Government told to back “game-changing” hydrogen


The UK should look to become a global leader in climate action to drive the creation of new green jobs and lifting productivity, post-pandemic, according to the Director-General of the CBI.

On 14 September, at the CBI’s first virtual Net-Zero Conference, Dame Carolyn Fairbairn launched the CBI’s Green Recovery Roadmap, calling on government to take ambitious steps nationally, while using the rest of the year to reignite global efforts to reach net zero by 2050. Within the report, the CBI urged government to publish the Energy White Paper and National Infrastructure Strategy in the autumn to unlock business investment, as well as advocating using the Budget to prioritise public spending on low carbon projects and “game-changing” technologies such as hydrogen and carbon capture.

The timing of COP26 next year, the paper said, should be viewed as a deadline for a national net zero strategy to be in place. However, this should not hold back progress now on delivering now, it stressed, with a step-change in the pace of investment needed if the 2020s are to continue to be a “decade of delivery on net zero”.

The roadmap explained that government can help to catalyse progress by continuing to work with industry on the sector roadmaps needed for net zero and how they interlink and create a whole economy plan for reaching this goal. Considering that some sectors will require a degree of private investment, the CBI said the roadmaps should focus on market design, underpinned by long-term policy frameworks that provide clear targets and regulatory standards, and fiscal support where required. Furthermore, some roadmaps will involve greater collaboration between business and government to develop transformative technologies in their infancy – such as carbon capture and hydrogen.

Six areas were identified as priorities for government action, with kickstarting a hydrogen economy among them. Hydrogen, it explained, is a technology leadership opportunity for the UK. It has the geography, industrial capabilities and infrastructure to capitalise, though with a global race starting to develop at a rapid pace, the UK will fall behind without bold action from government. It further set out the benefits of investing hydrogen, citing research from Imperial College Consultants and the Hydrogen Taskforce, which suggested it could unlock £18bn in GVA by 2035 and support 75,000 additional jobs.

Recommended actions for the government to pursue include introducing a variant of the Contracts for Difference (CfD) auction, with a variable cost for the production of hydrogen and a fixed payment to cover the CAPEX cost, with such auctioning based on different pots for green and blue hydrogen, reflecting their respective long-term cost reduction pathways. The government was also told to commit to at least £1bn over the next spending review period to hydrogen testing programmes and demonstration projects – involving production storage and distribution – while it said the Gas Safety Management Regulations should also be updated. This would be to allow for greater flexibility for the injection of hydrogen into the gas grid.