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UK Government publishes Hydrogen Strategy

  • United Kingdom
  • Energy and infrastructure - Hydrogen

17-08-2021

The UK Government has today published the much-anticipated Hydrogen Strategy, together with a number of consultations to inform further policy development. Initially introduced as a priority in the Prime Minister’s November 2020 Ten Point Plan for a Green Industrial Revolution, the Hydrogen Strategy is the first step towards achieving the aim of driving the growth of low carbon hydrogen.

A vision for hydrogen

The UK Hydrogen Strategy sets out a clear vision that, by 2030, the UK will be a global leader on hydrogen, with an ambitious target of 5GW of low carbon hydrogen production capacity. The Hydrogen Strategy also set out the UK Government’s plans to scale up hydrogen production, supporting new jobs and clean growth across the UK, with the aim of stimulating over £4 billion of private investment in the period up to 2030.

Jubilee Easo, partner, comments:

“The UK industry has been waiting for the Hydrogen Strategy to be published to see what the UK Government has planned for the development of a hydrogen economy as part of the UK’s package of commitments to achieve net zero. It is encouraging to see the twin track of green and blue hydrogen development. The key to successful deployment of low carbon hydrogen technologies will be the right regulatory framework, the right business models and removing market access barriers. The detail for all of this is still pending, so there is still a lot of work to be done to deliver a successful hydrogen economy.”

Recognising the potential for a low carbon hydrogen economy, the Hydrogen Strategy suggests that hydrogen could make up 20-35% of UK final energy consumption by 2050. Modelling by the UK Government suggests that meeting its ambition for 5GW hydrogen production by 2030 could deliver total emissions savings of around 41MtCO2e between 2023 and 2032, contributing to the UK’s Nationally Determined Contribution under the Paris Agreement to reduce emissions by 68% compared to 1990 levels by 2030.

In addition to the climate benefits of a low carbon hydrogen economy, the Hydrogen Strategy indicates that developing a UK hydrogen economy could be worth up to £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.

Key themes from the UK Hydrogen Strategy

The key points set out in the Hydrogen Strategy to deliver on the UK Government’s 2030 ambition include:

  • the £240 million Net Zero Hydrogen Fund will be launched early in 2022 for co-investment in early hydrogen production projects, intended to support commercial deployment of new low carbon hydrogen production projects during the 2020s, and helping to reduce commercial risk and production costs;
  • the development of a Hydrogen Business Model to be finalised in 2022 in order to provide long-term revenue support to hydrogen producers to overcome the cost challenge of producing low carbon hydrogen;
  • a technology-agnostic approach to hydrogen production, with the UK committing to supporting both electrolytic and CCUS-enabled hydrogen, with further details of the overall production strategy to be released early in 2022;
  • a review will be undertaken into the network infrastructure requirements for hydrogen transportation and storage, including the need for economic regulation and funding, with early stage demonstration funding to be provided through the £68m Longer Duration Energy Storage Demonstration competition and the £60m Low Carbon Hydrogen Supply 2 competition;
  • further review and consultation on end-use cases to encourage early deployment of applications with the greatest strategic potential to support deep decarbonisation goals, including support for industrial fuel switching, domestic heating, ‘Power to Gas’/’Gas to Power’ and transportation application;
  • assessing the conditions necessary for the establishment of a thriving market for low carbon hydrogen, and the creation of a supportive regulatory framework;
  • in order to maximise the economic benefits of the hydrogen economy in the UK, the Government will look at the promotion of sustainable supply chains, upskilling and education of the workforce, as well as maximising research and innovation opportunities; and
  • a package of funding through the Net Zero Innovation Portfolio, including £55m to support the Industrial Fuel Switching competition, a £40m Red Diesel Replacement competition, and a £10m Industrial Energy Efficiency Accelerator.

Hydrogen Strategy related consultations

Alongside the Hydrogen Strategy, the UK Government has launched a number of consultations to inform the policy and regulatory frameworks that will be required for the successful development of a hydrogen economy:

Our team at Eversheds Sutherland will be unpacking the Hydrogen Strategy in a series of articles and webinars as we continue to monitor how hydrogen technologies are developed to help deliver a net zero UK. Keep an eye out for further details of our events and discussions on the key areas addressed by the Hydrogen Strategy.