UK Government Launches Plan to Create a Thriving Low Carbon Hydrogen Sector
The UK’s first-ever Hydrogen Strategy has been published by the Department for Business, Energy and Industrial Strategy (BEIS) today, with plans to unlock £4 billion of investment in blue and green generation storage and usage.
Setting the foundation for how the UK Government will create a world-leading hydrogen economy, the strategy builds on the Prime Minister’s plans to ignite a green industrial revolution, outlined last year in his 10 Point Plan. This set a target for 5GW of low carbon hydrogen production capacity by 2030, replacing natural gas in powering around 3 million UK homes each year whilst powering transport and businesses.
Business and Energy Secretary, Kwasi Kwarteng described the publication as ‘the start of the UK’s hydrogen revolution,’ commenting on how the energy source has the ‘potential to transform the way we power our lives.’
The Strategy is set to support over 9,000 UK jobs, with £105 million of government funding provided to support polluting industries in significantly reducing their emissions.
A consultation looking at ways to overcome the cost gap between low carbon hydrogen and fossil fuels through a ‘Contract for Difference’ (CfD) support mechanism has also been launched. This aims to ensure a predictable price for hydrogen whilst ensuring good value for money for consumers.
CfDs have had notable success in ramping up offshore wind power generation capacity and significantly bringing down costs, with offshore wind brought online from 2020-2030 forecasted to produce power at an average cost per megawatt-hour, vs. the levelized cost of energy for new gas production forecasted to reach £82 per megawatt-hour by 2030[i].
With the United Nationals Climate COP26 Climate Talks due to take place in Glasgow this November, the launch of the Strategy comes at an important moment for global leaders. Now more than ever, it is critical that we see the right efforts made and decisions taken to create a greener and cleaner future.
The publication today ‘fires the starting gun on the scaling up of hydrogen solutions in the UK,’ commented Gemserv’s Clare Jackson, who also set up the Hydrogen Taskforce.
‘This is great news for the industry, but it is the first step in a very long journey to establishing hydrogen as a key part of our future energy systems and enable the UK to cost-effectively deliver net zero,’ Jackson added.
Hydrogen will play an important role in the UK’s transition to a Net Zero economy by 2050 and is highly effective at reaching hard-to-decarbonise sectors and industries. The Government’s policies will enable this cross-sectoral deployment; however, as is often the case with new low carbon solutions still in the early stages of deployment, hydrogen faces operational cost challenges and will need to compete with low-cost, high-carbon alternatives such as natural gas. Leadership and support will therefore be essential to its success.
By being at the forefront of innovation and technological advancement, the UK has a unique opportunity to establish itself as a world leader in developing and exporting its hydrogen capabilities, with hydrogen expected to find significant uses across a broad range of sectors.
A booming hydrogen economy would deliver economic, social and environmental benefits, whilst positioning the UK as a leader in action against climate change during a critical moment in history.
[i] UK Government Launches Plan to Create a Thriving Low Carbon Hydrogen Sector
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