What role will hydrogen play in the UK's net-zero transition?
After a string of delays and mounting pressure from green groups, the UK Government has finally unveiled the Hydrogen Strategy. But is hydrogen truly the green solution it's made out to be? And which sectors will benefit most, and when?
Hydrogen has become an increasingly visible talking point in the sustainability space in recent years. Here in the UK, a turning point was undoubtedly the Climate Change Committee’s (CCC) first set of recommendations to the Government on legislating for net-zero by 2050, which asserted that hydrogen would be “non-optional” in the transition. The CCC’s subsequent recommendations, including the recent Sixth Carbon Budget, which will require the UK to cut emissions by 78% by 2035, reiterated this point.
Following an initial commitment of £500m to hydrogen production in last year’s Ten Point Plan – intended to support 5GW of low-carbon hydrogen production capacity coming online by 2030 – the new Hydrogen Strategy is finally here.
The Strategy targets £4bn of private investment in the sector by 2030 and is based on a forecast that some 20-35% of the nation’s energy consumption could be met with hydrogen by 2050. It details £240m of new funding for the sector, to be taken from the £1bn Net-Zero Innovation Fund, and confirms a consultation into a new ‘Hydrogen Business Model’, to be based on the Contracts for Difference (CfD) auction scheme for renewable energy generation. Also touted is a commitment to draw up a new standard detailing which hydrogen can be legally called “low-carbon”.
As with any green policy package, the publication of the Hydrogen Strategy has prompted questions as well as providing answers. Here, edie asks the experts for their views on some of the frequently asked questions surrounding hydrogen’s role in the net-zero transition.
What sectors is hydrogen suitable for, and to what extent?
According to Bloomberg Intelligence, hydrogen is likely to account for 10% of the world’s final energy consumption by 2050. The proportion will be higher in marine transport (50%), road transport (25%) and aviation (25%) than other sectors, with building heating behind the average at just 5%.
Using current technologies, it is not possible to fully electrify container ships, the heaviest road vehicles or passenger planes, but heat pumps – while still not at price parity with gas boilers – do exist. Moreover, by not going all-in on electrification in all sectors, the demand for new infrastructure being placed on electricity grids can be reduced to some extent.
Nonetheless, many companies are making big bets on hydrogen for building heating, including the UK’s five biggest gas grid companies - Cadent, National Grid, Northern Gas Networks, SGN and Wales & West Utilities.
Several of Northern Gas Networks’ hydrogen projects have received much media coverage in recent months. In collaboration with Candent, National Grid and the UK Government, the firm has brought a pair of showcase homes online in Gateshead, which use 100% hydrogen for heating and cooking appliances.
The houses are not designed to be inhabited but, according to the firm’s hydrogen development manager Stella Matthews, to “break down the barrier, the perception that hydrogen is a bit of an unknown”. They will be open to the general public, education providers, government representatives and business representatives for at least three years, with the hopes of extending this to up to a decade.
The hydrogen homes form part of a broader portfolio of work; Northern Gas Networks is also participating in the Ofgem-funded ‘H21’ scheme, which is assessing how network infrastructure would need to be upgraded to deliver 100% hydrogen.
At present, the blend is limited to 23% and Northern Gas Networks has trialled 20% to allow what Matthews calls a “buffer”. The firm’s ‘HyDeploy’ project, delivered in partnership with Keele University, Cadent and Progressive Energy, saw a 20% hydrogen blend injected into an existing gas network. It was found that this had no impact on the gas users, paving the way for a public network trial featuring 670 homes and a school.
Northern Gas Networks’ overarching ambition is to deliver Britain’s first hydrogen village, which will involve production and distributions as well as end-use of 100% hydrogen in around 1,000 buildings. It is hoping for work on this project to commence in 2024 and that it will pave the way for a hydrogen town.
Outlining why the firm is only looking at 20% and 100%, Matthews explains: “We see the blend jumping from 20% to 100%, because over 20% is when you will need to change appliances. There is no point changing appliances between these points; this increases the costs for consumers.”
For Matthews, it is sensible that the Government mandates all gas firms to switch to a 20% hydrogen blend from 2025. She believes that the supply side is ready to deliver, telling edie: “We have many hydrogen production companies contacting us off the back of the Ten Point Plan; they want to scale up production but, at the moment, there’s no solid end-use. They want to inject into our network immediately; unfortunately, we’re waiting on that legislation change.”
What are the biggest practical challenges with switching to hydrogen?
As outlined above, as soon as hydrogen blends exceed 23%, building heating infrastructure will need to be changed. There is, similarly, the need to upgrade boats, trucks, buses, planes and industrial infrastructure for higher proportion blends. This comes with a financial cost, a carbon footprint and disruption to homes and businesses.
The Energy Networks Association’s (ENA) ‘Gas Goes Green’ champion Chris Train said that low-proportion blending “offers the opportunity to efficiently deliver lower-carbon industrial clusters”. Hydrogen can often be produced onsite or close by, so investment in a blend can “drive the early development needed”, Train explains. In other words, as with housing, the blend is likely to jump to 100% in other sectors to minimise costs.
There are other practical considerations. Train, who has previously served as chief executive at Cadent Gas and National Grid Gas Distribution, is a member of the UK Government’s Hydrogen Advisory Council with responsibility for standards. He speaks of the need for extensive testing to address potential issues such as leaks, flammability, other health and safety concerns and improving the energy efficiency of buildings.
Additionally, there is the need to ensure that hydrogen is not treated as a silver bullet. Both Train and Matthews agree that hydrogen needs to form part of a “whole-systems” approach, also considering energy efficiency, smart technologies and electrification.
As Train puts it: “One of the things I get slightly exacerbated about is this concept that it’s a case of ‘either or’. We need all technologies and, at the moment, that means hydrogen-ready boilers, heat pumps, district heating and hybrid solutions.”
Moreover, it will be essential to ensure that hydrogen delivers the promised climate benefits, as discussed below.
How do we ensure that hydrogen is a ‘green’ solution, given that most global production is fossil-fuelled?
Hydrogen does not produce emissions at the point of use, but it is not an inherently green solution. More than 95% of the hydrogen produced globally in 2019 was grey – a term used to describe hydrogen created using fossil-fuelled processes.
The UK Government’s plans for scaling low-carbon alternatives to grey hydrogen involve what has been dubbed a ‘twin-track’ approach, encompassing both green and blue hydrogen. The former involves separating water with an electrolyser powered by renewable energy and the latter involves using natural gas and capturing the majority of emissions from the processes using man-made technologies.
According to some green groups, including Greenpeace, WWF and E3G, the ‘twin track’ is not equally split. A recent report from the organisations states that 75% of Government support has gone to blue hydrogen while 25% has gone to green, despite the fact that the UK does not yet play host to any commercial-scale carbon capture and storage (CCS) infrastructure, upon which blue hydrogen relies for its climate claims.
Moreover, while proponents of blue hydrogen often claim that more than 90% of the emissions resulting from the production process can be addressed using onsite CCS, the capture rate varies from 15% to 90% for facilities currently in commercial operation elsewhere in the world.
E3G’s policy advisor specialising in hydrogen, Juliet Phillips, says: “The Government argument seems to be that, in order to get on-track for green in the longer term, it is best to invest in blue in the shorter term. Yes, blue hydrogen is attractive to get that early-stage investment, but green and blue hydrogen production require fundamentally different technologies on the supply side. It doesn’t make sense, to us, to continue those investments in fossil fuels in order to create blue hydrogen, when we know that we need to stop producing more fossil fuels.”
Coming back to the earlier discussion points, Phillips also thinks the UK Government is overestimating the role which hydrogen will play in decarbonising building heating. By E3G’s predictions, heat pumps will be cheaper in the long-run, suitable for most homes and more efficient; by using electricity directly, you mitigate the need to power an electrolyser then distribute the produced hydrogen.
Phillips’ opinion on how the Government is framing blue hydrogen is not shared by Train. He tells edie: “It’s my view that, in order to achieve net-zero, you need to make the most of existing resources. That means exploiting blue as well as green, but blue needs credible CCS alongside it.
“While CCS costs still need to come down, I take an optimistic view. We have the geology needed for CCS supply and storage, and the right skills pipeline.”
With green hydrogen and blue hydrogen accounting for just a small portion of the global market at present, it will undoubtedly take action from businesses as well as governments to bring the costs down. Green hydrogen prices currently range from $2.5-6 per kilogram, compared to $1-2.5 for grey hydrogen.
Organisations including KPMG, the Energy Transitions Commission and the UN-backed Green Hydrogen Catapult all see green hydrogen decreasing in cost rapidly. E3G’s Phillips also believes that green hydrogen will quickly become the cheapest variant, if the net-zero transition is properly delivered. This trend, she said, is likely to materialise in the EU first. The bloc included plans for scaling renewable hydrogen in its recently published ‘Fit for 55’ climate package and several member states, including Germany, have their own hydrogen strategies.
Perhaps the UK’s Hydrogen Strategy will result in similar forecasts, but only time will tell. In the meantime, you can read edie’s summary of reactions to the Strategy here.