United Kingdom

Country: United Kingdom

Document type: Policy Statement/National Strategy

The Ten Point Plan for a Green Industrial Revolution

Released: November 2020

UK Hydrogen Strategy (and supporting documents)

Released: August 2021

Summary Points:

The Ten Point Plan for a Green Industrial Revolution

  • Point 2 of the Plan is entitled ‘Driving the Growth of Low Carbon Hydrogen’
  • Two key policy impacts are:
    • Aiming for 5 GW low-carbon hydrogen production capacity by 2030 in partnership with industry
    • Lower carbon heating and cooking (with no change in experience for domestic consumers) through hydrogen blends and reducing the emissions of the gas used by up to 7%
  • Target milestones include
    • 2021 – Publication of a hydrogen strategy, begin consultations on the Government’s preferred business models for hydrogen
    • 2022 – Finalise hydrogen business models
    • 2023 – complete testing necessary to allow for up to 20% blending of hydrogen into gas networks, begin hydrogen heating trials in a local neighbourhood
    • 2025 – 1 GW of hydrogen production capacity, begin a large village hydrogen heating trial, set out plans for a possible pilot hydrogen town before the end of the decade
  • Potential savings of 41 million tonnes of CO2e between 2023-2032
  • Support measures include a UKP240 million Net Zero Hydrogen Fund

The Climate Change Committee’s Reducing UK emissions: 2020 Progress Report to Parliament notes, when discussing Actions to achieve Net Zero by 2050, the importance of hydrogen “..to service demands for some industrial processes, for energy-dense applications in long-distance HGVs and ships, and for electricity and heating in peak periods. By 2050, a new low-carbon industry is needed, with UK hydrogen production capacity of comparable size to the UK’s current fleet of gas-fired power stations.” (page 54)

In December 2020, the UK Government released its Energy White Paper – Powering our Net Zero Future; an overview of key commitments includes the aim to develop 5 GW of low-carbon hydrogen production capacity by 2030.

UK Hydrogen Strategy (and supporting documents)

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

  • Low Carbon Hydrogen Standards Consultation – seeks views on design options for a UK standard that defines ‘low carbon’ hydrogen, to underpin support for hydrogen production (consultation closes 25 October 2021).
  • Net Zero Hydrogen Fund Consultation – seeks views to inform the design of the (£240 million) Net Zero Hydrogen Fund (NZHF), which aims to support at-scale deployment of low carbon hydrogen production during the 2020s (consultation closes 25 October 2021).
  • Hydrogen Business Model Consultation – seeks views on the design for a low carbon hydrogen business model (consultation closes 25 October 2021).

The vision presented in the Strategy is that by 2030, the UK is a global leader on hydrogen, with 5GW of low carbon hydrogen production capacity 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 presents analysis prepared for CB6 that suggests 250-460TWh of hydrogen could be needed in 2050, equivalent to 20-35 per cent of UK final energy consumption.

The Strategy outlines a ‘twin track’ approach to supporting multiple technologies including ‘green’ electrolytic and ‘blue’ carbon capture-enabled hydrogen production, and commits to providing further detail in 2022 on the government’s production strategy.

Outcomes by 2030 across a range of strategic outcomes include:

  • Progress towards 2030 ambition: 5GW of low carbon hydrogen production capacity with potential for rapid expansion post-2030; hope to see 1GW 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.

Early 2020s (2022-2024)

  • Production: Small-scale electrolytic production
  • Networks: Direct pipeline, co-location, trucked (non-pipeline) or onsite use
  • Use: Some transport (buses, early HGV, rail & aviation trials); industry demonstrations; neighbourhood heat trial

Key actions and milestones

  • Launch NZHF early 2022
  • Phase 1 CCUS cluster decision 2021
  • Finalise low carbon hydrogen standard 2022
  • Finalise business model 2022
  • Heat neighbourhood trial 2023
  • Value for money case for blending Q3 2022

Mid-2020s (2025-2027)

  • Production: Large-scale CCUS-enabled production in at least one location; electrolytic production increasing in scale
  • Networks: Dedicated small-scale cluster pipeline network; expanded trucking & small-scale storage
  • Use: Industry applications; transport (HGV, rail & shipping trials) village heat trial; blending (tbc)

Key actions and milestones

  • Aiming for 1GW production capacity 2025
  • At least 2 CCUS clusters by 2025
  • Heat village trial 2025
  • Hydrogen heating decision by 2026
  • Decision on HGVs mid-2020s

Late 2020s (2028-30)

  • Production: Several large-scale CCUS-enabled projects & several large-scale electrolytic projects
  • Networks: Large cluster networks; large-scale storage; integration with gas networks
  • Use: Wide use in industry; power generation & flexibility; transport (HGVs, shipping); heat pilot town (tbc)

Key actions and milestones

  • Ambition for 5GW production capacity 2030
  • 4 CCUS clusters by 2030
  • Potential pilot hydrogen town by 2030
  • Ambition for 40GW offshore wind by 2030

Mid-2030s onward

  • Production: Increasing scale & range of production – e.g. nuclear, biomass
  • Networks: Regional or national networks & large-scale storage integrated with CCUS, gas & electricity networks
  • Use: Full range of end users incl. steel; power system; greater shipping & aviation; potential gas grid conversion

Key actions and milestones

  • Sixth Carbon Budget

The Strategy includes a comprehensive list of ‘key commitments’ (pages 111-115 for full listing) across the supply chain, including:

Hydrogen production:

  • Ambition for 5GW of low carbon hydrogen production capacity by 2030.
  • Launch the £240 million NZHF in early 2022 for co-investment in early hydrogen production projects.
  • Deliver the £60 million Low Carbon Hydrogen Supply 2 competition.
  • Finalise design of UK standard for low carbon hydrogen by early 2022.
  • Finalise Hydrogen Business Model in 2022, enabling first contracts to be allocated from Q1 2023.
  • Provide further detail on our production strategy and twin track approach by early 2022.

Hydrogen networks and storage

  • Launch a call for evidence on the future of the gas system in 2021.
  • Review systemic hydrogen network and storage requirements in the 2020s and beyond, including need for economic regulation and funding, and provide an update in early 2022.
  • Deliver the £68 million Longer Duration Energy Storage Demonstration competition.
  • Deliver the £60 million Low Carbon Hydrogen Supply 2 competition.

Use of hydrogen

  • Launch a call for evidence on ‘hydrogen-ready’ industrial equipment by the end of 2021.
  • Launch a call for evidence on phase out of carbon intensive hydrogen production in industry within a year.
  • Deliver Phase 2 of the £315m Industrial Energy Transformation Fund.
  • Launch a £55 million Industrial Fuel Switching 2 competition in 2021.
  • Prepare for hydrogen for heat trials – a hydrogen neighbourhood by 2023, hydrogen village by 2025 and potential pilot hydrogen town by 2030.
  • Aim to consult in 2021 on ‘hydrogen-ready’ boilers by 2026.
  • Continue the multi-million pound support for transport decarbonisation, including for deployment, trials and demonstration of hydrogen buses, HGVs, shipping, aviation and multi-modal transport hubs.

Creating a market

  • Set out further detail on the revenue mechanism which will provide funding for the Business Model in 2021.
  • Establish a Hydrogen Regulators Forum in 2021.
  • Assess market frameworks to drive investment and deployment of hydrogen, and provide an update in early 2022.
  • Assess regulatory barriers facing hydrogen projects, and provide an update in early 2022.
  • Complete an indicative assessment of the value for money case for blending up to 20 per cent hydrogen into the existing gas network by late 2022, and aim to make a final policy decision in late 2023.

Net Zero Strategy and Heat and Buildings Strategy

In October 2021, the UK government released both the Net Zero Strategy (and accompanying documents) and the Heat and Buildings Strategy.

The word ‘hydrogen’ appears over 500 times in the Net Zero Strategy with key points from the UK Hydrogen Strategy emphasised. The Net Zero Strategy includes establishment of an Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme to fund new hydrogen and industrial carbon capture business models, providing up to UK£140 million to establish the scheme, including up to UK£100 million to award contracts of up to 250MW of electrolytic hydrogen production capacity in 2023 with further allocation in 2024. (Page 20)

The Strategy also seeks to deliver four carbon capture usage and storage (CCUS) clusters, capturing 20-30 MtCO2 across the economy, including 6 MtCO2 of industrial emissions, per year by 2030. (Page 21)

The Heat and Buildings Strategy includes a discussion on the role of hydrogen in decarbonising the sector and notes that further analysis is required to allow strategic decisions on the role of hydrogen in heating to be made by 2026. (Page 9)

Hydrogen Skills and Standards for Heat Programme

In December 2021, the UK Government published the Hydrogen Skills and Standards for Heat Programme. The purpose of the programme is to define the required criteria to safely repurpose existing natural gas equipment for hydrogen and to train a workforce of competent hydrogen gas installers. The work will support future hydrogen trial activities and consideration of hydrogen for heat as a potential decarbonisation pathway.

The programme is made up of four elements:

  • Supporting technical research and evidence gathering
  • Hydrogen gas ancillary device and component standards
  • Hydrogen gas enabling standards
  • Hydrogen competence framework and training specifications

Hydrogen BECCS Innovation Programme

In January 2022, the UK announced the Hydrogen BECCS Innovation Programme, aimed at supporting the development of technologies to produce hydrogen generated via BECCS (bioenergy with carbon capture and storage). The programme will be conducted in two phases. Phase 1 (total budget UK£5 million) will support multiple projects to scope and develop a feasible prototype demonstration project; under Phase 2, successful projects will be able to apply for further funding to support a physical demonstration of the hydrogen BECCS technology.

April 2022 Consultations, Reports and Initiatives

In April 2022, several hydrogen-related consultations, reports and initiatives were published:

  • Launch of a UK£375 million package to support innovative energy technologies to decarbonise UK homes and businesses, including UK£240 million to support the production of clean, low-cost hydrogen.
  • The UK Government is to create a new Future System Operator (FSO) to oversee the UK energy system, including integrating existing networks with emerging technologies such as hydrogen.

Low Carbon Hydrogen Supply 2 (HySupply 2) competition awards

In May 2022, the UK Government announced that funding of up to UK£60 million had been awarded to 28 projects across the UK, including Scotland, Wales and the north of England and working across a range of different sectors and technologies, through the HySupply 2 competition.

Other Reports and Materials

In response to the earlier noted reports from the Committee on Climate Change and the Ten Point Plan for a Green Industrial Revolution, in December 2020, the House of Commons Science and Technology Committee launched an inquiry into the role of hydrogen in achieving Net Zero.   Evidence sessions were held throughout 2021, starting in March 2021. Combined oral evidence transcript and ‘watch the meeting’ materials (the latter embedded within the oral evidence transcript) from the May 2021 and July 2021 oral evidence sessions can be found here.

In July 2021, the All-Party Parliamentary Group (APPG) on Hydrogen launched its report on The role of hydrogen in powering industry which sets out 10 recommendations to support and accelerate the growth of the UK’s hydrogen sector.

 

Updated: June 2022