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UK hydrogen sector risks ‘falling behind’, industry leaders agree

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The UK government needs to act now if it wants to be a world leader in the hydrogen sector, industry leaders from Shell and Hydrogen UK have said.

  • Energy industry figures say the UK is falling behind in the global race to hydrogen.
  • A key tool to avoid it is the Government’s Energy Bill, currently in the committee stage at the House of Commons.
  • Following government investment in the sector, the industry would have to take action to establish the UK as a global provider of hydrogen infrastructure and skills, as seen with offshore wind.

Chairman of Shell UK David Bunch recently wrote on LinkedIn: “The UK, Shell and the wider industry needs clarity from government and policymakers on lower-carbon business models and incentives.

“This is particularly true for hydrogen, where I believe the country is falling behind.”

shell gas
David Bunch, UK country chair at Shell.

For Clare Jackson, chief executive of Hydrogen UK, the “top priority” for not falling behind in the global hydrogen market is the UK Government’s Energy Bill.

The bill is currently in the committee stage at the House of Commons.

Ms Jackson told Energy Voice: “There is nothing that will happen in Hydrogen in the UK without that Energy Bill going through.

The Hydrogen UK boss added: “Without this energy bill, there will be no production business models. There’ll be no production.”

If not the UK, then where?

Both the Shell chairman and the chief executive of Hydrogen UK agree that without rapid action from the government the UK will fall behind in this industry.

The two have pointed to the US as a place where investment may be directed if the UK does not act now.

Mr Bunch said: “When it comes to hydrogen, money will naturally be attracted to the prospect of stronger returns in countries like the USA or the European Union; Shell’s Holland Hydrogen I project in the Netherlands is a good example of this.

“Shell UK is prepared to take considered investment risk, but we need to see potential for a market – and that market needs to be investible.”

Clare Jackson

Ms Jackson also expressed concern about investment going across the pond with its more welcoming policy, particularly the Inflation Reduction Act (IRA).

She said: “The US’s IRA scheme has been a complete game changer, not just for the US, but we have seen every other developed nation respond to this.

“We’ve seen Australia, Canada, the EU, and India all come out with really ambitious funding programmes for hydrogen in response to the US.

“The UK has not done that and we seriously risk getting left behind.”

What is the Energy Bill?

The Energy Bill looks to be the country’s answer to the IRA and create the investment incentive in the UK that both of the industry leaders have discussed.

The proposed Energy Bill suggests bringing in a ‘hydrogen production revenue support contract’ in which government funding can be allocated to eligible projects.

For Ms Jackson, this is the support the sector needs to begin “exporting our skills and technologies around the world.”

Shell Beaconsfield on the M40 will be the first site in the UK to bring hydrogen under the same canopy as petrol and diesel.

She said: “There’s a huge economic opportunity here, if the UK can be one of the first countries out of the gate, then we can deliver a sort of world-leading hydrogen value chain.

“That means jobs, it means, economic growth, particularly in areas which need it the most like the northwest, the northeast and Scotland, some of these areas that a boost in terms of jobs and economic growth is really welcome.”

For the Hydrogen UK boss “speed is really of the essence”, she explained: “We’re very happy with what’s in the bill at the moment and for us, it’s just about trying to get it passed as quickly as possible so that these projects can take FID and actually start investing.”

Learning lessons from Wind

Following government investment in the sector, the industry would have to take action to establish the UK as a global provider of hydrogen infrastructure and skills.

Clare Jackson said: “Hydrogen is a little bit like where offshore wind was 10 years ago, we need the support of the government to scale up and bring costs down to the point where hydrogen can be competitive and affordable.”

However, last week at the All Energy event in Glasgow, the government’s Offshore Wind Champion Tim Pick said it was a “national disgrace” that maintenance work on Aberdeen’s floating offshore wind farm, Kincardine, had to be conducted overseas.

Scotland floating offshore wind
Kincardine wind farm.

To this, Energy Voice asked the Hydrogen UK boss, what lessons should be learned from the wind industry.

The chief executive answered: “We are a global leader in the deployment of offshore wind, but not in the manufacturer. So I think we need to be smart about the way that we do things.

“But it’s about being a first mover, supply chains grow in the places which move first, and the UK is very blessed.

“We have a really great set of projects in our pipeline, which are in all honesty are the envy of the world.

“If the US could have the UK’s project pipeline in terms of the maturity, development and quality of our projects, they’d bite our hands off.”

The Shell chairman concurred that the UK has the potential to seize the opportunities Hydrogen can bring in his LinkedIn blog post.

Bunch wrote: “The UK has the experience, skills, and political will to succeed in this challenge.

“The prize is huge, with the potential to provide long-term energy security and transform the country’s economy, as well as provide thousands of well-paid, skilled jobs.”

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