The UK hydrogen industry is calling on the government to deliver “pragmatism” and policy certainty to help the nascent sector overcome development challenges.
It comes as the UK Labour government today pledged to unveil an updated hydrogen strategy later this year.
The new hydrogen strategy will build on one introduced under the previous Conservative government in 2021.
Addressing the Hydrogen UK annual conference in Birmingham, industry minister Sarah Jones said the updated strategy comes following “a great deal of change” in the industry in recent years.
“New evidence has emerged on costs, demand and expected operating patterns, and our understanding has evolved in time, both in terms of how we can best use hydrogen in energy systems, and how we can expect the hydrogen economy to develop over time,” Jones said.
Clean power and economic growth
The government believes hydrogen will play a central role in two of Labour’s “guiding missions”, Jones said, delivering its clean power by 2030 target and securing economic growth.
Jones said the hydrogen strategy will set out the government’s plans to “build on the progress made in recent years and seize the opportunities ahead”.
In addition, Jones said the Department for Energy Security and Net Zero (DESNZ) will announce the successful projects within the second hydrogen allocation round (HAR2) “very shortly”.
© Supplied by VoltalisThe first allocation round (HAR1) saw 11 green hydrogen projects secure close to £2 billion in UK government funding in 2023 as part of the revenue support scheme.
However, the first round fell short of securing its 250 MW capacity target, and there have been lengthy delays in securing final investment decisions from HAR1 developers.
While several HAR1 developers have now signed government contracts, Jones said the government expects to secure agreement across all 11 projects by the end of May.
As a result of the delays to HAR1, the industry is keenly awaiting HAR2 results for a clearer picture of how the UK hydrogen sector is developing.
UK hydrogen sector progress
Hydrogen UK chief executive Clare Jackson acknowledged that progress within the sector has moved “painfully slowly” in recent months.
Speaking at the conference in Birmingham, Jackson said progress “is not linear” within an emerging energy sector like hydrogen and acknowledged the many “frustrations” experienced in recent years, such as a recent decision by BP to scrap a green hydrogen project in Teesside.
“There are always going to be challenges, obstacles, bumps in the road, but as I look ahead I see a great many reasons for hope and optimism,” she said.
© Supplied by Hydrogen UK“The case for hydrogen has never been more compelling, there is global consensus across governments and industry that net zero simply cannot be delivered without hydrogen.”
Pointing to the government’s ambitions around economic growth, Jackson said the Labour administration “cannot ignore” the fuel source.
“Hydrogen offers the UK a unique opportunity amongst energy transition technologies to deliver clean jobs and economic growth,” Jackson said.
“Unlike many other areas, it’s a huge future global market.”
Jackson said some estimates showed the global hydrogen market could be worth up to $8 trillion (£6.2tn) by 2050.
The nascent nature of the hydrogen sector means a large portion of that economic opportunity is “still up for grabs”, Jackson said, with the UK “incredibly well positioned to capitalise”.
“We have the geology, we’ve got the geography, we’ve got the project pipeline,” Jackson said.
“We’ve got £20bn worth of private sector investment that is ready to go in this country.”
Hydrogen sector needs support
While there was plenty of optimism on show at the industry gathering, many speakers also called for pragmatism in areas such as government support for blue or ‘low carbon’ hydrogen.
Elsewhere, analysts are also warning that the hydrogen industry across the UK and Europe is still facing significant headwinds.
Research from analyst firm Westwood Global Energy Group released earlier this week showed that 83% of European hydrogen projects may fail to materialise by 2030 without market intervention.
Westwood said its research showed a similar picture within the UK, with the firm estimating a potential delivery range of just 1% to 24% of its pipeline by 2030.
The analysis underlines the “sizable policy, funding and mandate shortfall”, Westwood said.
Westwood hydrogen manager Jun Sasamura said the “gap between ambition and reality in Europe’s hydrogen sector is widening”.
“While targets are necessary, they will remain out of reach unless the policy landscape evolves,” Sasamura said.
“For the UK in particular, without sharper coordination and a clearer demand-side focused approach, there is a potential risk of falling behind.”
