Hydrogen UK has released a report, looking at what needs to happen to stimulate demand for hydrogen.
With 2025 now providing greater certainty around how important hydrogen will be to some of the hardest to abate sectors of the economy, the time is now for the government to focus policy support on high value cases for hydrogen. These are non-road mobile machinery, the chemicals, refining, steel and glass and ceramics sectors in industry, seasonal electricity supply and grid balancing in power, as well as long-haul shipping and long-haul aviation.
To date, policy support has focused mostly on stimulating production. While this has delivered a strong UK production project pipeline, there now needs to be a focus on demand and supporting offtakers to make the switch. This should address key barriers, with Hydrogen UK identifying four common ones that are stifling adoption for hydrogen: economics, policy uncertainty, infrastructure, and technology demonstration.
With over £20 billion of private sector investment ready and willing to invest in UK hydrogen projects, the government needs to take action, driving adoption and accelerating deployment.
This should include a refreshed Hydrogen Strategy being published, reflecting the role hydrogen can play in an integrated energy system; a fully unified approach being employed across all government departments to accelerate deployment; and support for hydrogen transport and storage infrastructure, noted as a critical enabler for lowest cost hydrogen production, market development and achieving clean power.
There also needs to be a Low Carbon products market created, stimulating demand for products made with hydrogen, as well as Flexibility Markets being formed, helping incentivise the lowest cost production of hydrogen. DEVEX and CAPEX grants should be offered to bridge the full cost of fuel switching for offtakers, while R&D grants should be provided to stimulate technology development and innovation.
On mandates, meanwhile, Hydrogen UK wants government to consider a targeted, flexible mandate system that is specific to the UK market and complimented by support for first movers to stimulate demand; for Low Carbon Fuel mandates to be aligned with wider decarbonisation policies and standards; and for strong and stable Carbon Pricing to be facilitated, helping offtakers to take decarbonisation investment decisions while still maintaining cost competitiveness.
