UK aims for a thriving hydrogen economy by 2030
Energy

UK aims for a thriving hydrogen economy by 2030

Our vision is that by 2030, the UK is a global leader on hydrogen, with 5GW of low carbon hydrogen production capacity driving decarbonisation across the economy.

  • By ICN Bureau | August 22, 2021

The Govt. of United Kingdom recognises the importance of a clear goal alongside long term policy frameworks in bringing forward low carbon technologies, a report from the Govt reports. The govt’s ambition for 5GW of low carbon hydrogen production capacity by 2030 is a signal of the government’s firm commitment to work with industry to develop a strong and enduring UK hydrogen economy.

This ambition is a means to an end, rather than an end in itself – positioning the UK hydrogen economy for the scale up needed to support CB6 in the mid-2030s and net zero by 2050, and to deliver clean growth opportunities across the UK. We use “our 2030 ambition” in places throughout this strategy as shorthand for this wider vision for the UK hydrogen economy by the end of the decade.

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 recognize 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. We welcome this drive and ambition and will continue to work with industry to deliver the strategic direction and supporting policy environment to achieve our 2030 ambition and position the UK hydrogen economy for the future growth and scale up needed for CB6 and net zero.

Delivering the 2030 ambition will yield significant emissions savings. The govt’s modelling suggests that the use of low carbon hydrogen enabled by 5GW production capacity could deliver total emissions savings of around 41MtCO2 e between 2023 and 2032, equivalent to the carbon captured by 700 million trees over the same time period.

The govt’s 5GW ambition would also mean the creation of a thriving new hydrogen industry, which could support over 9,000 jobs and £900 million of GVA by 2030.9  Government

According to the report, investment in hydrogen to de-risk early projects could unlock over £4 billion of private sector co-investment up to 2030.10 Our ambition also sets us on a promising pathway post-2030. Our analysis shows that, under a high hydrogen scenario, up to 100,000 jobs and £13 billion of GVA could be generated from the UK hydrogen economy by 2050.

In developing a UK hydrogen economy, it will be important that the govternment sets clear and consistent direction to give industry and investors confidence and certainty, whilst remaining flexible to ensure that we act on learning from early projects and can take decisions which offer the greatest decarbonisation and economic value in the long term. Our strategic framework informs the policy direction and commitments set out in this strategy, and will guide our actions over the course of the 2020s to provide a coherent long term approach.

UK Hydrogen Strategy

Our vision

Our vision is that by 2030, the UK is a global leader on hydrogen, with 5GW of low carbon hydrogen production capacity driving decarbonisation across the economy and clear plans in place for future scale up towards Carbon Budget 6 and net zero, supporting new jobs and clean growth across the UK.

We recognise that there may be trade-offs within and between some of these principles at any point in time. For example, the levelised cost of hydrogen using electrolytic production technology is higher today than for CCUS-enabled hydrogen, and it will take time for production to reach industrial scale. That said, with the right support today, this technology presents a genuine opportunity for export of UK expertise and technology, and there is also significant potential for longer-term cost reduction with continued innovation, scale up of manufacture and access to increased amounts of low-cost renewable electricity. This is a clear example of the need to seek balance across these principles in current and future policy decisions.

Challenges to overcome

There are a number of strategic challenges across the value chain that will need to be overcome in order to produce and use hydrogen at scale in the UK:

• Cost of hydrogen relative to existing high carbon fuels: Although costs are likely to reduce significantly and rapidly as innovation and deployment accelerate, hydrogen is currently much costlier to produce and use than existing fossil fuels.

• Technological uncertainty: While some technology is already in use, many applications need to be proven at scale before they can be widely deployed.

• Policy and regulatory uncertainty: Hydrogen is a nascent area of energy policy; industry is looking to government to provide capital and revenue support, regulatory levers and incentives, assurance on quality and safety, direction on supply chains and skills, and broader strategic decisions.

• Need for enabling infrastructure: The use of hydrogen will require new networks and storage, as well as integration with CCUS, gas and electricity networks.

• Need for supply and demand coordination: Developing a hydrogen economy will require overcoming the ‘chicken and egg’ problem of needing to develop new production and use cases in tandem and balancing supply and demand, including potentially through storage over time.

• Need for ‘first-of-a-kind’ and ‘next-of-a-kind’ investment and deployment: Scaling up a low carbon hydrogen economy will require addressing ‘first mover disadvantage’ and other barriers to bring forward early projects while establishing a sustainable environment for increasing investment and deployment in the longer term.

Delivering a thriving UK hydrogen economy

Low carbon hydrogen has a key role to play in the UK’s net zero energy future. The 2020s will be critical for laying the groundwork to develop a thriving hydrogen economy by 2030, positioned for further ramp up to help meet CB6 and set us on a pathway to net zero by 2050. This strategy sets out our whole-system approach to meeting this ambition. This includes working closely with industry and the research and innovation community to scale up along the value chain and put in place the wider policy frameworks to support this, and to secure the economic opportunities that the hydrogen economy holds for the whole of the UK. In doing so, we will work with our international partners to ensure that low carbon hydrogen can contribute to the global transition to net zero, and we will track our progress to make sure that we deliver on our objectives. Building a thriving UK hydrogen economy is a once-in-a-lifetime opportunity to help create a new, clean energy industry of the future which can play a key role in the UK’s transition to net zero and deliver real economic opportunities across the UK.

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