The Labour Government, in power for eight weeks, has sparked hope for net-zero initiatives by launching plans like the removal of the de facto ban on onshore wind, the National Wealth Fund, Great British Energy, and the ‘superhighway’ Eastern Green Link 2 project.
Hydrogen will play a critical role in achieving net-zero, particularly where electrification falls short. Hydrogen UK’s Economic Impact Assessment estimates the hydrogen sector can generate 30,000 jobs and contribute £7 billion annually by 2030. Globally, the hydrogen market may reach $2.5 trillion by 2050.
The previous government targeted 10GW of low-carbon hydrogen production by 2030. Achieving this requires a technology-agnostic approach to reduce costs and expedite projects.
For hydrogen projects to succeed, prioritizing first-of-a-kind projects and Cluster Sequencing processes is crucial. This signals the UK’s commitment to clean energy and attracts investment. The Government should also commit to additional Hydrogen Allocation Rounds in 2025 and 2026, followed by annual rounds.
Affordable electricity access is vital for reducing electrolytic hydrogen costs. This requires optimizing the regulatory and policy landscape to enhance interactions between renewable electricity and hydrogen business models. Additionally, the planning and permitting framework must facilitate quicker deployment by setting strict timelines for project reviews—efforts already welcomed by Hydrogen UK through relaxed planning laws.
Demand risks, often termed a ‘chicken and egg issue,’ can hinder scaling hydrogen. Mitigating these risks involves allowing hydrogen blending in the gas distribution network and collaborating on transmission-level blending to support industrial operations and international trading.
Hydrogen UK’s manifesto suggests amending the Low Carbon Hydrogen Agreement and Standard to ensure risk-sharing, subsidy cost reduction, and market price promotion. This will enhance the Hydrogen Production Business Model.
Funding concerns are always prevalent. Clarifying funding mechanisms and establishing a long-term spending envelope are crucial. The National Wealth Fund can significantly contribute to driving innovation and development.
