UK Hydrogen Strategy

A pivotal element of the UK net zero ambition, the UK hydrogen strategy was launched in 2021, taking a holistic approach towards deep decarbonisation across all major polluting sectors. The strategy sets out ambitious targets for production, new technology innovation, infrastructure deployment, and investment in skills development to position the UK as a global leader in hydrogen utilisation for a robust green economy.

As a versatile energy vector, hydrogen can be used to replace emission intensive fossil fuels in heavy industry, transport, and can be used to generate electricity through fuel cells. To achieve the integration and takeover of hydrogen fuel, it is imperative that low carbon affordable hydrogen production be achieved. According to the department of Business, Energy, and Industrial Strategy, the UK would require 460 TWh of hydrogen by 2050, making up 30 % of the UK total energy consumption.  As of today, almost no low carbon production is taking place, either in the UK or globally. The UK hydrogen strategy places a great emphasis on low carbon hydrogen production, focusing on both green and blue hydrogen. Blue hydrogen is said to be transitional, paving the way for green hydrogen as a long-term solution. Blue hydrogen is normally produced through methane reforming integrated with carbon capture and storage. Most of the UK hydrogen today is produced by methane reforming (without CCS). Considering this, the UK government has dedicated a £240m Net Zero Hydrogen Fund to facilitate the production of low carbon hydrogen. The ambitious targets aim to deliver 10 GW of hydrogen by 2030, with 4 GW allocated towards blue hydrogen and 6 GW allocated towards green electrolytic hydrogen production. In 2022, the first round of the Net Zero Hydrogen Fund (HAR1) allocated £90m to 11 projects across 8 regions of the UK, totalling 125 MW of low carbon hydrogen production, with an expected delivery in 2025. In 2023, the UK government opened calls for the second round of the Net Zero Hydrogen Fund (HAR2), allocating a production capacity of 875 MW, completing the ambitious target of 1 GW of low carbon hydrogen production plants operation (or construction) by 2025. The third (HAR3) and fourth (HAR4) rounds will begin in 2025 and 2026, totalling 1.5 GW of low carbon hydrogen production. Annual production rounds will occur between 2025-2030, with a focus on electrolytic green hydrogen production, so that the ambitious 2030 targets of 10 GW low carbon hydrogen production can be met.

Transport and storage (T&S) infrastructure is critical to enable an efficient transition to a sustainable hydrogen economy. The Department of Energy Security and Net Zero (DESNZ) is rapidly developing business cases to support the UK T&S networks. In 2023, they published the Hydrogen T&S Networks pathway to define the UK government’s strategy for hydrogen infrastructure. The Longer Duration Energy Storage Demonstration competition allocated £69m and the Low Carbon Hydrogen Supply competition allocated £60m to develop novel solutions towards the supply and storage of hydrogen. The development of the transport and storage of hydrogen policy from DESNZ is dependent on the evidence of growth in hydrogen production and demand. DESNZ is working towards building a market and regulatory framework and will shortly release the T&S business allocation rounds to facilitate operation by 2030. The UK government has also taken a strategic policy decision allowing up to 20 % (by volume) of blending of hydrogen in the UK natural gas network, showcasing a commitment towards a fast transition away from fossil fuels.

To slash greenhouse gas emissions by 78 % by 2035, in line with the sixth carbon budget, low carbon hydrogen must be widely adopted across multiple sectors. In line with this directive, the UK government has taken multiple steps to ensure a high demand for hydrogen applications. In terms of industry application of hydrogen, the UK government has set a target of 50 TWh of hydrogen to replace fossil fuels by 2035. To facilitate this transition to low carbon hydrogen, the Industrial Energy Transformation Fund (IETF) has been set up to allocate £474m of grant funding, out of which £289m has been awarded and £185m has been committed to DESNZ to support energy efficiency objectives. Additionally, £55m has been allocated to the Industrial Fuel Switching competition. For construction vehicles, such as quarrying and construction, an additional fund of £40m (Red Diesel Replacement competition) was launched, with an aim to facilitate low carbon hydrogen within this hard to decarbonise industry. Hydrogen to Power (H2P) is an initiative introduced for the deployment of low carbon electricity via hydrogen, and the UK government aims to increase the capacity to 12 GW by 2035. The government is actively engaging with the power industry to move away from emission intensive technologies. The diversity of UK geography makes the suitability of one solution for heating unfeasible, paving the way for low carbon hydrogen as an alternative. The government is consulting with Ofgem to support the gas network in adopting 100 % hydrogen for heating, and the first trial is underway, expected to be operation by the end of 2024, providing heating to 300 homes. This trial will form the basis of the government’s position of the use of hydrogen for heating, and a decision is likely to be made by 2026. The transport sector is a significant source of greenhouse emissions and is an integral part of the UK Net Zero targets. Petrol and diesel fuelled cars will be phased out by 2035, and the government is promoting alternative power vehicles, such as EVs (EVs) and Hydrogen Fuel Cell Vehicles (HFCVs). In 2017, the government launched the Hydrogen for Transport Programme, a £23m fund to increase the uptake of hydrogen fuelled vehicles.  In terms of heavy transport, the UK government introduced the Zero Emission Bus Regional Areas (ZEBRA) programmes, which provided £54m in 2021 and £198m in 2022 and will provide £142.8m between 2023-2025 to regional transport authorities to support the deployment of zero-emission buses, which included EVs and HFCVs. For the aviation industry, the government aims to use hydrogen for 1-4 TWh of energy by 2035. To facilitate this initiative the Aerospace Technology Institute was granted £685m for R&D purposes. The Advanced Fuel Fund was allocated £165m, to provide sustainable aviation fuel to the UK. The maritime industry, one of the hardest to decarbonise, is a vital part of the UK hydrogen strategy. The government has launched the Clean Maritime Demonstration Competition (CMDC), which has granted £72m across a multitude of decarbonisation projects, 23 of which were related to hydrogen. The railway sector is another integral part of the British economy, ranging from passenger trains to heavy freight trains. The UK government has set an ambitious target of complete decarbonisation of its railway network by 2040, with £12.5m allocated in this regard, of which £0.75m was funded by the Department of Transport towards the HydroFLEX, a fully hydrogen fuelled train, recently showcased at the COP26.

The UK is known worldwide for its exceptional research outputs through university collaborations. The UK government has recently funded two national hydrogen research hubs: Hydrogen Integration for Accelerated Energy Transitions (HI-ACT) and Hub for Research Challenges in Hydrogen and Alternative Liquid Fuels (HyRES). These funds total a collective value of £21m. The government has also funded the UK National Clean Maritime Research Hub, providing £8m of funds to decarbonise the maritime sector, and the project has a significant focus towards using hydrogen fuel for propulsion. The government is committed towards providing a platform for collaboration between universities and industry professionals for achieving the ultimate goal of UK Net Zero by 2050.

Low carbon hydrogen and alternative liquid fuels have an integral role in the net-zero transition by providing flexibility and versatility across the entirety of the energy system. While the UK government’s efforts towards the widespread adoption and commercialisation of hydrogen are commendable, significant barriers remain in the scalability and implementation, locally and nationally, of hydrogen technologies and infrastructure. Technological, organisational, regulatory, societal, and financial barriers may skew investor confidence in hydrogen technologies. Significant gaps exist between current hydrogen production, transportation and storage networks, infrastructure, and end-use, creating a challenging transitional environment. To address these issues, HI-ACT is taking the whole systems and energy systems approach, with an intent to create robust investment-oriented tools to navigate the complex interconnected and interdependent nature of hydrogen integration within the UK national economy.