Major boost for hydrogen as UK unlocks new investment

More than 700 jobs will be created across the UK in 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.

Energy Security Secretary Claire Coutinho today (Thursday 14 December) 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.

This 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.

In return for this government support, the successful projects will invest over £400 million in the next three years, generating more than 700 jobs in local communities across the UK and 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.

Energy Security Secretary Claire 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.

“Today’s announcement represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe.

“These eleven major new hydrogen projects across the UK will create over 700 jobs and deliver new opportunities from Plymouth in England to Cromarty in Scotland.”

Minister for Energy Efficiency and Green Finance Lord Callanan said: 

“Today’s funding commitment represents a monumental step forward in helping producers to deliver a fuel of the future today, backing businesses to go greener.

“This will be essential to achieving our net zero targets, and will benefit people across the UK with the job and investment opportunities that this funding will bring.

“And we’re not stopping there with a new, second round of funding now available for producers to apply for, so they can develop the next round of projects and build on this success.”

Today’s funding represents the most significant step in scaling up the UK’s hydrogen economy to date – speeding up progress towards the Government’s ambition to deploy up to 10GW low carbon production capacity by 2030.

Ministers have also today opened a new second round of funding that companies can apply for to support their projects and published a production roadmap, which sets out the government’s plan for future allocation rounds in 2025 and 2026. This includes ambitious plans to boost hydrogen capacity up to 1.5GW across these rounds, and award funding to projects to help deliver up to 4GW of CCUS-enabled, or blue, hydrogen and 6GW of green hydrogen by 2030 – giving businesses the confidence they need to invest in the UK.

Ministers have also announced their decision to support hydrogen blending in certain scenarios – subject to an assessment of safety evidence and final agreement.

Currently, less than one per cent 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.

Johan Lundgren, Chair of the Hydrogen in Aviation alliance, a group of leading companies in the UK aviation and renewable energy sectors including easyJet, Rolls-Royce, Airbus, Ørsted, GKN Aerospace and Bristol Airport working to accelerate the delivery of zero carbon aviation:

“The news of the eleven new green hydrogen production projects announced by the government today represents progress. The UK now must ensure this marks the start of a journey to significantly ramp up the supply and production in green hydrogen across the whole of the UK, which will be key to delivering hydrogen in aviation. When we formed our alliance in September, wecalled on rapid action to improve the supply of green hydrogen for hard to abate sectors like aviation and today’s announcements helps us in our collective goal to reach net zero by 2050. While there remains considerable work to be done, this is a positive and significant step in securing the UK’s future as a global leader in hydrogen production – something that could truly revolutionise the energy and transport sectors in the future and make decarbonised flight a reality.”

Hydrogen UK launches supply chain strategy

In other related news, trade association Hydrogen UK has launched an industry-led supply chain strategy. This puts forward the industry vision for the future and outlines what is required to grow a robust hydrogen supply chain across the UK. The strategy is the culmination of extensive industry collaboration and insight, aimed at bolstering the growth of the hydrogen sector.  

With the industry at a tipping point, Hydrogen UK analysis indicates that the UK is poised to create 20,000 jobs, contributing £26bn in cumulative GVA. This opportunity can be realised across multiple aspects of hydrogen supply chains – be it production, storage, or network development and off-taker markets. With large scale projects scheduled to take final investment decisions in the coming 12 months, Hydrogen UK say action must be taken now to maximise the economic benefit of these projects and support UK supply chains. 

To seize the hydrogen economic opportunity, industry is calling for an ambitious coalition between government, industry, private finance, and academia, to kick-start large projects and build a strong UK supply chain. Notably, to realise the industry ambition of 50% local content, whereby at least half of the value created the hydrogen industry is retained within the UK, Hydrogen UK has put forward five strategic pillars. These include:  

  • Targeted, end-to-end funding support, scaling up UK capabilities in both emerging technologies and advanced manufacturing 
  • Incentivising partnerships that stimulate industry, government and private finance investments into large production, networks, storage, infrastructure and off-taker projects 
  • Accelerate targeted public sector finance into UK supply chains 
  • A more strategic approach between government and industry to attract overseas supply chain companies
  • Stimulate the domestic hydrogen market and supply chain by balancing the role of non-price factors and competitive allocations, building on knowledge from the wind sector

Fundamentally, to ensure this is achieved, the UK requires harmonised standards, regulations and accelerated testing of hydrogen technologies, a monitoring and evaluation framework to track supply chain growth, as well as accelerating the development of a trained workforce to deliver the necessary projects and wider supply chain.  

With this in mind, Hydrogen UK will work closely with DESNZ to capitalise on this opportunity, deliver on the strategic pillars and maximise the impact of the Government’s new £960m Green Industries Growth Accelerator. 

On the report, Clare Jackson, CEO of Hydrogen UK said: “We’re at a critical juncture in the evolution of the UK’s hydrogen supply chain development. Navigated correctly, we have the unparalleled opportunity to not only reap significant economic benefits, but also achieve our Net Zero objectives, and bolster domestic energy security.  

“We must, however, recognise that hydrogen is still a relatively nascent industry, and as such necessitates a high degree of collaboration between government and industry in order to accelerate its growth and adaptation. Together, we have a collective responsibility to channel investment into burgeoning supply chains, thereby cementing the UK’s stature as a global frontrunner in hydrogen production and its diverse end-use applications. In striving for this, we look forward to our continued partnership with government to ensure the report’s findings can help maximise the impact of GIGA.” 

Jane Toogood the Chair of the Hydrogen Delivery Council said: “The UK has a unique set of capabilities and skills that are critical enablers for meeting our future Net Zero target. The opportunity for the hydrogen economy to deliver 20,000 new jobs and generate £26bn in cumulative GVA by 2030 represents a highly attractive prize for both industry and government. 

“I’m delighted to see that Hydrogen UK has shaped work within the Hydrogen Delivery Council Supply Chain and Skills Group to define an industry-led strategy that will accelerate the development of a vibrant, local supply chain. The evidence gathered as part of this analysis will be integral to ensure the welcomed Green Industries Growth Accelerator and other government interventions deliver the greatest impact. I look forward to this strategy evolving into a shared action plan which will support future job creation and economic growth across the UK hydrogen supply chain.” 

Image courtesy of Shutterstock.

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