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Hydrogen Strategy Announced

Published: 17 August 2021
Time to read: 2 mins

One red metal gear on silver wheelgears background. 3d illustration

The UK Government has today published its Hydrogen Strategy, committing to support the development of a hydrogen economy in the UK and which aims to mark the start of a “Hydrogen Revolution”.

The strategy is designed to build upon Boris Johnston’s 10-point plan for a green industrial revolution published last year which included the aim of generating 5GW of low carbon hydrogen production capacity by 2030 for industry, transport, power and homes. The Strategy outlines a ‘twin-track- approach to hydrogen production including both green hydrogen (produced using electrolysis of water powered by renewable energy sources) and blue hydrogen (derived from natural gas and using carbon capture and storage technology to capture emissions).

The focus of the Strategy is triggering investment, creating jobs and working towards net zero emissions targets, with the UK Government suggesting that by 2050 20-30% of the UK’s energy consumption could be hydrogen-based. Public consultations on a hydrogen business model (based on the existing offshore wind CfD system), a £240m net zero hydrogen fund and low carbon hydrogen standards have also been announced.

It is pleasing to see that a support mechanism, similar to that used for offshore wind projects is being offered to help overcome the current low price of natural gas. A new UK carbon pricing mechanism is still required to disincentivise the use of natural gas over the next few years. Today’s UK Hydrogen Strategy is to be given teeth by a hydrogen sector development action plan which will be published in spring next year and  will set out a framework for companies to understand, invest in and secure business opportunities and skills in the industry.

The response from industry so far have been mixed. Many have welcomed positive steps being made, while some feel the strategy does not go far enough, in particular, in relation to focussing on the UK’s green hydrogen potential. What will be critical is whether the Government’s strategy can be brought into practice in an efficient and workable way to begin realising the full potential of hydrogen development in the UK. The motivation should be there with the broader focus on Green Recovery, and climate change targets in the lead up to the UK hosting COP26 later this year.

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