United Kingdom

Country: United Kingdom

Document type: National Strategy

UK Hydrogen Strategy (and supporting documents)

Released: August 2021

Summary Points:

UK Hydrogen Strategy (and supporting documents)

On 17 August 2021, the UK Government published the UK Hydrogen Strategy along with several supporting documents:

The vision presented in the (originally released) Strategy is that by 2030, the UK is a global leader on hydrogen, with 5 GW of low carbon hydrogen production capacity (since revised upwards to 10 GW) driving decarbonisation across the economy and clear plans in place for future scale up towards Carbon Budget 6 (CB6, covering the period 2033-37) and net zero.

The Strategy outlines a ‘twin track’ approach to supporting multiple technologies including ‘green’ electrolytic and ‘blue’ carbon capture-enabled hydrogen production.

Outcomes by 2030 across a range of strategic outcomes include:

  • Progress towards 2030 ambition: 5 GW (subsequently doubled to 10 GW) of low carbon hydrogen production capacity; hope to see 1 GW production capacity by 2025.
  • Decarbonisation of existing UK hydrogen supply: Existing hydrogen supply decarbonised through CCUS and/or supplemented by electrolytic hydrogen injection.
  • Lower cost of hydrogen production: A decrease in the cost of low carbon hydrogen production driven by learning from early projects, more mature markets and technology innovation.
  • End-to-end hydrogen system with a diverse range of users: End user demand in place across a range of sectors and locations across the UK, with significantly more end users able and willing to switch.
  • Increased public awareness: Public and consumers are aware of and accept use of hydrogen across the energy system.
  • Promote UK economic growth and opportunities, including jobs: Established UK capabilities and supply chain that translates into economic benefits, including through exports. UK is an international leader and attractive place for inward investment.
  • Emissions reduction under Carbon Budgets 4 and 5: Hydrogen makes a material contribution to the UK’s emissions reduction targets, including through setting us on a pathway to achieving CB6.
  • Preparation for ramp up beyond 2030 – on a pathway to net zero: Requisite hydrogen infrastructure and technologies are in place with potential for expansion. Well established regulatory and market framework in place.
  • Evidence-based policy development: Modelling of hydrogen in the energy system and input assumptions improved based on wider literature, qualitative and quantitative evidence and real-world learning. Delivery evidence from innovation and deployment projects collected and used to improve policy making.

The strategy sets out a 2020s Roadmap based around archetypes of a hydrogen economy that could be expected in the early 2020s, mid-2020s and late 2020s, as well as by the mid-2030s for CB6. For each archetype, the Strategy sets out the supporting policies or activities that need to be in place to deliver the roadmap.

The Strategy includes a comprehensive list of ‘key commitments’ across the supply chain.

Net Zero Strategy 

In October 2021, the UK government released its Net Zero Strategy (and accompanying documents).  The Strategy includes establishment of an Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) Scheme (which funds the Hydrogen Business Model) to fund new hydrogen and industrial carbon capture business models.

British Energy Security Strategy (hydrogen production ambition doubled)

In April 2022, the Policy Paper – British Energy Security Strategy, doubled the low-carbon hydrogen production capacity ambition to 10 GW by 2030, with at least half derived from electrolytic hydrogen.

The Energy Security Strategy also included the following aims:

  • To run annual allocation rounds for electrolytic hydrogen, moving to price competitive allocation by 2025 as soon as legislation and market conditions allow, so that up to 1GW of electrolytic hydrogen is in construction or operational by 2025
  • Designing, by 2025, new business models for hydrogen transport and storage infrastructure
  • Establishing a hydrogen certification scheme by 2025

In its December 2023 Hydrogen Strategy Update to the Market (see below) the UK Government indicated a stretching interim ambition of up to 1 GW of electrolytic and up to 1 GW of CCUS-enabled hydrogen production operational or under construction by 2025.

Hydrogen Production Delivery Roadmap

In December 2023, as a complement to the Net Zero and Hydrogen Strategy documents, the UK Government published its Hydrogen Production Delivery Roadmap indicating how it expects the hydrogen production landscape to evolve towards 2035, including a description of annual Hydrogen Allocation Rounds (HAR) for electrolytic projects during the 2020s.

Hydrogen Strategy Update to the Market

Five hydrogen strategy updates to the market have been published in July 2022, December 2022, August 2023, December 2023, and December 2024. These documents summarise UK government hydrogen policy developments and schemes since the original Strategy was published.

Funding Programmes

The hydrogen strategy market updates provide a chronological summary of key hydrogen-related funding support developments and awards over the course of 2022-2024, including for (but not limited to):

  • The Net Zero Hydrogen Fund (NZHF)
  • The Hydrogen Business Model
    • Hydrogen Allocation Rounds – support for non-CCUS enabled production (e.g. electrolysis-based)
    • Carbon Capture, Utilisation and Storage Cluster Sequencing Process
  • Hydrogen research and innovation funding programmes, including the Hydrogen BECCS Programme, Industrial Hydrogen Accelerator, Low Carbon Hydrogen Supply 2 Competition, etc.

Net Zero Hydrogen Fund (NZHF) strands 1 and 2

In March 2023, the UK Government announced 15 successful applicants from Round 1 (April 2022 competition) of the NZHF strands 1 and 2 to be allocated a total of £37.9 million to support the development and deployment of low carbon hydrogen production.

In February 2024, the UK Government announced 7 successful applicants from Round 2 (April 2023 competition) of the NZHF strands 1 and 2 to be allocated a total of £21 million to support the development and deployment of low carbon hydrogen production.

Hydrogen Business Model – Hydrogen Allocation Rounds 

The first Electrolytic Hydrogen Allocation Round (HAR1, offering joint NZHF / HBM support) was launched in July 2022. In December 2023, the UK Government announced 11 successful projects (totalling 125 MW capacity) to be offered contracts. The announcement noted that this round would provide over £2 billion of revenue support from the Hydrogen Production Business Model (over 15 years) to be paid once projects become operational. Over £90 million from the Net Zero Hydrogen Fund has been allocated to support the construction of these 11 projects. In December 2024, the Low Carbon Contracts Company announced the signing of the first three (of 11) hydrogen production contracts under HAR1.

In December 2023, the UK Government launched the second hydrogen allocation round (HAR2) with an aim to support up to 875 MW capacity, subject to affordability, value for money and quality of projects. As at end December 2024, shortlisted projects have yet to be published.

In its December 2024 Hydrogen Strategy Update to the Market, the UK Government indicated that it is developing its plans for future Allocation Rounds (including Round 3) and reviewing the design of Allocation Rounds beyond Allocation Round 4.

Hydrogen Business Model – CCUS Sequencing Process

In April 2023, the Powering up Britain: Energy Security Plan included the announcement of the Track-1 negotiation project list of 8 capture projects (including hydrogen-related projects) for the HyNet and East Coast clusters across the hydrogen, power, industry, and waste sectors. In December 2023, the UK Government launched the Track-1 HyNet Expansion Process.

In October 2024, in a carbon capture clusters-related announcement, the UK Government announced funding for two sites in Teesside and Merseyside of up to £21.7 billion of funding available, over 25 years, targeted to make the UK an early leader in both carbon capture, utilisation and storage and hydrogen, to be allocated between these two clusters.

Carbon Border Adjustment Mechanism (CBAM)

In December 2023, the UK announced it is to implement an import carbon pricing mechanism by 2027, noting that imports such as iron, steel, aluminium, ceramics and cement from overseas would face a comparable carbon price to those goods produced in the UK. Goods imported into the UK from countries with a lower or no carbon price would have to pay a levy by 2027. The design and delivery of the CBAM will be subject to further consultation in 2024, including the precise list of products in scope.

In October 2024, the UK government published a consultation response on the introduction of a UK Carbon Border Adjustment Mechanism.

Notable Programmes and Documents

Hydrogen Investor Roadmap 

The original roadmap was released in April 2022 and summarised the government policies designed to support the development of a UK low-carbon hydrogen economy. The latest annual update to the Hydrogen Net Zero Investment Roadmap was released in February 2024.

UK Low Carbon Hydrogen Standard 

The Standard was finalised in July 2022 and provides guidance on the methodology for calculating the emissions associated with hydrogen production and the steps producers should take to prove that the hydrogen they produce is compliant with the standard. The standard is to be reviewed at regular intervals, with an updated version published in April 2023.

Environment Agency Published Guidance

In March 2024, the Environment Agency published guidance on emerging techniques for the production of hydrogen from water using electrolysis. In February 2023, the Environment Agency published guidance on how to prevent or minimise the environmental impacts of industrial hydrogen production from methane or refinery fuel gas with carbon capture for storage.

Hydrogen Transport and Storage (T&S) Infrastructure

In August 2022, the UK published a consultation on Hydrogen Transport and Storage Infrastructure, which closed in November 2022. The Government published its response to the consultation in August 2023. In December 2023, the UK Government published its Hydrogen Transport and Storage Networks Pathway which sets out the next steps in its vision for the strategic development of hydrogen T&S in the UK.

Energy Act 2023

In October 2023, the UK Energy Act 2023, noted as the most extensive energy legislation in the history of the UK, was granted Royal Assent with provisions around energy production and security and the regulation of the energy market, including (but not limited to):

  • The licensing of carbon dioxide transport and storage.
  • The commercial arrangements for carbon capture and storage and for hydrogen production and transportation.
  • New technology, including low-carbon heat schemes and hydrogen grid trials.
  • Offshore energy production, including environmental protection, licensing and decommissioning.
  • The Independent System Operator and Planner.

Hydrogen combustion in industry and power: regulations and standards stocktake 2023

In December 2024, the UK Government released a stocktake report conducted on the development of regulations and standards for hydrogen combustion equipment used in industry and power sectors.

Heat in buildings

In its December 2024 Hydrogen Strategy Update to the Market, the UK Government noted that it wishes to provide strategic clarity on decarbonising home heating as soon as possible and that in the coming months it would assess the latest evidence before consulting in 2025 on the role of hydrogen in home heating.

Clean Power 2030 Action Plan

In December 2024, the UK Government released its Clean Power 2030 Action Plan which, amongst other things, indicated a range of possible installed capacity of 2-7 GW of low carbon dispatchable power (including hydrogen to power) by 2030.

 

Reviewed: January 2025