Hydrogen Strategy Has Huge Implications for Freight and Transport Sectors

Maritime & Ports

Source: Handy Shipping guide, 2021-08-17

17 August 2021 saw the Department for Business, Energy and Industrial Strategy finally publish its first ever Hydrogen Strategy, something promised in July 2021 but delayed as the politicians searched for funding in a scheme set to support over 9,000 UK jobs with the unlocking of a £4bn investment by 2030.

The plan is nothing if not ambitious. The government figures those jobs can be created before 2030 and add up to £900m to the economy in that time, with the potential to create up to 100,000 more employment opportunities worth up to £13bn by 2050.

Not only would the success of such a scheme see Britain lose its dependency upon natural gas in homes across the country, but it would mean a huge step in decarbonising shipping and logistics with everything from Heavy Goods Vehicles to container ships operating either directly on the fuel, or from electricity generated by 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.”

The government claims it aims to mirror the success of its offshore wind strategy, where it credits early government action coupled with strong private sector backing as earning the UK a world leading status. It refers to 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 ever with such proclamations it came attached to a promised public consultation on a preferred hydrogen business model which, built on a similar premise to the offshore wind CfDs, is aimed at overcoming any cost differential between the current supply and that of hydrogen. There is also consultation on the design of the £240m Net Zero Hydrogen Fund, which aims to support the commercial deployment of new low carbon hydrogen production plants across the UK.

For the logistics sector there is much to consider in the promised £105m funding package through its Net Zero Innovation Portfolio including a £55m Industrial Fuel Switching Competition. Funding will support the development and trials of solutions to switch industries from high to low carbon fuels such as natural gas to clean hydrogen, helping industry reach net zero by 2050.

Then there is the £40m Red Diesel Replacement Competition to decarbonise those industries which currently produce 14m t of carbon annually, and a £10m Industrial Energy Efficiency Accelerator (IEEA) offering funding to clean technology developers to work with industrial sites to install, test and prove solutions for reducing UK industry’s energy and resource consumption. Associate Director for the Carbon Trust Paul Huggins commented on this, saying:

”The previous rounds of the Industrial Energy Efficiency Accelerator have seen over £8m of funding awarded to 16 successful projects. The programme has been instrumental in securing the first industrial demonstration of a wide range of innovative technologies, with the future potential to deliver up to 10m t of cumulative carbon savings over 10 years.

”Seeing these technologies working at scale on site will reduce the barriers to widespread industry adoption of energy saving technologies. We are delighted that BEIS has re-appointed the Carbon Trust and our partners, Jacobs and KTN, to deliver the next round of the IEEA and look forward to supporting the next wave of demonstration projects and further contributing to UK’s industry transition toward net zero.”

Other parts of the plan include outlining a ‘twin track’ approach to supporting multiple technologies including ‘green’ electrolytic and ‘blue’ carbon capture-enabled hydrogen production; collaborating with industry to develop a UK standard for low carbon hydrogen giving certainty of net zero status; assessing the value of a 20% hydrogen input into existing gas supplies to achieve a 7% emission reduction and launching an action plan in the New Year on how to support companies to secure supply chain opportunities, skills and jobs in hydrogen.

Obviously the proposals have huge implications for the domestic market and Dr Tony Ballance, Chief Strategy & Regulation Officer at Cadent, Britain’s biggest distributor of gas, said he welcomed the release of the Government’s Hydrogen Strategy as a great first step in promoting the use of this 'green gas', but added there were opportunities for the UK to go further and faster, observing:

“It’s great to finally see the Government's long-awaited Hydrogen Strategy being published. It will help to accelerate progress towards Net Zero, create new, green jobs across the UK and strengthen our energy security. We’re particularly supportive of the plans to introduce the blending of hydrogen into the wider gas network. It’s a logical, low risk key stepping stone that requires no new technology or behaviour changes from households; will stimulate millions of pounds of investment into hydrogen production; and will save carbon emissions equivalent to removing 2.5m cars from our roads.

“We believe this should be aligned with a mandate to introduce ‘hydrogen-ready’ boilers from 2025. This means as existing boilers naturally become defunct, households will replace them with green boilers, meaning homes will be ready to switch to 100% hydrogen when it’s introduced into the network in the future. As a result, this will mean no major disruption or upfront costs for millions of people across the UK.

“So while this Hydrogen Strategy is an excellent start, we believe there are opportunities for the UK to go further and at a faster pace to ensure we’re at the forefront of the hydrogen revolution. We need hydrogen at scale to enable us to achieve Net Zero. We know that in the north-west alone, 3GW of hydrogen could be produced by the HyNet project Cadent is part of, with up to £2bn of private investment being deployed and creating wider economic growth. We will continue to work closely with the Government to turn hydrogen targets into carbon reductions and new jobs, and hope to see the minister’s hydrogen ambitions continue to grow.”

The Hydrogen Strategy is one of a series of strategies the UK government is publishing ahead of the UN Climate Summit COP26 taking place in Glasgow this November. It has already published an Industrial Decarbonisation Strategy, Transport Decarbonisation Strategy and North Sea Transition Deal, while its Heat and Buildings and Net Zero Strategies will be published in 2021.

Photo: Despite the passage of time many people are still wary of hydrogen with the images of the 1937 Hindenburg disaster in mind, an incident which effectively ended airship travel at a stroke.


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