With Westminster awash with rumours and speculation about what the government’s economic response to Covid-19 will look like, a chorus of voices is now emerging in favour of strong, clear and decisive action on developing the UK’s hydrogen economy.
And we should make no mistake – the international hydrogen race is now on. The UK has made much progress on hydrogen over the last few years, and we’ve taken an early leadership position. But following a spate of announcements, it’s clear that competition is now hotting up. In recent weeks, we’ve seen major commitments from the German, Portuguese and Dutch governments making clear their ambitions to develop their own hydrogen potential. Further afield, we’ve seen the likes of Australia and Japan capitalising on the opportunities that it presents. If we’re not careful, the UK risks being left behind.
The difference is for us here in the UK is that we have been in a similar situation before, nearly ten years ago.
Then, a major strategic decision was made by the government to focus on developing Britain’s nascent offshore wind sector. And many of the questions around the government backing offshore wind then are similar to the ones being asked about whether the government should back hydrogen now. But as the experience of the last decade shows, the best response to those questions is not to simply prevaricate in answering them, but rather to seize the opportunity to do so.
And the government’s economic response to Covid-19 is the chance to do that.
New research published by Energy Networks Association shows just how investment in a hydrogen economy today will pay dividends in the long run. If we kick-start the £182 billion of investment that’s needed to create a zero carbon gas grid using hydrogen, then the country will be a net beneficiary of that investment in 2045, five years ahead of our 2050 net zero target and saving the economy £89 billion compared to our current, natural gas based system.
What’s more, that research shows that there is no realistic scenario whereby the UK is able to achieve net zero carbon emissions by 2050 without blue and green hydrogen playing a key role in the decarbonisation of large emitting sectors such as industry, transport, power and heat. Green hydrogen is projected to play a significant role in achieving net zero from 2025 and is expected to become cost-competitive with natural gas by 2030 if investment into its uptake is made now by policymakers.
However, it will be unable to meet 2050 demand in isolation. It is expected to become more cost competitive with blue hydrogen in 2045. That’s why it’s important that we also invest in developing blue hydrogen through carbon capture utilisation and storage today, to develop the hydrogen infrastructure we need.
If the case for answering the operational and technical challenges is clear, then what are the first steps that we should take to answer them?
Britain’s gas networks have now set out their plans to answer those questions through the £904 million of investment we have proposed in our new Gas Goes Green Zero Carbon Commitment. That will help Britain take its first steps in taking part in the international hydrogen race that is now taking place. We just need the government put the right polices in place, so Ofgem can fire the starting pistol.
Under the RIIO-2 price control, our proposed package of investment will support the development of the carbon, capture and storage clusters around the country that will help get our hydrogen economy off the ground. We want to connect more hydrogen and bio-methane generation projects, transport refuelling stations, and ensure network operators have the right systems in place to manage the gas used by those connections. And we want to run more, world-leading domestic trials of hydrogen heating, cooking and transportation appliances, to ensure that people and businesses can choose those that best fit their needs.
The opportunity to be at the front of the international hydrogen race is here and we need to take action today to play our part in addressing the global climate emergency. Let’s make the decisions necessary, build on the foundations of our world-leading energy system and use our response to the Covid-19 crisis to rise to the challenge in front of us.