Worth the wait? Government’s hydrogen strategy underwhelms industry


‘Twin-tracking’ expansion of hydrogen’s varieties sourced with and without methane can lift Britain’s generation capacity to 5GW by 2030, create 9,000 jobs, and lay foundations to supply up to 35% of UK energy by 2050, optimistic scenarios in the government’s long awaited hydrogen strategy suggest today.

Seeking to foster £ 4 billion in private development this decade, Britain’s first ever national plan for the gas outlines a £ 240 m Net-Zero Hydrogen Fund, earmarked to build production plants for either variety.

Backed by fossil supermajors such as BP, established ‘blue’ hydrogen’s cost advantage means it will continue to dominate supply in coming years, D-BEIS’s strategy accepts.   This will alarm environmentalists. A recent quantification by American scientists predicts the methane-derived variety, even with CCUS, could prove as much as 20% more harmful to the atmosphere even than established ‘natural’ gas.

Nor does Whitehall’s announcement today follow recent advice from its Committee on Climate Change, that today’s strategy should set out a quantified transition plan, a ‘blue hydrocarbon bridge’, towards the lower carbon alternative.

The government’s plan proposes only steps to spur cost cutting of the green alternative, which is electrolysed from water with renewable electricity.

D-BEIS’ document invites consultation responses on a new ‘Hydrogen Business Model’, based on periodic reverse auctions, replicating decarbonised electricity’s success under Contracts for Difference.  Speculation had predicted green hydrogen would be rolled into the existing CfD apparatus: this has not happened.

Premier Johnson’s high level Ten Point Plan for green industry in November included a headline £500 million to expand hydrogen.  Supports specified today from that pot to support switched consumption include

  • £55m for an Industrial Fuel Switching Competition, targeting heavy energy consumers such as in cement and chemicals
  • £10m directed to the existing Industrial Energy Efficiency Accelerator (IEEA). £1.7m of this package has gone to delivery partner Carbon Trust.

D-BEIS promises further details on the government’s production strategy next year. Firmer definitions are pledged, including a rationale for which hydrogen varieties can be truly considered low-carbon.

Not until 2026 will ministers take definitive decisions shaping hydrogen’s role in decarbonising heat, the strategy confirms. Current regulations limit hydrogen to a 23% mix with conventional supply.  Small trials of a 20% solution are under way,  Ofgem and the Health and Safety Executive are shaping technical trials, and today’s document seeks industry responses.

Raising that cap will impose trillions in costs of replacing boilers and other equipment, including for households.   The Times reported at the weekend that consumers could be offered up to £7,000 in a revised £ 400 million scrappage scheme for home boilers, a sum to be quadrupled at the Prime Minister’s insistence. Confirmation may come next spring, the piece speculated.

Switching heavy transport including ships and trucks away from diesel burning receives only high-level attention in D-BEIS’s strategy today.

It repeats existing initiatives such as this year’s £120 million Zero-Emission Regional Areas scheme for buses, and the £15 million ‘Green Fuels Green Skies’ competition for sustainable aviation.   In no case, though, does the plan specify target shares for substituting hydrogen against existing fuels.

For network operators, ENA chief executive David Smith said the government should have shown more ambition.  The strategy was “a much needed and welcome first step”, Smith said. But he added:

“We need further recognition that for hydrogen to play its part in Net Zero, producing 5GW of hydrogen by 2030 will not be enough.

“We must set our sights higher, towards a figure twice that amount.”

For RenewableUK, chief executive Dan McGrail was disappointed:  “Overall, the strategy doesn’t focus nearly enough on developing the UK’s world-leading green hydrogen industry.

“In the year when the UK is hosting the biggest climate change summit for years, we fear that international investors in renewable hydrogen may compare this strategy to those of other countries and vote with their feet”, McGrail said.

At the CBI, policy director Matthew Fell also expressed reservations: “Hydrogen is an area where the UK can lead by example on the global stage….”.

“However, to truly capitalise on its large-scale economic opportunities, and unlock the private sector finance needed”, Fell added, “firms will now be looking for the government to provide detailed policies and standards for hydrogen production and application.”

D-BEIS’s hydrogen strategy is here.


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