© Shutterstock/Sean Aidan Calderbank
© Shutterstock/Sean Aidan Calderbank

UK Budget 2023: An open door for blue and nuclear hydrogen?

The UK Chancellor has today (March 15) announced £20bn ($24bn) of funding for carbon capture, utilisation and storage (CCUS) and revealed plans for Great British Nuclear, with intentions of investing in small modular reactors.

Despite no mention of hydrogen in the hour-long delivery, Jeremy Hunt’s budget has given hope that blue hydrogen and nuclear-produced hydrogen will gain more support.

Saying he wanted to develop “another plank of the green economy”, the Chancellor said he would allocate up to £20bn to support the early development of CCUS across the UK in the run up to 2050, telling MPs it would support, “50,000 jobs, attract private sector investment, and capture 20-30 million tonnes of carbon dioxide per year by 2030.”

Under his plans for the state-owned nuclear company, Hunt told MPs that nuclear power will be classed as “environmentally sustainable,” subject to consultation to give it access to the same investment incentives as renewable energy.

“I am announcing the launch of Great British Nuclear, which will bring down costs and provide opportunities across the nuclear supply chain, to help provide a quarter of our electricity by 2050,” the Chancellor told the House.

If approved, it begs the question as to whether the classification could open the door for hydrogen produced through electrolysis with nuclear power to be classed as renewable.

The Chancellor also announced a £600m ($723m) tax relief package on energy efficiency measures.

Steve Scrimshaw, Vice-President Siemens Energy UK&I, said the support for CCUS and nuclear power is welcomed, but added, “we need to see the policy changes, the new regulatory regimes and the funding to put substance behind the positive words.”

“We need investment decisions on carbon capture and hydrogen projects and changes to the consenting and allocation process for offshore wind projects to keep our UK industry attractive in a world with significantly higher costs,” Scrimshaw added.

The UK’s HyNet project partners have come in support of the announced £20bn for CCUS, saying the pledged funding will “maintain confidence in the UK’s commitment to a Net Zero industrial future.”

Read more: HyNet Hydrogen Production Plant – the UK’s first large-scale low-carbon hydrogen facility

HyNet’s CCUS infrastructure is planned to store carbon dioxide from hard-to-abate industrial sectors across the North West of England and North Wales, poised to unlock over 1GW of low-carbon hydrogen, allowing industries to switch away from fossil fuels.

“This announcement is very welcome,” said David Parkin, Project Director of HyNet. “This investment from Government is good for the UK’s fight against climate change, good for the North West and North Wales region, good for industry and good for the UK’s economy.”

Joe Seifert, CEO of Vertex Hydrogen, added, “We are delighted to see the UK Government announce a significant investment in domestic carbon capture that is vital to the low-carbon hydrogen industry which in turn is a core pillar that UK industrial and power companies require to reduce emissions.

“Hydrogen needs enough large projects to be actioned in the short term to deliver industrial decarbonisation at pace, to deliver infrastructure that drives value for money and to capitalise on the UK’s global leadership in this sector to secure and grow high value UK jobs.”

Last week at the UK Hydrogen and Fuel Cells Conference (UKHFCC), Stephanie Murphey, Director of Hydrogen at the newly formed UK Department of Energy Security and Net Zero, told delegates that the Government remains committed to developing the industry, saying, “the department name may have changed, but I can assure you that the UK Government continues to see hydrogen as a key priority.”

Read more: No time to waste: UKHFCC 2023

Other notable points of the 2023 budget were that the £2,500 ($3,014) energy price guarantee will remain in place until the end of June, and that the UK will avoid recession this year, but the economy will shrink by 0.2%. However, the Chancellor says the Office for Budget Responsibility (OBR) predicts the economy will growth by 1.8% in 2024, 2.5% in 2025, and 2.1% in 2026.

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