HomeIndustry SectorsFinance and PolicyUK Government launches Hydrogen Strategy

UK Government launches Hydrogen Strategy

The United Kingdom (UK) has launched its Hydrogen Strategy, outlining plans to create a low carbon hydrogen sector over the next decade.

This Hydrogen Strategy will drive forward the commitments laid out in the UK Prime Minister’s 10 Point Plan for a green industrial revolution. The Plan sets the foundation for how the UK government will work with industry to meet its 5GW of low carbon hydrogen production capacity by 2030.

The plan is for hydrogen to replace natural gas in powering around 3 million UK homes yearly, as well as to power transport and businesses in heavy industry.

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The Strategy suggests a UK-wide hydrogen economy could be worth £900 million and create more than 9,000 high quality jobs by 2030, potentially rising to 100,000 jobs and worth up to £13 billion by 2050. This is if the potential clean energy source plays the planned role of decarbonising polluting, energy-intensive industries such as chemicals, oil refineries, power and heavy transport like shipping, HGV lorries and trains by moving them away from fossil fuels.

UK Business & Energy Secretary Kwasi Kwarteng, said: “With the potential to provide a third of 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.”

Applying offshore wind sector lessons

The UK government’s approach is based on their previous success with the offshore wind sector, which featured early government action coupled with strong private sector. One of the main tools the government used to support the establish the offshore wind sector in the UK was the Contracts for Difference (CfD) scheme. The CfD 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.

Thus the UK government has launched a public consultation on a preferred business model built on a similar premise, designed to overcome the cost gap between low carbon hydrogen and fossil fuel. This should help the costs of low-carbon alternatives to fall quickly, as hydrogen comes into play as an energy source and carrier.

The government is also consulting on the design of a £240m Net Zero Hydrogen Fund to support commercial deployment of new low carbon hydrogen production plants across the UK.

Other measures included in the UK Hydrogen Strategy include:

  • Outlining an approach to supporting multiple technologies and committing to providing further detail in 2022 on the government’s production strategy;
  • Collaborating with industry to develop a UK standard for low carbon hydrogen;
  • Undertaking a review to support the development of necessary network and storage infrastructure;
  • Working with industry to assess safety, technical feasibility and cost effectiveness of mixing 20% hydrogen into existing gas supply. Doing this would deliver a 7% emissions reduction on natural gas; and
  • Launching a hydrogen sector development action plan in early 2022 setting out how government will support companies to secure supply chain opportunities, skills and jobs in hydrogen.

Need for hydrogen use could far outstrip a country’s ability to create

The UK’s 5GW by 2030 hydrogen production target puts it in the lower half of the top ten European countries projections for how much H2 they think they will be able to create over the next years.

The rapid growth of renewable electricity and falling price of solar and wind power means the opportunities to produce zero carbon hydrogen has caught the attention of global energy players. African countries are well aware of the benefits of developing local and export markets for green hydrogen, as the European market realises its need for the clean gas might quickly outstrip its ability to produce.

Japan, The Netherlands and Germany are just some of the countries funneling research & development money into projects and studies around the African continent as various countries work on developing their own value chains.

The South African government started working on the seeds of a hydrogen economy in 2008 with the establishment of the Hydrogen South Africa (HYSA) programme. The first draft of the Hydrogen Society Roadmap was completed at the end of 2020 and the policy document should be presented to Parliament by the beginning of 2022.

Dr Sivakumar Pasupathi, director of HYSA systems competence centre at the University of the Western Cape said hydrogen is a hot topic globally, which is moved beyond hype to an impending solution to the world’s environmental issues and energy security. “It is more relevant to South Africa as it is home to 80% of the world’s PGM resources, which is used as a catalyst in electrolysers and fuel cells.”

He pointed out South Africa has entered this sector quite lately and investment is minute compared to what is happening in developed countries. “However, due to its mineral endowments and technology leap frogging capability, South Africa can still benefit immensely from the hydrogen economy.”

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Developing any energy economy takes mix of public and private investment

Pasupathi believes creating a local hydrogen economy will start with government policies and incentives that allow private sector to take full advantage of the available technologies.

“Hydrogen technologies are still very expensive and CAPEX intensive. Therefore, it is not easy to attract private sector to invest. Scaled up demonstrations and field trials are required to bring down the cost to required values.

“it is similar to the renewable industry where, when it was scaled up the cost became considerably cheaper leading to it becoming commercially relevant. Similar things need to happen with the hydrogen economy,” said Pasupathi.

He will join energy experts on a roundtable discussing the various facets of Africa’s potential hydrogen sector on 1 September. Register for your front row seat.

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Theresa Smith
Theresa Smith is a conference producer for Clarion Events Africa.