A global race for hydrogen investment is underway and the UK needs to gain ground.
Recent initiatives out of the U.S. and the European Union risk leaving the emerging UK hydrogen industry at a disadvantage if it doesn’t respond.
In the U.S., the Inflation Reduction Act became law on Aug. 7, providing $369 billion for energy and climate projects, including a subsidy of as much as $3/kg for clean hydrogen.
The subsidy works on a sliding scale, so that the cleaner the end product, the bigger the tax credit it receives, starting at 60c/kg. It also makes green hydrogen, created by splitting water with electrolysers powered by renewable energy “immediately cost-competitive” with unabated traditional grey hydrogen, made with natural gas and steam reformation, according to S&P Global Commodity Insights.
In fact, with industry already targeting $2/kg hydrogen by 2030, the Inflation Reduction Act’s $3/kg subsidy could push green hydrogen prices below zero in some regions, Brenor Brophy, vice president of project development at Plug Power, said last week.
Just over a month later, on Sept. 14, European Commission President Ursula von der Leyen announced the creation of a €3 billion European Hydrogen Bank. The bank will act as a “market maker” for hydrogen, helping to create demand for the 20 million tons a year of renewable hydrogen the EU is targeting by 2030.
Additionally, the latest iteration of the EU’s Renewable Energy Directive II sets targets for renewable fuels of non-biological origin (RFNBOs) such as green hydrogen and green ammonia at 5.7% of all fuels by 2030, and 1.2% for maritime fuels. Half of all industrial fuel use will need to be RFNBOs by 2030, rising to 75% by 2035. Meeting those targets will require 9-10 million tonnes of green hydrogen, according to lobbyist Hydrogen Europe.
While the UK was supportive of the hydrogen industry under Boris Johnson, more needs to be done to keep pace with developments elsewhere.
Hydrogen UK, the country’s largest hydrogen trade body, has published a number of recommendations, which it calls Hydrogen Accelerators, to close the gap.
Among the recommendations are that larger projects should be eligible for funding under the hydrogen business model and a review of the planning framework to accelerate the deployment of production.
Hydrogen UK, which is backed by 50 businesses including energy giants BP, Shell, Uniper, Equinor, RWE, Orsted and Centrica, is also calling for an expansion of the hydrogen business model to include hydrogen transportation and storage. A hydrogen hydrogen-only pipeline system linking industrial clusters should be agreed to “as soon as possible”, it said.
Demand for hydrogen comes from building heating, heavy industry and the transport and power sectors. Hydrogen should play a role in decarbonising cars and vans, heavier vehicles and trains, while in the longer term, it will be commercially viable in maritime and aviation applications, it said.
Boris Johnson’s government introduced a raft of measures to aid the growth of the hydrogen industry, including a clean hydrogen production target of 10 GW by 2030, the £240 million Net Zero Hydrogen Fund, £26 million for the Industrial Hydrogen Accelerator, and £100 million for the Hydrogen Business Model, a subsidy scheme for green hydrogen production.
Jacob Rees-Mogg, newly appointed Secretary of State for Business, Energy and Industrial Strategy, used his first speech in the Commons to insist that the government will “accelerate” the rollout of renewables with “vim and vigour, accelerating the deployment of wind, solar and—particularly exciting, I think—hydrogen technologies.”
The recommendations from Hydrogen UK would go a long way to achieving those goals.
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