UK £11 billion hydrogen investment key to end of fossil fuel dependence

The UK government announced a £2 billion hydrogen investment programme as one expert said the country has to recognise that an end to reliance in north sea energy is imperative to its future.

Jess Ralston, analyst at the Energy and Climate Intelligence Unit (ECIU) made his comments as the energy security secretary, Claire Coutinho, (pic) announced backing for 11 major projects to produce green hydrogen – through a process known as electrolysis – and confirmed suppliers will receive a guaranteed price from the government for the clean energy they supply.

It represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe, helping to place the country at the forefront of this emerging industry. Unlike blue hydrogen, which is formed using fossil fuels and capturing the carbon emissions, green hydrogen is made by using renewable energy to split water – helping provide cleaner fuel for energy intensive industries and transport.

The projects will create 700 jobs across the UK in  what has been described as “a world-leading hydrogen industry” from the South West of England to the Highlands of Scotland, backed by £2 billion in government funding over the next 15 years.

As part of the government support package, the successful projects will invest over £400 million in the next 3 years, delivering 125MW of new hydrogen for businesses including:

  • Sofidel in South Wales, who will replace 50% of their current gas boiler consumption with hydrogen at their Port Talbot paper mill.
  • InchDairnie Distillery in Scotland, who plan to run a boiler on 100% hydrogen for use in their distilling process.
  • PD Ports in Teesside, who will use hydrogen to replace diesel in their vehicle fleet, decarbonising port operations from 2026.

Coutinho said: “Hydrogen presents a massive economic opportunity for the UK, unlocking over 12,000 jobs and up to £11 billion of investment by 2030. This announcement represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe.”

Ralston said: “It’s pretty clear that hydrogen will be a bit part player, if any role at all, in home heating in future. Everyone from Government ministers to the National Infrastructure Commission accepts that, maybe less so the gas industry.

“A minister has already called out their campaign of misinformation against the main alternative, which is heat pumps, but the reality is they work and are being installed in vast numbers in countries like France and the US.

“Unless the UK makes the shift away from gas heating, as the North Sea inevitably declines, we’ll simply become more dependent on foreign gas imports and the price they come at. The last two years show why that’s not a good idea.”

The government has also announced plans to support hydrogen blending in certain scenarios – subject to an assessment of safety evidence and final agreement.

Currently, less than 1% of the gas in distribution networks is hydrogen. Under proposals, hydrogen could be blended with other gases in the network as an offtaker of last resort, working to reduce costs in the hydrogen sector by helping producers, and to support the wider energy system.

“Hydrogen blending may help achieve the UK’s net zero ambitions but would have a limited and temporary role as the UK moves away from the use of natural gas,” the government said in a statement.

Ministers have decided not to proceed with a hydrogen trial in Redcar, as the main source of hydrogen will not be available. The government recognises the potential role of hydrogen in home heating and will assess evidence from the neighbourhood trial in Fife, as well as similar schemes across Europe, to decide in 2026 whether and how hydrogen could help households in the journey to net zero.

Sopna Sury, chief operating officer Hydrogen RWE Generation explained the funding it vital to the UK’s future net zero strategy.

“The announcements on the first 2 hydrogen allocation rounds mark a significant milestone in the development of the UK hydrogen economy,” she said. “They represent a shift from policy development to project delivery, giving industry more clarity on the route to final investment decisions.  Alongside the wider policy publications, this demonstrates that the UK wants to be a leader in delivering the clean energy transition.

“These early projects are vital not only in driving the production of electrolytic hydrogen but also in signalling the need to build-out the T&S infrastructure for its wider distribution.”