Hydrogen UK - Driving Demand

Low carbon hydrogen has a fundamental role to play in not one but two of the UK Government’s core missions. First, it can help grow the economy - with thousands of new jobs and opportunities breathing new life into our industrial heartlands. Second, it can help the UK become a clean energy superpower by using clean, secure energy that we control. Third, it can future-proof the UK’s foundational industries, delivering decarbonisation and energy security to the hard-to-abate sectors which underpin the UK economy. Hydrogen developers across our membership report growing interest from customers in a wide range of sectors. Whilst current government policy has helped start the hydrogen economy, industry wants this to accelerate and become more holistic so that interest is translated into demand, allowing the sector to fully develop and the UK to meet its decarbonisation targets. With growing international competition, the UK Government should prioritise the growth of hydrogen technology implementation, leveraging the nation’s natural geological and geographical advantages. Although £20 billion in private capital investment is estimated to be ready to support the UK Government’s hydrogen ambitions, persistent delays and market uncertainty risk this funding being lost to other markets. This report outlines the importance of Driving Demand for offtakers, complementing the strong market foundation built from Government’s early hydrogen production focus. For effective policy implementation, industry stakeholders have highlighted the importance of finding balance: retaining low-carbon technology optionality alongside certainty and support for investment, with the adoption of a clear ‘vision’ and ‘market creation’ supported by a tailored mix of ‘carrots and sticks’ to support the market. From the research conducted by HUK, it is clear that the choice of decarbonisation options is not done on a sector-by-sector basis, that even within companies the decision-making process is site-by-site. This reflects the sensitivity of numerous factors that will ultimately determine the best solution for their site, and re-enforces the view that customers must be allowed the choice of decarbonisation options. Hydrogen will play a significant role in decarbonising some of the hardest to abate sectors of the UK economy, complimenting the role of electrification, CCUS and other decarbonisation technologies. These sectors represent the hardest, and therefore most expensive to decarbonise. However, hydrogen also provides an opportunity to deliver significant economic growth through a thriving domestic supply chain, and so a holistic approach should be applied.
The paper can be found on their website.