.

The scale of the challenge is clear: with almost no low carbon production of hydrogen in the UK or globally today. Meeting the stated 2030 ambitions and delivering decarbonisation and economic benefits from hydrogen requires rapid and significant upscaling this decade in the face of considerable challenges from existing infrastructure and a long-established built environment that was never conceived with Net Zero in mind. This Hydrogen Strategy is one of a series the UK government is publishing ahead of the UN Climate Summit COP26 taking place in Glasgow this November, and we await the Heat and Buildings and Net Zero Strategies in particular which are set to also be published this year. Further detail on the government’s production strategy for hydrogen alongside a hydrogen sector development action plan are set to be published in 2022.

Read the full Hydrogen Strategy document