The UK government finally launched its long-awaited hydrogen strategy on Tuesday, setting out proposals to build the fledgling energy sector using a contracts for difference (CfD) support mechanism similar to the one used to kick-start the nation’s successful offshore wind sector.

Prime Minister Boris Johnson’s administration wants to build 5GW of hydrogen capacity by 2030 to be used in industry, transport and heating, helping the UK to become a carbon neutral economy by 2050.

The new strategy — published slightly later than expected — outlines a “twin-track” approach to support both zero-carbon green hydrogen produced by splitting water molecules using renewable energy, and blue hydrogen production from natural gas with carbon capture and storage in a process that is not totally carbon free.

As part of the strategy launch, the government has also kicked off a public consultation on the business model that will underpin the sector for the clean-burning gas.

The government is proposing using a replica of the CfD scheme that has helped build-out capacity of offshore wind in the UK to more than 10GW while also lowering its cost over the past decade by offering guaranteed 'strike prices' for power produced.

The government said the publication of the document, three months ahead of the UN’s COP26 climate summit in Glasgow, sent out a “strong signal globally” that the UK is to committed to building a thriving hydrogen economy that could deliver hundreds of thousands of green jobs.

Business & energy secretary Kwasi Kwarteng said: “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.”

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In the document, the government also committed to collaborating with industry to develop standards to give certainty to producers and users that the hydrogen the UK produces is consistent with net zero.

It will also undertake a review to support the development transport and storage infrastructure and will assess the safety, technical feasibility and cost effectiveness of mixing hydrogen into the existing gas supply.

A hydrogen sector development action plan will be launched in early 2022 setting out how the government will support companies to secure supply chain opportunities and jobs in hydrogen.

The government is also consulting on the design of the £240m ($332m) Net Zero Hydrogen Fund, which aims to support the commercial deployment of new low carbon hydrogen production plants across the UK.

Director of policy at the Association for Renewable Energy & Clean Technology (REA) Frank Gordon said: “This strategy provides welcome clarity. The REA urged the government to provide certainty for investors, deliver a technology neutral approach and highlight the range of low carbon pathways.

“The Hydrogen Strategy starts to answer those calls and offers a positive vision for the role of hydrogen in meeting the UK’s net zero ambitions.

“Backed up by the Net Zero Hydrogen Fund, a revenue support scheme for hydrogen production and a standard methodology to define when hydrogen is low-carbon, we believe this Strategy can provide a stimulus for British-based hydrogen production over the coming years.”

Some of the world’s biggest oil and gas companies, including BP, Shell, Eni and Equinor, are formulating plans for blue hydrogen schemes in the UK.

Backers of that technology coupled with carbon capture and storage technology say it is a cost-effective stepping-stone towards cuttings emissions from hard-to-decarbonise clusters of heavy industry.

However, critics say it will extend dependency on coal and natural gas, while a study last week slated its environmental credentials as in some cases worse than natural gas or even coal.

  • This article first appeared on Upstream