In a report released today (December 16), the commission of cross-party parliamentarians, local leaders, trade union representatives, and academics said, recent political instability, delays to the Energy Bill, and “worsening economic outlook” have dealt a “hammer blow” to UK industry confidence.
“We need to wake up to the rapid developments in hydrogen support in other countries like the Inflation Reduction Act in the US and the Hydrogen Bank in Europe,” said Baroness Brown DBE, Former Vice Chair of the Climate Change Committee. “Investors are looking seriously at the opportunities these initiatives create and the UK risks losing its place as a key hydrogen player.”
Despite the report offering some praise for the UK Hydrogen Strategy and the British Energy Security Strategy, which saw the doubling of the target for low-carbon hydrogen production capacity to 10GW by 2030, the HPC says delays in policy implementation have “taken the shine off the confidence that was building across the sector.”
“It is vital that the new PM and Cabinet give early public commitment to the Hydrogen Strategy, and that the Energy Bill is not subject to any further delay,” the report stated.
Celia Greaves, Chief Executive of the UK Hydrogen and Fuel Cell Association (UKHFCA), commented, “We agree that the UK has built strong foundations to support hydrogen but needs to move further and faster to maintain its international leadership position. We look forward to working with Government and industry stakeholders to make this happen.”
Real world delivery of UK hydrogen economy
The report has said the Government should be “bold” in its decision making around allocation of the Net Zero Hydrogen Fund (NZHF) and the Hydrogen Business model. It stressed the need to focus on market building and stimulating demand.
It recommended that the Government should work with industry to identify areas where near term action will drive early market growth, and where more coordination might bring together hydrogen supply and demand, including:
Setting targets for zero-emission vehicles, including hydrogen
Mandating hydrogen readiness in industry, power, and heat.
Increasing and expanding full value chain trials
Supporting broad range of hydrogen technology solutions
A review of tax treatment of hydrogen
It read, “Clear practical support will reduce costs, maximise learning, and increase industry and investor confidence. Done properly it will also support diversity of energy supply and consumer choice. This may in some cases mean favouring hydrogen over alternatives that currently have lower costs, for example in zero emission buses, or refuse vehicles.”
Adding, “Only in this way will the industry be able to scale, and UK companies position themselves to reap economic benefits.”
Government alignment on hydrogen
Furthermore, the HPC has called for UK Government Departments to be aligned on hydrogen, with recommendations of establishing biannual ministerial roundtables to discuss the delivery of the hydrogen strategy, ensure market updates on the hydrogen strategy include a ministerial foreword, and commit that the Energy Minister will annually report progress on the hydrogen economy development to Parliament.
Boost investor confidence
In a bid to encourage investor confidence in the UK hydrogen industry, the report recommends that the Government continues to engage with the investment community to ensure the emerging policy framework is creating an “investable proposition.”
It also notes there must be a focus on providing a supportive policy environment for UK-based hydrogen and fuel cell manufacturing and supply chains, while providing a clear long-term line of sight on future funding for hydrogen.
Industry and Government joint endeavour
The report also details recommendations to both Government and industry, to ensure there is a shared understanding of market developments. It says both parties should:
Maintain Hydrogen Champion role with open communication with senior officials and regular access to ministers.
Broaden the Hydrogen Advisory Council to “balance the current weighting towards production and ensure voices from the full value chain are represented.
Continue to open policy making through Hydrogen Advisory Council Working Groups.
Additionally, it suggests structures to support joined-up senior decision making around the 2026 decision on hydrogen for heat should be create, with summaries of meetings being published online.
Andy Prendergast, National Secretary of trade union, GMB, said, “Investment in hydrogen is essential for jobs, skills, and an energy transition that is just for workers. We can build a strong, exporting hydrogen industry, but the UK is at risk of being left behind. This report makes a number of important recommendations and as the UK’s lead energy union we are glad to endorse it.”
You can access the full report here.