It comes after the conclusion of a two-month consultation which sought views on how legislation could be adapted to underpin the development of dedicated hydrogen transmission infrastructure.
The moves are intended to give clarity to investors, set basic market rules, and ensure early networks operate safely and efficiently.
The government plans to retain the existing “primary” and “residual” balancing roles used in the gas system. In practice, this means there will be a clear chain of responsibility to ensure the amount of hydrogen entering matches the amount being taken to maintain pressure and system integrity.
Ministers are still considering how to license hydrogen “shippers,” but the consultation responses suggest this is likely to fall on hydrogen producers due to their control of how much hydrogen is injected.
The government also plans to designate licensed hydrogen transporters as System Operators, arguing they are best placed to oversee real-time network operation given their existing pipeline experience.
In hopes of reducing bureaucracy during the early market ramp-up, the government plans to temporarily exempt hydrogen suppliers from needing a full supplier license when selling hydrogen to a premises. This will likely be reviewed as networks expand.
Additionally, ministers appear to be holding off calls on introducing dedicated hydrogen production or storage licences to avoid overregulation, slowing investment.
One of the most significant moves is plans to make a dedicated hydrogen network code to cover how pipelines are accessed, operated, and commercially managed. The government intends to lead this development by establishing a basic, functional set of rules which can be refined over time.
Ministers are considering giving themselves statutory powers to amend the code directly, allowing the government to intervene if the market becomes stuck.
It will be welcome news for the hydrogen sector, which has faced long waits to receive details on how pipeline infrastructure will be allowed to work.
Unlike the EU, which already has various pipeline projects under development, the UK’s activity has remained limited.
The Hydrogen Energy Association described the response as an “important step” in giving the sector clarity and stability.