The United Kingdom is taking significant strides towards achieving its ambitious climate goals by embracing green hydrogen as a key component of its decarbonization strategy.
The government’s recent announcement of annual green hydrogen tenders by 2025 and the launch of its second renewable H2 auction demonstrate a strong commitment to fostering the growth of the green hydrogen industry. This article delves into the UK’s hydrogen strategy, its goals, the underlying technology, and the potential impact it could have on the nation’s energy landscape.
The UK government’s Department for Energy Security & Net Zero (DESNZ) is at the forefront of driving the green hydrogen revolution. The department’s Hydrogen Strategy Update outlines a comprehensive plan to support hydrogen producers and encourage the adoption of low-carbon hydrogen over conventional high-carbon fuels like natural gas and diesel.
The government has launched a series of hydrogen allocation rounds to identify and support promising hydrogen projects. The first electrolytic hydrogen allocation round (HAR1) was initiated in July 2022, shortlisting 20 projects with a total electrolyser capacity of 408MW. These shortlisted projects are now undergoing negotiations and due diligence, with the aim to award contracts (Low Carbon Hydrogen Agreements or LCHAs) to successful projects by the end of 2023.
LCHAs serve as revenue support mechanisms for hydrogen producers, bridging the cost gap between low-carbon hydrogen production and conventional high-carbon alternatives. The UK government’s commitment to provide subsidies to hydrogen producers underscores its determination to create a level playing field for green hydrogen and facilitate its widespread adoption.
Building on the success of HAR1, the UK government is gearing up to launch the second hydrogen allocation round (HAR2) later this year. HAR2 aims to award contracts for up to 750MW of hydrogen capacity by 2025, subject to affordability and value for money. Beyond HAR2, the government envisions transitioning to annual, price-based competitive allocation for LCHAs by 2025 for electrolytic projects, and potentially other specified non-CCUS hydrogen production technologies.
To qualify for support, all hydrogen projects must meet stringent emission intensity criteria, ensuring that hydrogen production remains truly green. Projects must achieve a lifetime emissions intensity of below 20g of CO2-equivalent per MJ (2.4kgCO2e/kgH2). Moreover, the government is actively exploring the potential of non-CCUS technologies, such as hydrogen made from methane pyrolysis and biomass or waste gasification, to further diversify and enhance the green hydrogen ecosystem.
The UK’s ambitious hydrogen strategy holds the potential to revolutionize the nation’s energy landscape. By providing critical support to green hydrogen projects, the government is driving innovation and encouraging investments in sustainable technologies. The transition towards green hydrogen not only reduces carbon emissions but also ensures energy security, strengthens energy independence, and fosters economic growth by creating a new industry with job opportunities.
The UK’s commitment to holding annual green hydrogen tenders and supporting low-carbon hydrogen producers through LCHAs marks a transformative step in its journey towards a greener and more sustainable future. By fostering the growth of the green hydrogen industry, the UK is positioning itself as a global leader in the fight against climate change and paving the way for a cleaner, more resilient, and prosperous tomorrow.
