After months of speculation, this week the UK Government released its long-awaited Hydrogen Strategy. Like many within the industry, the UK Hydrogen and Fuel Cell Association (UK HFCA) welcomed the publication of the Strategy, the greater clarity offered and the government’s commitment to the hydrogen sector. However, we still believe that the government could be more ambitious in its targets and support. Overall, it is clear that further detail will be key.
As a trade association, we are dedicated to all forms of hydrogen production, so we are pleased to see the government support a ‘twin-track’ approach to hydrogen production. Supporting both green and blue hydrogen will enable scale up and decarbonisation more quickly. And while it was good to see government set out its ambition for 5GW of low carbon hydrogen production capacity by 2030, we believe that the Strategy could have been more ambitious. As we have outlined in our recent Green and Blue Hydrogen position papers, with the right support, a 20GW mix of green and blue hydrogen power could be deployed by 2030 – four times more than the government has planned for.
The business models that are implemented by government for hydrogen will be integral to ensuring the hydrogen industry grows at the pace needed to play a significant part in the UK’s energy mix. They need to be attractive and workable for both green and blue hydrogen and reflect their different characteristics. We welcome the publication of the consultation on business models and look forward to working with government to develop the right support mechanisms so that both green and blue hydrogen can compete with traditional sources of power and heating.
We think that a Contracts for Difference type model, similar to the one used for offshore wind, would work for blue hydrogen, bringing down costs and increasing production. However, for green hydrogen a cumbersome Contracts for Difference-type approach could stall progress. We therefore think a more tailored approach is needed which will allow green hydrogen growth at the pace we need. This is a point we’ll continue to make to ministers and officials. It’s clearly important we get this right. That said, the sooner these models are decided, the quicker investment in generating capacity can be unlocked. The models, therefore, really need to be up and running and open for business in 2022. This is particularly important if the UK is to hit its interim carbon emissions reduction targets in 2030 and 2035. Time is ticking and without rapid progress and implementation, the growing UK hydrogen industry risks falling behind internationally and failing to deliver the significant clean growth that is needed.
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