Country: United Kingdom
Document type: National Strategy
Released: August 2021
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 – sought views on design options for a UK standard that defines ‘low carbon’ hydrogen, to underpin support for hydrogen production.
- Net Zero Hydrogen Fund Consultation – sought 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.
- Hydrogen Business Model Consultation – sought views on the design for a low carbon hydrogen business model.
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.
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
Hydrogen Strategy Update to the Market
Three hydrogen strategy updates to the market have been published in July 2022, December 2022 and August 2023. These documents summarise UK government hydrogen policy developments and schemes since the original Strategy was published.
The hydrogen strategy market updates published in July and December 2022 and August 2023 provide a chronological summary of key hydrogen-related funding support developments and awards over the course of 2022/2023, including for (but not limited to):
- The Net Zero Hydrogen Fund (NZHF)
- The Low Carbon Hydrogen Supply 2 Programme
- The Hydrogen BECCS Innovation Programme
- The Hydrogen Business Model (funded by the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) Scheme)
- The CCUS Cluster Sequencing Process
- Hydrogen innovation funding programmes (e.g., Industrial Hydrogen Accelerator), etc.
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, 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.
Notable Programmes and Documents
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.
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 was conducted in two phases – phase 1 scoping projects concluded in January 2023, details of five demonstration projects being supported in Phase 2 were published in June 2023.
Hydrogen Investor Roadmap
The original roadmap was released in April 2022 (now withdrawn) and summarised the government policies designed to support the development of a UK low-carbon hydrogen economy. An updated Hydrogen Net Zero Investment Roadmap was released in April 2023.
2022 Hydrogen Business Model (HBM) / Net Zero Hydrogen Fund (NZHF) Electrolytic Allocation Round.
The first Electrolytic Hydrogen Allocation Round (HAR1, offering joint NZHF / HBM support) was launched in July 2022. In August 2023, the Government announced that following the completion of initial due diligence on the earlier announced (March 2023) shortlisted projects, 17 projects have been invited to negotiations, alongside continued due diligence. Award of contracts is aimed for the fourth quarter of 2023 (totalling up to 250 MW of capacity, with first projects becoming operational in 2025).
The Government intends to launch the second allocation round (HAR2) in the fourth quarter of 2023 and aims to award contracts to up to 750MW of capacity in 2025, subject to affordability and value for money.
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.
Hydrogen Sector Development Action Plan
In July 2022, the UK published the Hydrogen Sector Development Action Plan. The purpose of this Sector Development Action Plan is to highlight the nature and scale of opportunities across the hydrogen economy in the UK. It focuses on four key area – investment, supply chains, jobs and skills, and exports.
Hydrogen Transport and Storage Infrastructure
In August 2022, the UK published a consultation on Hydrogen Transport and Storage Infrastructure, which closed in November 2022. The consultation document sets out the government’s vision for how it expects the hydrogen transport and storage infrastructure to emerge from the mid-2020s onwards, as well as seeking stakeholder views on high-level design options for business models aimed at supporting investment in such infrastructure.
The Government published its response to the consultation in August 2023.
House of Commons Science and Technology Committee: Inquiry into the role of hydrogen in achieving Net Zero
In December 2022, the Committee published its report on The Role of Hydrogen in Achieving Net Zero. Evidence sessions in support of report preparation were held throughout 2021. Transcripts of witness evidence is included in the report.
UK Climate Change Committee: Reliable Decarbonised Power System
In March 2023, the Committee released a report, Delivering a reliable decarbonised power system, which includes comprehensive modelling of a resilient UK power system by 2035, and which includes discussion of the role of flexible firming provided by hydrogen and natural gas, peaking periods, hydrogen-based turbines and hydrogen storage.
Hydrogen Champion Report
In March 2023, the findings and recommendations from the UK Hydrogen Champion for government and industry to accelerate the growth of the hydrogen sector were released. The UK Hydrogen Champion was appointed in July 2022 as an independent advisor to government and industry on the development of the UK hydrogen economy. The report follows engagement with stakeholders across the hydrogen value chain between July and December 2022.
Hydrogen Production Delivery Roadmap
In the Powering Up Britain plan, the UK Government announced that it would be developing a hydrogen production delivery roadmap in 2023.
Open consultation – hydrogen blending into GB gas distribution networks
In September 2023, the UK Government announced an open consultation to support further assessment of the case for hydrogen blending and lead options for its implementation, if enabled. This process is intended to help inform a strategic policy decision on whether to support blending of up to 20% hydrogen by volume into Great Britain’s gas distribution networks.
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.
Updated: October 2023