UK government launches plan to kickstart hydrogen economy

UK

The UK has unveiled its plan to unlock jobs, investment, and new export opportunities through the creation of a low-carbon hydrogen sector over the next decade and beyond.

Business and energy secretary, Kwasi Kwarteng, has set out 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.

According to the government, a booming, 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 also suggests that 20-35 per cent of the UK’s energy consumption by 2050 could be hydrogen-based, meaning that low-carbon hydrogen could play a critical role in meeting the country’s targets of net zero emissions by 2050, and cutting emissions by 78 per cent by 2035.

A low-carbon hydrogen economy could deliver emissions savings equivalent to the carbon captured by 700 million trees by 2032.

Kwarteng 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.”

Energy and climate change minister, Anne-Marie Trevelyan, 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.”

Success with offshore wind informing Hydrogen Strategy

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 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 UK 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 the energy mix. These subsidies would be available to producers of ‘blue’ hydrogen – which is made from natural gas but with most of the CO2 captured using carbon capture and storage (CCS) technology – as well as ‘green’ hydrogen – where renewable electricity is used with electrolysers to produce hydrogen from water.

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.

CEO of ITM Power, Dr. Graham Cooley, said: “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 is just what today’s Hydrogen Strategy sets out.

“Green, zero-carbon hydrogen can abate greenhouse gas emissions from industry, transport and heat. It can be used to store our abundant renewable energy from offshore wind and longer term, be used to create export markets. This is a win for the UK’s decarbonisation plans, a win for cleaner air and a win for British jobs.”

Concerns over ‘blue’ hydrogen

While many have welcomed the fact that the UK government is finally considering hydrogen as part of its net zero strategy, concern has been raised about the potential overreliance on ‘blue’ hydrogen. CCS, however, does not capture all CO2 emissions, remains commercially unproven, and perpetuates natural gas extraction, leading to some environmental activists to oppose the technology.

A recent report by scientists from Cornell and Stanford universities, published by Energy Science & Engineering, suggests that the full life cycle greenhouse gas emissions from burning ‘blue’ hydrogen for heating may be more than 20 per cent greater than using conventional natural gas.

The study also says that ‘blue’ hydrogen has higher fugitive methane emissions than conventional ‘grey’ hydrogen from fossil fuels, because of increased natural gas use in powering the carbon capture operation. Even with CCS, CO2 emissions from gas-based hydrogen are only to 12 per cent lower than for ‘grey’ hydrogen.

The report’s authors conclude that: “There really is no role for ‘blue’ hydrogen in a carbon-free future. We suggest that ‘blue’ hydrogen is best viewed as a distraction – something that may delay needed action to truly decarbonise the global energy economy.

“We further note that much of the push for using hydrogen for energy since 2017 has come from the Hydrogen Council, a group established by the oil and gas industry specifically to promote hydrogen, with a major emphasis on ‘blue’ hydrogen,” the authors go on to say. “From an industry perspective, switching from natural gas to ‘blue’ hydrogen may be viewed as economically beneficial, since even more natural gas is needed to generate the same amount of heat.”

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

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