Energy ministry D-ESNZ has committed to back 11 projects making industrial use of green hydrogen with £2 billion over 15 years.

In return for state backing, the successful projects will invest over £400 million in the next 3 years, generating more than 700 jobs across the UK, said the ministry.

For industrial processes, the government says nascent green hydrogen, electrolysed with renewable electricity, needs support as it challenges blue hydrogen, made from re-processed oil and gas.  The cleaner variety, says Whitehall, needs support in building up output to justify new infrastructure.

Both types offer potential, ministers believe, to create over 12,000 jobs this decade and unlock as much as £11 billion of investment.

However the government has confirmed that plans to convert homes in Redcar, Teesside to the green variety will not go ahead, with ministers citing problems with its main supply. The announcement follows withdrawal of a similar conversion of homes in Whitby. Results from a third home pilot in Fife are being evaluated.

Around 125MW of industrial projects will benefit straightaway from the announcement. Participating businesses include

  • Sofidel in Port Talbot, South Wales. The paper-maker will replace half of its current gas consumption with hydrogen
  • InchDairnie Distillery in Scotland, who will run a boiler on 100% hydrogen in their distilling process
  • PD Ports in Teesside, who will use hydrogen to replace diesel in their vehicle fleet, decarbonising port operations from 2026

Currently, less than 1% of the gas in distribution networks is hydrogen. Under Whitehall’s proposals, hydrogen could be blended with other gases in the network as an offtaker of last resort. That should cut costs in the hydrogen sector by helping producers seize economies of scale.

Energy Secretary Claire Coutinho also unveiled a second round of funding now available to applicants making blue and green H2 varieties, so they can develop pipelines in readiness for the government’s allocation rounds in 2025 and 2026. These intend to boost hydrogen capacity up to 1.5GW, on track to 4GW of blue capacity and 6GW of green by 2030.

Hydrogen blending may help achieve the UK’s Net Zero ambitions, but would have a limited and temporary role as the UK moves away from the use of natural gas.

Coutinho said: “Hydrogen presents a massive economic opportunity for the UK, unlocking over 12,000 jobs and up to £11 billion of investment by 2030.

“Our announcement represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe”.


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