913: Implications of the Hydrogen Strategy

Today’s entry covers the Hydrogen Strategy and related documentation.

On 17 August the government published its long-awaited (and promised by Q2 2021) Hydrogen Strategy together with a number of associated documents, including three consultations.

The strategy itself can be found here.

As it notes, hydrogen was first identified in the UK, by Henry Cavendish in 1766, who called it ‘inflammable air’ (it doesn’t note that it was French chemist Antoine Lavoisier who named it hydrogen, or water-former). So who better to lead on hydrogen than the UK? Hydrogen is to be the UK’s principal fuel to power the UK by 2050, for things needing energy that can’t be converted to use electricity.

A bit of terminology: although hydrogen is colourless, colours are used to describe its various means of production. Green hydrogen is the best, as if it is powered by renewable energy it has no emissions. It is simply a big version of the electrolysis of water you may have tried in chemistry lessons at school, where two electrodes are inserted in water and the gases bubble off them.

Blue hydrogen is the next best, it involves breaking down natural gas and steam into CO2 and hydrogen, but crucially capturing the CO2 so that it is not released to the atmosphere. If the CO2 is released, then it is called grey hydrogen. The worst kinds are brown and black hydrogen, made from brown and black coal respectively, with released emissions. Some even use pink hydrogen to describe hydrogen generated from nuclear energy.

Hydrogen is odourless as well; I wonder if they will add a smell to it like they had to do to natural gas so that people would notice leaks (called mercaptan).

The government has decided to go for it on hydrogen with the intention of it making up 20-35% of energy consumption by 2050, with an interim target of 5 gigawatts of energy from it by 2030 (actually called an ‘ambition’, which sounds a little less attainable). That is much more ambitious than the Climate Change Committee suggested when recommending the sixth carbon budget – their main pathway to 2050 involved just 17.6% of demand coming from hydrogen (source: table 2.7). The EU’s pathways average 12%. This will be based on not just green hydrogen but green and blue hydrogen production (the so-called ‘twin track approach’), which has proven controversial. Indeed, the chair of the UK Hydrogen and Fuel Cell Association stepped down at the news.

Proponents of blue hydrogen argue that its emissions can be successfully captured, and having both types will provide the scale for an industry to develop quickly, which would not happen with (currently) more expensive green hydrogen alone. A recent study reported that methane escaping from production of blue hydrogen was more of a problem than CO2, so that will need to be looked at as well.

As the strategy says, developing a hydrogen economy requires tackling the ‘chicken and egg’ problem of growing supply and demand in tandem, which is what the strategy attempts to do, although I think it leans more towards supply than demand. Demand is probably going to be driven more by stick than carrot, such as banning new gas boilers, petrol cars and uncaptured industrial emissions.

Particularly if supply outstrips demand but also for supply and demand management generally, there will be a need to store large quantities of hydrogen, and I think that hydrogen could eventually be a better alternative than battery storage for longer-lasting supply. If there is an oversupply of wind energy, the spare capacity could be used to generate hydrogen. There will need to be large storage sites, and the strategy suggests salt caverns and depleted gas fields could be used – although those are also intended for captured carbon dioxide – I hope there are enough for both.

Consultations

There are three consultations associated with the strategy, all seeking responses by 25 October.

The first consultation is on a low carbon hydrogen standard and can be found here.

It is aimed at setting a standard for what counts as ‘low carbon hydrogen’ – so mainly aimed at blue hydrogen but also at green, whose electricity source may not be fully renewable.

I found this one the most interesting. It considers points such as:

• Should we be the same as other countries or set our own standard?
• How pure and at what pressure should the hydrogen be? 99.9% and 3MPa are suggested.
• Carbon capture and storage are included for blue hydrogen, but what about carbon capture and use, should it count?
• Should the origin of the electricity used for electrolysis for green hydrogen be factored in?
• What units should be used in the calculation and what should low carbon be defined as? Grams of CO2 equivalent per million joules of lower heating value are suggested, with 15-20 given as an example. That would not include electrolysis using electricity from the grid until the 2030s.
• Should there be more than one standard?
• Should the standard decrease over time?

The second consultation is on a hydrogen business model and can be found here.

Essentially the business model is aimed at hydrogen production and will involve contracts between producers and the government. There will be a single model that will cover different production methods. A ‘contracts for difference’ model is proposed, like for existing sectors such as offshore wind, using strike prices and reference prices but under a variable premium support mechanism rather than a fixed one. Given there will be no actual reference price (the market value of hydrogen) initially, the government proposes a proxy reference price based on the highest of the natural gas price and the achieved sales price.

The prices will be indexed, and the consultation asks against what. ‘Volume risk’ (ie there will not be enough customers to cover production costs) will be dealt with by a sliding scale of support that tapers off as volumes increase.

The third consultation is on the design of the Net Zero Hydrogen Fund, and can be found here.

This will support green and blue hydrogen through grants for capital projects with matched private funding. The projects may or may not also need revenue support. Green ones are likely to get more support than blue ones.

So at last we have tangible government policy support for hydrogen production, an emerging business model and funding for innovation to accelerate technological developments. Revised draft National Policy Statements are expected imminently that should provide further support and a declaration of the urgency of the need for hydrogen infrastructure.