The UK government has officially opened the world’s first national low carbon subsidy scheme for hydrogen, which will target up to 1GW of clean hydrogen production by 2025 on the way to 10GW of low carbon hydrogen capacity by 2030.
The UK government in 2020 announced a plan to develop 5GW of low carbon hydrogen generation by 2030, but earlier this year it doubled the target to 10GW of low carbon hydrogen production capacity by 2030.
The target is split between “electrolytic hydrogen”, more commonly termed “green hydrogen”, and – more controversially – “low carbon hydrogen”, or blue hydrogen made from fossil fuels and with the promise of carbon capture.
This week the UK government’s Department for Business, Energy and Industrial Strategy (BEIS) outlined the specifics of how they would go about supporting hydrogen development, committing to awarding up to 1GW of contracts to electrolytic projects in two allocation rounds in 2023 and 2024.
These contracts will be awarded under the Hydrogen Business Model (HBM) which will see ongoing revenue support back the development of low carbon hydrogen.
The first allocation round is expected to support at least 250MW of green hydrogen.
However, the catch to the UK’s plans is that, by 2025, another 1GW of hydrogen capacity is expected to be operational that will rely on CCUS (carbon capture, utilisation, and storage) technology, also known as ‘blue hydrogen’.
The government justifies this by saying its aim is “to support projects to deploy at scale at the earliest opportunity, advancing government’s aspiration to deploy up to 10GW of low carbon hydrogen production capacity by 2030.
It insists the intention is that at least half of this will be from electrolytic hydrogen, and with the soaring cost of gas in global markets, that may end up being the case.
Green hydrogen projects can now apply for government funding through both the HBM as well as the Net Zero Hydrogen Fund (NZHF), which provides up to £240 million of grant funding to support the upfront costs of developing and building low carbon hydrogen production projects.
The UK BEIS is aiming to run annual allocation rounds for green hydrogen by 2025 which it hopes will help position the UK as a world-leading hydrogen economy, attracting billions of pounds in investment and supporting 12,000 jobs around the country.
“The UK’s hydrogen sector is open for business,” said Kwasi Kwarteng, the UK business and energy secretary.
“With the right investment, we can unlock the enormous potential of hydrogen by reindustrialising our economy and ending our dependency on expensive fossil fuels.”
See also: Australia leads world in green hydrogen hype and hope, but not in actual projects
