The UK government has announced its first-ever Hydrogen Strategy, which it hopes will create "tens of thousands of jobs, billions of pounds in investment and new export opportunities," over the next decade and beyond and create a world-leading hydrogen economy.
The strategy announced by the Business and Energy Secretary Kwasi Kwarteng sets 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 it says 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.
"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 decarbonizing 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. Low-carbon hydrogen provides opportunities for UK companies and workers across our industrial heartlands," the government said.
Business & Energy Secretary Kwasi 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."
With government analysis suggesting that 20-35% of the UK’s energy consumption by 2050 could be hydrogen-based, hydrogen could be critical to meet our targets of net zero emissions by 2050 and cutting emissions by 78% by 2035.
In the UK, the government said, a low-carbon hydrogen economy could deliver emissions savings equivalent to the carbon captured by 700 million trees by 2032 and is a key pillar of capitalizing on cleaner energy sources as the UK moves away from fossil fuels.
The government said its hydrogen approach was based on the UK’s previous success with offshore wind, "where early government action coupled with strong private sector backing has earned the UK a world leading status."
CfD
One of the main tools used by the government to support the establishment of offshore wind in the UK was the Contracts for Difference (CfD) scheme, which incentivizes 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 government has today 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 our lives. 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," the Government said.
CEO of ITM Power Dr Graham Cooley: "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 decarbonization plans, a win for cleaner air and a win for British jobs."
Chief Executive at SSE Alistair Phillips-Davies said: "We strongly welcome the publication of this first-ever Hydrogen Strategy and hope to turn this encouraging strategy into firm and rapid action through our exciting plans. These include working with Equinor on the world’s first major hydrogen-fired power station at Keadby and developing hydrogen storage caverns at Aldbrough, as well as our partnership with Siemens Gamesa to co-locate hydrogen production facilities at our wind farms. The strategy is a welcome first step to realizing the potential of hydrogen."
OGUK, an organization representing the interests of the UK offshore oil and gas industry, also welcomed the hydrogen plan.
OGUK said: "We welcome the publication of the UK’s much-awaited Hydrogen Strategy, which will enable hydrogen to be a vital resource as one of the multitudes of low-carbon solutions we now require.
“This provides a clear long-term signal that the government is committed to building a world-leading UK hydrogen economy and sets out how it will work with industry to achieve this.
“Consistent with the Prime Minister’s Ten Point Plan, our North Sea Transition Deal, and our Methane Action Plan alike, this strategy can help energy communities realise the full potential of this alternative fuel.
“The recognized need for the development of green and blue hydrogen is a sentiment we echo – all options should be made viable if we are to transform the UK’s energy system to a sustainable one.
“We look forward to working with the UK Government to consult on this and help develop hydrogen, as well as the other necessary low-carbon solutions we know will be needed to reach net-zero.”