DNV has highlighted the “substantial green prize” that lies ahead for the UK as it decarbonises the economy in its 2025 Energy Transition Outlook.
While the UK is forecast to miss net zero by 2050, as it stands, DNV said its progress is still looking to be impressive, cutting emissions by 58% by the end of the decade, 68% by 2035 and 82% by mid-century against 1990 levels. It will also see energy demand fall 25%, driven by large-scale electrification, bringing about a more efficient energy system compared to one that is based on fossil fuels, while decarbonising the UK economy is affordable and promises big benefits – cutting average household energy costs by 40% on 2021 levels.
So, where does hydrogen factor into it all? According to DNV, without significant additional government and incentivise, low carbon hydrogen production rates are set to miss 2030 targets. Hydrogen production is projected to reach 0.9MtH2 per year in 2030, with just 25% of this low carbon, equivalent to 4GW of capacity, compared to the government target of 10GW.
It explained that its forecast does take into account current expectations around timelines and capacities for selected hydrogen projects in the industrial clusters and at specific production sites, and assumes they will receive further government support to ensure the projects reach Final Investment Decisions over the next few years. This will see hydrogen production rise to 4.7Mt by 2050, or 8% of final UK energy demand.
It is tipping half of the hydrogen and its derivatives to be used for transport, with 30% in industry and 20% for dispatchable low carbon power generation. An increasing need for hydrogen derivatives in the transport sector to hit national and international fuel directives will be the main driver for long-term hydrogen demand, with hydrogen set to be “generally uncompetitive” for industrial use and domestic heating, even by 2050, without there being a clear business model or market support mechanism due to high production costs.
Come mid-century, DNV Is tipping a 25/75 split between blue and green hydrogen. At first, most of the hydrogen will be produced and consumed within industrial clusters, meaning just a limited hydrogen transmission system will be needed to balance demand and supply between these sites. Once the build out of distributed electrolytic hydrogen progresses, however, and there is growing use of hydrogen in the transportation sector, there could be a future need for a wider national hydrogen transmission system.
