With the right policy support, the UK can deliver double the government’s target of 5GW of low carbon hydrogen by 2030, according to a report.
On 3 March, the UK Hydrogen and Fuel Cell Association (UKHFCA) published a paper, highlighting green hydrogen’s potential to become a leading sector in the UK for job creation and exports. With the right policies in place, it can deploy 10GW of green hydrogen by 2030 and 80GW by 2050, while achieving a price target of £2kg as the average green hydrogen price across projects by 2030 if investments are to begin now.
It drew on research from the Hydrogen Taskforce, which found 75,000 jobs could be created from a commitment to hydrogen by government and supported by appropriate measures, and ORE Catapult on how a hydrogen industry could generate £320bn for the UK economy by 2050, before calling on government to support domestic hydrogen-focused businesses with sufficient national opportunities. This would allow them to achieve scale and compete internationally. Incentivising hydrogen production is essential in this context, with the paper detailing the “ready to go” policies that can accomplish this.
These include a 10-year moratorium on VAT for green and net zero hydrogen production; allowing green hydrogen to qualify for the green gas levy; including hydrogen fuelling infrastructure for funding available from the Office of Low Emission Vehicles (OLEV), alongside direct funding of hydrogen fuelling station (HRS) capital costs; and co-locating green hydrogen production and HRS with EV rapid charging sites. All of these are amended, existing polices that can deliver significant growth in green hydrogen production, without substantive, complex changes in policy.
A mixture of supply side and demand side measures would then be needed over the short to medium-term, focused on transportation, industrial and domestic heat, and industrial processes – the three sectors with the greatest potential decarbonisation opportunities in the UK that would allow green hydrogen to continue growing.
It set out a roadmap up to 2050, outlining actions and goals for government to support sector development, beginning with 5GW of capacity being deployed over the next five years and targeted policy to expand small-scale and on-site distributed green hydrogen production. From 2025 to 2030, the goal would then for capacity to reach 10GW as the first offshore wind to green hydrogen projects roll out, along with support for several large distributed green hydrogen hubs. This period would also see rollout of hydrogen fuelling infrastructure along major transportation routes and support for green hydrogen production through capital grants, tariffs and a CfD-type mechanism on hydrogen.
Up to 2040, capacity would reach 40GW with a complete phase-out of grey, brown and black hydrogen as the new supply, limited to blue or green hydrogen, sees hydrogen account for 5-10% of total final energy consumed in the UK. The whole UK gas grid would be 100% hydrogen tolerant with blends reaching at least 20%. By 2050, capacity would reach 80GW, the portion of hydrogen in the UK gas grid would be 100% and green hydrogen a traded commodity, with London a major trading hub point for Europe.
It further urged government to not repeat the mistakes of being slow to invest in wind energy and, instead, embrace the opportunity for the UK to become a world leading exporter of electrolysis systems and other green hydrogen technologies. It expressed concern that the Treasury and other parts of government still do not appreciate the opportunity green hydrogen offers and urged it to consider the long-term outcomes of missing the green hydrogen window and global opportunity.