UK Hydrogen Strategy

Full ahead for hydrogen? With its analysis suggesting that 20-35% of the UK’s energy consumption by 2050 could be hydrogen-based, the government has launched a public consultation on a new preferred hydrogen business model.  It is built on a similar premise to the offshore wind CfDs, and is designed to overcome the cost gap between low carbon hydrogen and fossil fuels, helping the costs of low-carbon alternatives to fall quickly. In addition, the government is consulting 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. 

The Hydrogen Strategy also includes a commitment to a ‘twin track’ approach to supporting multiple technologies including ‘green’ electrolytic and ‘blue’ carbon capture-enabled hydrogen production. That’s controversial. Why back both? Blue Hydrogen maybe cheaper just now, but it may lead to up to 20% more emissions than using gas direct, due in part to fugitive methane losses. Whereas green hydrogen, produced using renewable power, has no associated emissions.  The case for Blue Hydrogen certainly suffered a blow when the chair of the UK Hydrogen and Fuel Cell Association resigned over what he claimed were ‘false claims made by oil companies about the cost of blue hydrogen’. He said ‘blue hydrogen is at best an expensive distraction, and at worst a lock-in for continued fossil fuel use that guarantees we will fail to meet our decarbonisation goals’. It certainly does not seem popular. 

By contrast green hydrogen was seen as a better bet. One of the key UK green hydrogen electrolysis pioneers, Dr Graham Cooley, CEO of ITM Power, welcomed the governments overall hydrogen initiative: ‘By supporting the creation of a UK home market, today’s announcement is a very welcome step in helping British companies cement their positions as world leaders in hydrogen technology’. But he focused on ‘rolling out green hydrogen production in the UK’, arguing that ‘Green, zero-carbon hydrogen can abate greenhouse gas emissions from industry, transport and heat. It can be used to store our abundant renewable energy from offshore wind and longer term, be used to create export markets.’ 

However, the new Hydrogen Strategy is based in part on the belief that Green Hydrogen will be expensive for while. So it looks to Blue Hydrogen at least initially. But it does its cost comparison in arguably an odd way. It compares the most advanced blue hydrogen concept (‘ATR+GHR with CCUS’), with the more standard electrolysis technology using Proton Exchange Membrane (PEM) cells. They are quite widely used, unlike gas heated  Autothermal Reformers with carbon capture and storage. PEM cost are seen as falling significant, especially when use is made of green power that would otherwise by curtailed, but the fossil gas CCUS route is still seen and cheaper - and the biomass gasification route as even cheaper still. The Strategy report does admit that it is all rather uncertain and dependent on starting assumptions, and looks to a more detailed reviews in 2022, but some critics did see the current review as just in effect an attempt to keep fossil gas in the game. 

Interestingly though, it doesn’t seem to be very interested in new nuclear power options, at least not much and not yet. As Bloomberg put it: ‘The plan doesn’t model costs for hydrogen production from nuclear power plants, but does envision a role for existing reactors to power electrolyzers this decade’. However ‘the role for nuclear power to produce hydrogen could be expanded after 2030.’ Well maybe longer term, depending on the economics, but for now plans to produce so-called ‘pink’ hydrogen at Hinkley have been labelled as ‘daft’ by BNEFs Liebreich.  

Heat pumps 

Of course the big rival to hydrogen, from whatever source, in the heating sector, is heat pumps. The current plan is that they should lead and replace the use of gas heating. However, there have been some problems and much controversy, with the Global Warming Policy Forum mounting a ‘Hands off our Heating’ campaign. At one time it looked as if the government would ban the installation of new gas boilers from 2025, but, in the event they backed off, delaying  the release of the long awaited heat plan until the autumn and pushing the gas boiler phase-out on to maybe as far ahead as 2040.  PM Boris Johnson admitted that heat pumps ‘cost about 10 grand a pop’. He added: ‘This is a lot of money for ordinary people. We’ve got to make sure that when we embark on this programme, that we have a solution that is affordable and that works for people. We won’t be imposing it until we have been able to create that market.’  But The Times said that he was now planning to launch a £400 million boiler scrappage scheme ‘offering people £7,000 grants to encourage homeowners to buy low carbon alternatives’, e.g. up to 60,000 heat pumps. That didn’t go down very well with the Global Warming Policy Forum, which saw this as an inequitable subsidy and as a pointless exercise any way, since, in their view, we could and should carry on using fossil gas- and more nuclear. But evidently not blue or green gas. 

Although certainly expensive and messy to install, the more efficient ground source units especially, Heat Pumps are very efficient, with Coefficient of Performance of to 3-4, meaning that they can at times produce 3 or 4 times more heat than the same amount of power used in a simple electric heater. However, to work well in winter they need fully insulated houses, which adds to the cost - and even then may need back up at peak heating times. Some say a switch over to using green hydrogen in a modified conventional gas boiler would be less costly & disruptive, but as the Hydrogen Strategy explores, there are big economic and hydrogen supply/use issues.  

The debate continues. While heat pumps have their supporters, most industrial groups also welcomed the Hydrogen Strategy, although some were worried about the lack of details for smaller companies and those seeking to decarbonise outside of the proposed local hubs. And some said that it didn’t focus enough on green hydrogen, and what Renewable UK called ‘the UK’s world-leading green hydrogen industry’. Whereas the strategy talks of a 5GW by 2030 hydrogen target, RUK called for a 5 GW by 2030 green hydrogen target. Helen Melone, Senior Policy Manager at Scottish Renewables, the trade body for Scotland’s renewable energy industry, saw it as the top priority: ‘It is important that government does not take its eye off the prize here: green hydrogen, made using electrolysis powered by renewables like wind, solar, tidal and more, is set to play a key role in decarbonising the global energy system and concentrating on developing supply and a market for it now should be governments’ top priority in this area’. However, ever contrarian, the Global Warming Policy Forum said the report focused too much on green hydrogen from renewables and not enough on hydrogen generation using nuclear!