The government has set a target to produce 5GW of low-carbon hydrogen by 2030
Unveiling its strategy today, BEIS said it would work with industry to deliver 5GW of low-carbon hydrogen production capacity by 2030.
BEIS said a UK-wide hydrogen economy could be worth £900m and create over 9,000 high-quality jobs by 2030, potentially rising to 100,000 jobs and worth up to £13bn by 2050.
The strategy has been cautiously welcomed by businesses
The Confederation of British Industry (CBI) said the strategy was a key milestone in the delivery of the UK’s 10 Point Plan.
Matthew Fell, the CBI’s chief policy director, said: “As a leader in high-skilled manufacturing, and with an extensive legacy in energy production, the UK stands perfectly positioned to capitalise on the opportunities provided by hydrogen.”
The government has indicated it will favour a CFD business model
One of the main incentives used by the government to support the establishment of offshore wind in the UK was the Contracts for Difference (CfD) scheme, which the government said had provided developers with “direct protection from volatile wholesale prices” and protected consumers “from paying increased support costs when electricity prices are high”.
It today launched a public consultation on a preferred hydrogen business model which will be built on a similar premise to the offshore wind CfDs.
Fell said this confirmation would “alleviate uncertainty in the market and provide the confidence boost private investors are looking for”.
However, business have called for more detail
Fell added: “To truly capitalise on those large-scale economic opportunities, and unlock the private sector finance needed, firms will now be looking for the government to provide detailed policies and standards for hydrogen production and application.”
The government said it would provide further detail in 2022 on the government’s production strategy.
The strategy outlines a “twin track” approach to supporting both blue and green hydrogen
The government said it would support multiple technologies including ‘green’ electrolytic and ‘blue’ carbon capture-enabled hydrogen production and that it would collaborate 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, it said.
The application of ‘blue hydrogen’ is controversial
A study published this month claimed that blue hydrogen could have a footprint 20% greater than natural gas. Green groups are also concerned that it can be used by fossil fuel companies as greenwashing PR but the Climate Change Committee argues that blue hydrogen can fill in as a transitional option, “to help grow the H₂ option while also reducing emissions”.
As is the idea of blending the existing gas supply
Jess Ralston, analyst at the Energy and Climate Intelligence Unit (ECIU) said: “The case for hydrogen for home heating is far from proven, particularly hydrogen derived from fossil gas rather than from renewable energy. After all, any remaining fossil gas with a hydrogen blend in the grid is just not compatible with net zero and it’s not yet clear how effective hydrogen will be, nor how much it will cost.”
The government will launch a sector action plan in 2022
The government said it would launch the 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. It will also carry out a review to support the development of the necessary network and storage infrastructure “to underpin a thriving hydrogen sector”.
There is criticism that the plan has been delayed
The Environmental Audit Committee (EAC) chairman, Philip Dunne said it was “disappointing that only now – after being promised the strategy in November last year – are the necessary consultations being launched on how to overcome funding issues and how to define ‘low-carbon’ hydrogen”.
“These critical issues should have been ironed out in advance of this strategy. I urge the government to act swiftly on the outcomes of these consultations. The UK has a strategic advantage from the prospect of generating green hydrogen from surplus offshore renewable energy generation, but the opportunity should not be missed,” he added.
Other critics point out that countries in Europe are going much further
Analytics firm Globaldata said the government’s 5GW goal appears “relatively achievable”, as it had already tracked the equivalent of 4.6GW in proposed projects, with further early-stage projects potentially adding more capacity to the pipeline.
It added that this “is far behind the Netherlands and Germany, which already have 15GW and 14GW of respective projects in the pipeline”. Additionally, the UK target is “dwarfed” by the EU’s 2030 target of 40GW of low-carbon hydrogen capacity, the firm noted.
Winners announced for Tees Valley hydrogen transport trials
Coinciding with the strategy, the government announced the competition winners of a £2.5m research and development competition to accelerate the use of hydrogen transport in the Tees Valley area. Successful projects will see diesel buses retrofitted with hydrogen fuel cells, supermarket chains benefitting from hydrogen delivery vans and the police and NHS using hydrogen vehicles for rapid response services.