UK hydrogen strategy
UK hydrogen strategy
BOTH blue and green hydrogen NOW supporting thousands of businesses and domestic energy security, and placating those that argue that we should not ‘cut our nose off to spite our face’, by ending oil production prematurely in the UK, to then immediately import the same amount of oil, arguably at higher costs and emissions. The CCUS technology that comes as the friend of blue is the real prize here though. CCUS is a globally exciting technology, not so much to enable blue production, but to deal with harder to decarbonise transport and industry emissions, providing a rare chance for the UK to build globally competitive capability that will lead to the sort of export-led GDP growth the government needs. Blue itself though does not provide a significant export opportunity. It is to be treated as a short-term and domestic fuel only. Why? Because as soon as the world demand for blue grows, then NOCs around the world will switch on their own supply of blue, at vastly greater scale and MUCH lower cost. The UK will not be a competitive exporter of blue, but it can be a competitive exporter of CO2 storage, the other great opportunity that is opened-up by CCUS. So, blue with CCUS is a vital investment stream that the government should go ALL-IN for NOW.
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It helps with just transition and energy transition for the supply chain, it is a lifeline for the UK oil industry, it creates worldbeating export technologies in CCUS and CO2 storage, and secures energy security. But what of green hydrogen? Green provides two different opportunities – of all the recent hydrogen project announcements in the world, the vast majority are for green, not blue, more than 90% in quantity and value terms. Why is this? Because investor and consumer demand for hydrogen is linked to their desire to have non-oil produced hydrogen, green fuels, as soon as possible. This can be seen as contradicting with consumer resistance to over-pay for green power and fuels, but even still, the trend is clear. As soon as green hydrogen can be produced at pace and scale, and competitively, then it will overtake blue as the fuel of choice. The UK has great infrastructure and natural resources for both blue and green hydrogen – how lucky are we? We have technology providers in the UK for electrolysers and, so far, there are no other regions of the world, and no other major industrial groups of entrepreneurs (Elon Musk has not yet focused on green hydrogen, although he loves CCUS), that can scale up in green, as they can so easily in blue.
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So, we have the chance, if we go ALL-IN NOW, to take the leading position with green technology development. This will enable us to develop a competitive UK-centred supply chain for UK projects, needing UK content oversight, to then become the Denmark Offshore Wind of green hydrogen technology. This would be the next great export and GDP growth opportunity for the UK. Green scale up would be slower than for blue hydrogen, as the infrastructure, competitiveness and technology starting points are much lower, so let’s think about blue and green in partnership – the UK can scale in blue and CCUS first, and then transition (again) to green hydrogen 5-10 years later. But this means green investment has to be ALL-IN and NOW too. In summary therefore, in the publication of the UK Hydrogen Strategy, the UK has positioned itself to be globally significant in both blue and green hydrogen and EIC members will appreciate this, but this positioning is not enough. The investment should go ALLIN, not in the future but NOW, and with enough scale and stickiness. Only then do we get a head-start on the rest of the world. This feels like a key moment for policy makers, and the COP26 stage is the perfect place to stake our claim on the net-zero-bubble.
@TheEICEnergy
EIC (Energy Industries Council)
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