Hydrogen: No silver bullet without government firepower

Gemserv’s Clare Jackson sets out why the UK risks losing out and forfeiting any first mover advantage if does not invest in hydrogen capabilities now.

When it is produced in the right way, hydrogen is the world’s only zero carbon fuel. Whilst hydrogen is often touted as a future silver bullet, globally we already produce vast quantities of the element today – about 70 million tonnes per year.

The problem is that 96 per cent of this hydrogen is produced using unabated fossil fuels. The end product of this unsustainable production method is known as “grey hydrogen”, but there are other options. By coupling processes with carbon, capture, usage, and storage (CCUS), we can produce low carbon “blue hydrogen”. Alternatively, by using renewable energy to power electrolysis, we can produce zero carbon “green hydrogen”.

However, bringing low and zero carbon hydrogen into the mainstream will require significant government support and investment. If the UK were to significantly invest in creating a hydrogen economy, there would be tangible economic and environmental benefits.

Hydrogen is set to play an increasingly important role in the world’s energy mix. John Kerry, the US climate envoy, has described hydrogen as the “jump ball” in the global race for clean energy. Countries around the world are investing ever greater amounts in hydrogen, there is no time to be indecisive anymore. The current global pipeline of hydrogen projects represents $300 billion of investment. If the UK does not invest in hydrogen capabilities, it risks losing out and forfeiting any first mover advantage.

Last week’s announcement, that the UK will toughen its emission targets, cutting emissions by 78 per cent by 2035 compared to 1990 levels, only strengthens the case for greater investment in hydrogen.

If the UK moves quickly on hydrogen, introducing demand side policies to encourage its uptake, there is the opportunity to create a whole new industry sector for the UK. A booming hydrogen sector would help the government achieve its green revolution and fulfil its promise to build back better and greener. Hydrogen also fits in with the government’s levelling up agenda, bringing jobs to all regions of the UK. Already, a new green hydrogen hub, that would bring well paid high skill jobs, has been proposed for the Scottish Highlands.

A report by the Hydrogen Taskforce, which was reviewed by Imperial College Consultants, found that investment in hydrogen could generate over 28,000 UK jobs in the production of hydrogen by 2035. Another 47,000 hydrogen linked jobs could be created in due to storage, infrastructure, and end use sectors. In total hydrogen could add £18 billion to the UK economy in gross value.

With the government’s new emission targets renewing the UK’s drive to a zero-carbon economy, groups like the Hydrogen Task Force will keep pushing to make hydrogen a mainstream of the UK’s future economy. Clear, robust policy recommendations that illustrate the immediate pathways to facilitating and scaling up the deployment of hydrogen will enable the UK’s hydrogen sector to thrive.

However, to do this, the UK government will need to make business model Heads of Terms available by end of 2021.  By introducing demand side incentives, deploying policies across end use sectors, and supporting the sector with sufficient spending, the UK will be able to kick start multiple hydrogen clusters.

Developing and scaling up an entire new energy source will require a fully coordinated and supportive link between government policy and industry involved in the production and distribution of future domestic UK hydrogen.