The government and oil and gas sector are to invest up to £10bn for hydrogen production as part of the North Sea Transition Deal.
On 24 March, the deal, which has been agreed between government and industry, was unveiled and will seek to support workers, businesses and the supply chain through the low carbon transition. It is aiming to harness the existing capabilities of the industry, along with its infrastructure and private investment potential, to exploit new and emerging technologies, which include hydrogen production, carbon capture usage and storage (CCUS), offshore wind and decommissioning.
With the extraction of oil and gas from the UKCS accounting for around 3.5% of the UK’s greenhouse gas emissions, the package of commitments laid out within the deal are set to cut pollution by as much as 60mn tonnes come 2030, including 15mn from oil and gas production on the UKCS, and support up to 40,000 jobs across the supply chain.
Targets include reducing emissions by 10% by 2050, 25% by 2027 and 50% by 2030, along with a pledge of up to £16bn investment from government and the oil and gas sector by 2030. This will include £3bn to replace fossil fuel-based power supplies on oil and gas platforms with renewable energy, up to £3bn for CCUS and up to £10bn on hydrogen.
In terms of specific sector action on hydrogen, the deal tasks it with creating low carbon hydrogen production capacity, working with the government to deliver the ambition of 5GW by 2030; investing in RD&D for hydrogen technologies to support the production, transportation, storage and consumption of hydrogen at lower cost, once more working with government to align innovation objectives and maximise investments; and supporting the development and deployment of offshore green hydrogen production, using offshore wind to enable it to reach maturity. It will also support measures to continue the hydrogen safety programme and take steps to understand hydrogen and public opinion.
The government, meanwhile, will deploy funding from the £1bn Net Zero Innovation Programme for hydrogen technologies supporting the production, transportation, storage and consumption of hydrogen at lower cost; bring forward details on preferred hydrogen business models and the revenue mechanism to stimulate private investment in 2021, with the former finalised in 2022; and review the overarching market framework set out in the Gas Act 1995 to ensure the appropriate powers and responsibilities are in place to facilitate a decarbonised gas future. It will also look to accelerate the hydrogen project planning process and ensure the continued delivery of the iron mains replacement programme.
Elsewhere, other key commitments set out within the deal include the sector ensuring 50% of offshore decommissioning and new energy technology projects are provided by local businesses and an Industry Supply Chain Champion is appointed to support the coordination of local growth and job opportunities with other sectors.