United Kingdom

Hydrogen Strategy update to the market: December 2023

United Kingdom’s national hydrogen strategy has been regularly updated since its publication, providing stakeholders with a summary of recent government’s activities and funding opportunities. The latest update was in December 2023. The strategy focuses both on electrolytic and low-carbon hydrogen, enabled via CCUS or other production pathways.

PRODUCTION

The current national target for hydrogen production is up to 10 GW of low-carbon hydrogen, production capacity by 2030 with at least half of it electrolytic (5 GW). Further interim targets are to have up to 1 GW of CCUS-enabled and up to 1 GW of electrolytic hydrogen in construction or operational by 2025. Support is provided under different funding schemes for different pathways, as long as they comply with the UK Low Carbon Hydrogen Standard.

TRANSMISSION AND DISTRIBUTION

Development of transport infrastructure will be focused on large-scale infrastructure, based on Regulated Asset Base, with an External Subsidy Mechanism. Storage development will be focused on geological storage, with above ground storage in certain situations and it will be developed under private law contracts with a revenue floor and an incentive to sell storage capacity. These business models will be designed by 2025.

Under the Energy Act of 2023 a new Future System Operator was established, which is to be operational by 2024. The FSO will take a whole system approach to energy planning. It is expected to take over of strategic hydrogen planning from 2026.

A strategic decision has been taken to support blending of up to 20% hydrogen by volume in the distribution networks.
 

TRADE

The strategy focuses on high grade hydrogen exports from the UK, primarily to continental Europe. Trade will be facilitated through the development of Low Carbon Hydrogen Certification scheme from 2025 and active participation in North Sea Energy Cooperation Agreement.

RESEARCH AND DEVELOPMENT

A significant emphasis is placed on Research, development and innovation. These are to be supported in the fields of hydrogen production production (electrolytic, biogenic and others), hydrogen in aviation and scaling-up production of SAF, maritime propulsion and projects that develop and demonstrate clean maritime solutions, including hydrogen. Support is also envisaged for development of hydrogen trains, with focus on research regarding their feasibility and safety. Fuel switching to hydrogen in industry will also be supported. Identified research needs also include long distance transmission, modelling needs of hydrogen grid, short-term and long-term storage, demonstration of large-scale centralised hydrogen fuelled generation.

CROSS-CUTTING

Support is provided for leveraging of domestic supply chains. Assessments of workforce and skills requirements are being carried out, with the development of sectoral plants to deliver skilled and sufficiently sized workforce. A key priority in 2024 is the development of Hydrogen Skills Strategy. Embassies and consulates are engaged in stimulating investment and the realisation of the export potential, especially for hydrogen.

END-USES

Mobility

Legislative amendments are being prepared to allow non-road mobile machinery fuelled by hydrogen to access roads.

Hydrogen is included in the Renewable Transport Fuel Obligations Order, which creates demand for low-carbon fuels, including renewable hydrogen, and compensates for higher production costs. The scope of the scheme being expanded to include RFNBOs (F2, ammonia, and methanol) in maritime. In the future it will be also expanded to include SAF for the inclusion of nuclear-based hydrogen and RCF.

Hydrogen is expected to have a significant role in aviation, with a SAF mandate being created in 2025 requiring 10% of SAF in jet fuel in the UK by 2030. A mechanism to provide revenue certainty for SAF is being developed.

Hydrogen and derivatives are expected to have a key role in the maritime sector, where propulsion development and clean maritime technologies are being supported through development and demonstration projects.

The Tees Valley project will demonstrate the use of hydrogen across different transport modes. Deployment of HRS and FCEV bus fleets are supported.
 

Industry

Hydrogen will have a significant role in industry, together with CCUS and electrification, especially for steam boilers, CHP and direct heating processes. Support is provided for industry seeking to deploy decarbonisation technologies. Standardisation is also aided to develop standards on hydrogen-ready boilers for industry.

Energy

Hydrogen is a key component for development of low carbon flexible generation technology and long duration energy storage. Through several consultations, strategies for entry of low-carbon flexible technologies and the exit of high carbon technologies will be proposed. New proposals also include that newly built or substantially refurbished combustion power plants are to be required to be easily decarbonised through hydrogen or CCUS.

Heat

A strategic decision on the role of hydrogen for heat in buildings will be taken in 2026. Trials of hydrogen heating are supported to understand the feasibility, costs and acceptance of gas to hydrogen conversion.