The UK, along with many other industrialised countries, is facing significant challenges when considering how to tackle the energy crisis; not just pricing and availability in the present but future initiatives to move away from a reliance on carbon-based energy sources.

Hydrogen presents a significant growth opportunity across all regions of the UK, supporting decarbonisation and improving energy security. It is also the only route for a significant portion of the country’s existing energy intensive industry to decarbonise.

In March 2023, the government’s first Hydrogen Champion released a report setting out what decisions the UK needs to take to kickstart investment in hydrogen production and meet targets for 2030.

In the report’s executive summary, several observations were made about the process itself and some external factors that will influence how the process develops. It was observed that the US and EU had recently introduced significant incentives for hydrogen production, as well as an EU-wide plan for a hydrogen infrastructure.

While global investors and major industry players have substantial funding available, they are also looking at alternative investment options. Many are waiting to see how projects in the UK play out. If the UK did not begin investment initiatives of its own, the report said, it could find that private investment gravitated to the US and EU instead, with the risk that the UK could be left behind.

It was also worth noting that the new hydrogen economy would depend on skills investment as, at present, the sector is at a nascent stage and therefore industry, government and the education sector needed to work together to deliver the required training and skills. This could mean looking to the natural gas industry, where many of the skills and training initiatives already exist, albeit in a slightly different form.

Who is the Hydrogen Champion?

This is an independent advisor who engages with industry stakeholders and investors to identify barriers and enablers to investment in hydrogen projects and makes recommendations on what government and industry could do to accelerate investment in the hydrogen economy. The scope of work also covers hydrogen demand, transportation and storage and the development of a UK hydrogen supply chain.

Recommendations

The Hydrogen Champion’s report also made several recommendations, both for government and industry. These were intended to address policy and regulatory concerns, highlight project challenges and identify opportunities for industry to contribute more to solutions.

Government

1: Kickstart investment by overcoming barriers to deliver the first hydrogen production projects at scale. This will boost investor confidence, build project momentum and drive UK content.

2: Provide a clear vision for investors on how and when hydrogen will scale-up beyond the first round of projects in the initial industrial clusters.

3: Drive rapid development of the hydrogen economy by stimulating demand in blending, heating and transport.

4: Create a plan for integrated energy infrastructure to deliver an optimal future energy system incorporating gas, electricity and hydrogen (and CO²), enabling balancing of intermittent renewable power generation.

5: Provide an integrated plan for the implementation of the Hydrogen Strategy to 2030, building on the existing roadmap.

Industry

1: Industry should work closely with government in dedicated work groups to help resolve problems and gaps in resource. Industry could improve the effectiveness of formal consultations by working in closer partnership with Government, for example, on blending, where industry has data and experience from other markets.

2: Industry and trade associations should work together to evaluate the scale of the economic opportunity of hydrogen, to ensure this is not underestimated. The Government would benefit from additional data to provide the full picture of how many jobs the hydrogen economy could create.

3: Industry should work closely with government to identify UK strengths, make voluntary commitments to deliver UK content and formulate a wider supply chain strategy that builds on UK strengths, as has been done for aviation.

4: An industry supported delivery workstream on skills is required both to join up industry, government and the education sector and to ensure that near and long-term skill needs are met within the supply chain strategy.

SOURCE: Forum of Private Business

Hydrogen Champion Calls on UK Government to Work With Industry to Scale-Up Investment