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Industry bodies welcome new Hydrogen Strategy

The Government’s newly unveiled Hydrogen Strategy has been hailed as a huge step in the right direction for the heating industry in its drive towards decarbonisation.

Mike Foster, chief executive of the Energy and Utilities Alliance (EUA)

As part of the strategy tens of thousands of jobs, billions of pounds in investment and new export opportunities will be unlocked through plans to create a thriving low carbon hydrogen sector in the UK over the next decade and beyond.

Announced by Business and Energy Secretary Kwasi Kwarteng the UK’s first-ever Hydrogen Strategy drives forward the commitments laid out in the Prime Minister’s ambitious 10-point plan for a green industrial revolution.

It sets the foundation for how the UK government will work with industry to meet its ambition for 5GW of low carbon hydrogen production capacity by 2030 – which could replace natural gas in powering around three million UK homes each year as well as powering transport and businesses, particularly heavy industry.

A booming, UK-wide hydrogen economy could be worth £900 million and create over 9,000 high-quality jobs by 2030, potentially rising to 100,000 jobs and worth up to £13 billion by 2050.

By 2030, hydrogen could play an important role in decarbonising polluting, energy-intensive industries like chemicals, oil refineries, power and heavy transport like shipping, HGVlorries and trains, by helping these sectors move away from fossil fuels. Low-carbon hydrogen provides opportunities for UK companies and workers across our industrial heartlands.

With government analysis suggesting that 20-35% of the UK’s energy consumption by 2050 could be hydrogen-based, this new energy source could be critical to meet our targets of net zero emissions by 2050 and cutting emissions by 78% by 2035 – a view shared by the UK’s independent Climate Change Committee.

In the UK, a low-carbon hydrogen economy could deliver emissions savings equivalent to the carbon captured by 700 million trees by 2032 and is a key pillar of capitalising on cleaner energy sources as the UK moves away from fossil fuels.

Revealing the strategy Mr Kwarteng said: “Today marks the start of the UK’s hydrogen revolution. This home-grown clean energy source has the potential to transform the way we power our lives and will be essential to tackling climate change and reaching Net Zero.

“With the potential to provide a third of the UK’s energy in the future, our strategy positions the UK as first in the global race to ramp up hydrogen technology and seize the thousands of jobs and private investment that come with it.

Energy & Climate Change Minister Anne-Marie Trevelyan said: “Today’s Hydrogen Strategy sends a strong signal globally that we are committed to building a thriving low carbon hydrogen economy that could deliver hundreds of thousands of high-quality green jobs, helps millions of homes transition to green energy, support our key industrial heartlands to move away from fossil fuels and bring in significant investment.”

Mike Foster, chief executive of the Energy and Utilities Alliance (EUA), said: 'The Government’s commitment to hydrogen is a promising step, which will help to create thousands of jobs and decarbonise homes for millions of consumers with minimal disruption.

“We are enthused to see the Government also recognise the role a hydrogen blend into the grid will play in reducing carbon emissions without homeowners needing to change appliances or boilers. It is of great importance that the transition to hydrogen does not cause disruption or large costs to consumers. The blend is a way to significantly reduce emissions with no change, which will in turn leave time for the groundwork to be laid for a seamless switch to 100% hydrogen later on.

“We also welcome Business & Energy Secretary Kwasi Kwarteng’s recognition of hydrogen’s potential for decarbonising heat in homes and commercial buildings across the country.

“Giving consumers choice when it comes to low carbon heating is vital to ensuring all buildings can be suitably decarbonised to hit targets set out by government. Research conducted in our recent report Too Close To Home revealed 72% of homeowners supported efforts of UK manufacturers to develop low carbon gas boilers, such as hydrogen boilers. The establishment of a Hydrogen Strategy will be to ensure this consumer sentiment is met, and disruption is limited in the renewable transition.

“The creation of jobs is a welcome aspect of the strategy but will also play a part in the preservation of jobs for the over 120,000 gas engineers working across the UK. Likely requiring only one extra module to be taken on the compulsory Gas Safe engineering qualification, the installation and servicing of hydrogen-ready boilers is set to be very similar to their traditional counterparts. Given heating installers will play an integral role in preparing for the transition should the decision be made in 2026, it is vital that their jobs are protected as part of renewable development.

“We in the heating industry are committed to do all that we can to work with the Government ahead of its decision in 2026 on the role of hydrogen in decarbonising heat. A number of EUA members have been at the forefront of developing hydrogen heating technologies to ease the transition for homeowners and ensure cost to them is no more than with natural gas equivalents. With the establishment of this strategy, UK consumers and businesses have more choice across low-carbon energy mix, an integral part of ensuring no one is left being in the renewable transition.”

Oliver Lancaster, chief executive of IGEM, said: “With hydrogen required at the core of an affordable net zero energy system, IGEM warmly welcomes the publication of this much-anticipated strategy. It has become clear that a national hydrogen network will be required to provide the storage and flexibility we need to safely and securely meet demand across industry, home heating, power generation and transport. We look forward to continuing our engagement on the frontline for hydrogen to deliver a least-cost, least-disruption outcome for consumers.”

IGEM fully supports the government’s plans for 5GW of low carbon hydrogen production capacity and to establish CCUS in four industrial clusters by 2030. In particular, we support the commitments made to support the blending of hydrogen into the existing gas network and the ‘twin-track’ approach to hydrogen production. This will enable the UK to leverage both electrolytic and CCUS-enabled low carbon hydrogen production in order to scale up production in time to meet the UK’s 2030 and 2050 carbon emissions targets.

IGEM welcomes the Government’s commitment to review the Gas Act 1986 and gas quality standards to allow for decarbonised gases, such as hydrogen, into the network. This will include a call for evidence on the future of the gas system, calling on expertise throughout the energy system on the future role of gas.

The strategy highlights the key role for hydrogen in decarbonising heat, aiming in late 2021 to consult on hydrogen-ready boilers by 2026.

Mr Lancaster added: “IGEM is supportive of mandating hydrogen-ready appliances as soon as possible to ensure a smooth transition to hydrogen. Mandating hydrogen-ready boilers by 2026 will send a strong signal to the market to accelerate production in anticipation of demand, with manufacturers already well-prepared for this ramp-up. We look forward to collaborating with our members on an IGEM response to this consultation commitment.”

The Government’s approach is based on the UK’s previous success with offshore wind, where early government action coupled with strong private sector backing has earned the UK a world leading status. One of the main tools used by government to support the establishment of offshore wind in the UK was the Contracts for Difference (CfD) scheme, which incentivises investment in renewable energy by providing developers with direct protection from volatile wholesale prices and protects consumers from paying increased support costs when electricity prices are high.

As such, the government has launched a public consultation on a preferred hydrogen business model which, built on a similar premise to the offshore wind CfDs, is designed to overcome the cost gap between low carbon hydrogen and fossil fuels, helping the costs of low-carbon alternatives to fall quickly, as hydrogen comes to play an increasing role in our lives. Alongside this, the Government is consulting on the design of the £240 million Net Zero Hydrogen Fund, which aims to support the commercial deployment of new low carbon hydrogen production plants across the UK.

17 August 2021

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