The UK must carefully consider where clean hydrogen can play the most cost and climate effective role to realise its hydrogen ambitions, says Barclays.
Launching a paper, Barclays outlined a series of key policy recommendations to help the UK deliver on its hydrogen goals after engaging with stakeholders across the value chain. The first of this calls on government to set out a credible vision or the UK’s role in a global hydrogen economy.
Building this together with industry, a pragmatic, actionable view on the role the government wants the UK to play in the international hydrogen economy needs to be put forward. This should focus on areas where the UK could have a unique global competitive advantage.
A detailed government roadmap is required too with the purpose of this being to provide policy certainty. The roadmap should outline specific enabling policy actions and investment pathways to deliver headline production targets, set against the backdrop of clear timelines.
The roadmap should cover the whole of the hydrogen value chain and be set within a broad National Transition Plan for the UK. Providing this, it will enable market participants to then understand the role the government sees hydrogen playing in the net zero transition, allowing them to act accordingly.
Moves should also be made to implement appropriate demand-side policies. Through these, which could be quotas or mandates, mandatory use directives, or bans on fossil fuel use by certain dates, a robust hydrogen ecosystem can be secured across the value chain. It should be focussed on sectors where the government wants to prioritise hydrogen use to achieve decarbonisation.
Finally, the government needs to ensure its clean hydrogen revenue certainty mechanism remains credible as it matures to a steady-state, price-based competitive allocation process. It should be used to incentivise and support the development of a robust green hydrogen market.
