Strategy for hydrogen
18 August 2021
The Government yesterday announced initial details of its eagerly awaited Hydrogen Strategy for introducing this form of energy for industrial, domestic and other purposes.
While obviously focused primarily on large-scale likely producers and likely consumers of the fuel, the 121-page document also includes details of consultations and schemes relevant to other sectors, including construction and related markets.
The Strategy builds on commitments laid out in the Prime Minister’s 10 Point Plan for a ‘green industrial revolution’ by setting the foundation for how the UK government will work with industry to meet its ambition for 5GW of low carbon hydrogen production capacity by 2030 – the equivalent of replacing natural gas in powering around 3 million UK homes each year as well as powering transport and businesses, particularly heavy industry.
However, it states that “It is not possible today, in 2021, to predict with certainty the size of the future hydrogen market in a net zero energy system, nor the best pathway to reach that. We recognise that the UK has huge potential to produce and use low carbon hydrogen, and that many in industry think we could go further and faster.”
Nevertheless, it says government analysis suggesting that 20-35% of the UK’s energy consumption by 2050 could be hydrogen-based, and cutting emissions by 78% by 2035.
The government says its approach is based on the UK’s previous success with offshore wind using joint public and private sector backing. One of the main tools used by government then was the Contracts for Difference (CfD) scheme, which incentivises investment in renewable energy by providing developers with direct protection from volatile wholesale prices and protects consumers from paying increased support costs when electricity prices are high.
As such, the government has launched a public consultation on a preferred hydrogen business model which, built on a similar premise to the offshore wind CfDs, is designed to overcome the cost gap between low carbon hydrogen and fossil fuels, helping the costs of low-carbon alternatives to fall quickly.
Other measures include a ‘twin track’ approach to supporting multiple technologies including ‘green’ electrolytic and ‘blue’ carbon capture-enabled hydrogen production, and committing to providing further detail in 2022 on the government’s production strategy.
Interestingly, the Strategy also commits to collaborating with industry to develop a UK standard for low carbon hydrogen, thus giving certainty to producers and users that the hydrogen the UK produces is consistent with net zero while supporting the deployment of hydrogen across the country. This also includes a review to support the development of the necessary network and storage infrastructure for hydrogen in sectors such as construction.
The Strategy also includes details of a £40 million Red Diesel Replacement Competition. This will provide grant funding for the development and demonstration of low carbon alternatives to diesel for the construction, quarrying and mining sectors, with the aim of decarbonising these industries reliant on red diesel. It says that red diesel is responsible for producing nearly 14 million tonnes of carbon each year.
As already reported here on the Site-Eco blog the government is working with the Health and Safety Executive to conduct hydrogen heating trials <<< link >>>. These, along with the results of a wider research and development testing programme, will inform a UK government decision in 2026 on the role of hydrogen in decarbonising heat.
The Hydrogen Strategy is obviously an important first step in determining the feasibility of this form of energy as a green fuel source and it will be fascinating to watch future developments.
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