A manifesto for the hydrogen economy
When a solution for decarbonising our economy as powerful as Hydrogen comes along, it can be tempting to believe it will just happen, propelled by its inherent irresistible logic.
But even the best ideas can falter if not given the support they need to thrive. While there is no doubt that hydrogen will transform vast swathes of industry, which industries, the shape of the transformation and the speed of change are all open questions.
If the UK wants to be a leader in the new hydrogen economy and take this rare opportunity to ensure its energy security, it needs to lay the foundations now.
We have identified the five key elements of a future hydrogen economy that the government and business need to invest in today:
1.Infrastructure – if we are to enable all the things we want to do with hydrogen, from decarbonising heavy industry to fuelling clean buses and planes and heating homes, we need to be able to move it around and store it.
Fortunately, the UK is ahead of the game in this department in that 70% of its 7,600 km natural gas pipeline network has been converted from iron to hydrogen-ready plastic. A deal last week to sell a majority stake in that network to Macquarie also bodes well for its future after the Australian bank pledged to invest in its transition to a carrier of clean hydrogen.
Less well-advanced are UK plans for hydrogen storage. Again, facilities currently used for natural gas, such as salt caverns, can be repurposed for the job. However, because hydrogen is less dense than natural gas, it requires more storage space, so investment in new capacity is going to be needed.
Maximum possible hydrogen storage capacity in the 19 EU countries plus Switzerland and the UK using existing gas storage sites could reach 264.7 TWh by 2050, according to GIE, well below the 466.4 TWh that will be needed, based on the ratio of gas storage capacity to estimated demand.
A hydrogen bus takes the same time to refuel as a diesel bus and covers the same distance.
2.Skills – many of the jobs needed to develop and run the hydrogen economy do not currently exist or are currently very niche but will be needed in large numbers in the not-too-distant future. Research from Cavendish Energy in the U.S. suggests these will be jobs that pay more than the average salary and will require a wide variety of different skills and education, from extensive on-the-job training to doctoral degrees.
While you will struggle to find job postings from roles including hydrogen vehicle electrician, fuel cell designer, emissions reduction project manager, and director of hydrogen energy development today, they are likely to be in great demand just a few years hence. Our colleges and universities need to start preparing the workforce for these jobs today if we are to produce the homegrown talent needed to power the hydrogen economy.
3.Policy support – the UK is blessed with vast renewable energy resources, mainly in the area of offshore wind, that could allow us to become a net exporter of hydrogen. Not only can that give us much-needed energy security, it is an essential element in the creation of a hydrogen ecosystem.
Hydrogen can be produced where it is consumed, giving users unparalleled control over their energy supply chain. Imports will play their part for sure, but a strong base of domestic hydrogen production is needed for a thriving hydrogen economy.
While the cost of producing hydrogen is falling rapidly, it remains high for many would-be consumers, so a mechanism to subsidise the cost of production is needed. Variations on the contracts for difference (CfD) model that has been so successful in driving down the cost of offshore wind are being considered by the UK government but industry has been waiting since 2020 for details of the proposed mechanism.
The UK is ahead of the game as 70% of its 7,600 km natural gas pipeline network has been converted from iron to hydrogen-ready plastic.
4.Innovation – the UK is bubbling with the ideas and talent needed to make it a leader in the hydrogen economy. Companies such as Wrightbus, which is building the world’s first hydrogen-powered buses, Ryze Hydrogen, the UK’s leading hydrogen transporter and distributor, and JCB, which is developing its own hydrogen combustion engine to power its plant machinery (and for which it has already started winning awards), are all pushing the envelope in their respective fields.
The UK is also becoming a global centre of hydrogen aviation, while companies such as Powerhouse Energy, which has developed a unique waste-to-hydrogen system, are exporting their technology around the world.
The UK’s technology start-up ecosystem is by far the largest in Europe with a value of $142.7 billion in 2021. If similar levels of innovation can be achieved in the energy space, the UK will be well-placed.
The UK’s technology start-up ecosystem is by far the largest in Europe with a value of $142.7 billion in 2021. If similar levels of innovation can be achieved in the energy space, the UK will be well-placed.
5.Capital – to maximise the UK’s potential as a hub of hydrogen innovation, technology, production, and consumption, it needs capital. Dedicated hydrogen funds, such as HYCAP, are among investors aspiring to lead the UK energy transition by investing in the emerging clean hydrogen economy.
Traditional sources of financing, including banks, as well as capital from energy majors and power companies, such as Northern Power Networks and Cadent, are also ploughing billions of pounds into the UK’s hydrogen economy. If the government gets the policy support piece right, it could unlock much more.
To learn more about HYCAP click here.