UK hydrogen strategy - Why the UK needs to go ALL-IN for BOTH blue and green hydrogen NOW

UK hydrogen strategy - Why the UK needs to go ALL-IN for BOTH blue and green hydrogen NOW

08 Sep 2021

EIC welcomes the publication of the UK government’s Hydrogen Strategy. Hydrogen will be a key factor in enabling the decarbonisation of harder to address sectors like transport and heat and there is a dot-com-bubble-style excitement around the long-term technology and wealth opportunities that hydrogen may bring, as well as, of course, the environmental benefits.

The UK’s Hydrogen Strategy plans to apply lessons learnt from offshore wind, employing the successful CfD model once again to stimulate a vital new green economy, but we urge that the UK supply chain is also brought along at the same pace and scale as CfD. UK content must also be maximised for these critical, early net-zero domestic projects, enabling the seeding, rooting and growth of a competitive and future-ready UK-based hydrogen supply chain.

The UK has approached the roll out of hydrogen development projects across the UK in a steady and planned way, with various phases of money, levelling up and technology placement being supported to try to position the UK as a leader and first mover in this exciting new sector. The UK sees hydrogen as important to address its own emission challenges in time to meet its 2050 net zero legislation, but it also provides another stream of work for the hungry supply chain and energy community. The valuable work in this area will hopefully rally engagement and investment in the hydrogen dream, both for future domestic and international demand.

But there are challenges. The government in removing (nearly all) oil and gas funding and support for UK exporters, which has put pressure on an already struggling energy supply chain to be globally competitive and profitable. Business leaders all agree that we need to achieve 2050 net zero goals, here and globally, but they also say that they need more time to transition their current oil and gas order books, skills and facilities to non-emitting markets, asking for 5-10 years, not 5-10 months. This rapid removal of oil and gas support has hurt them, and if left unchecked this will continue to for years to come.

The concern around the short-to-medium term health of the UK energy supply chain is compounded by a 5+ year historical trend of export-shyness across all UK regions and all energy sectors. Business leaders find the development of new export markets as the hardest growth strategy, and have done each year since at least 2017, as confirmed by EIC Survive & Thrive research.

The UK government itself confirms that less than 10% of UK businesses are exporters (all sectors). At this rate, how is the UK to reach its own target of exports accounting for 35% of GDP, being currently at 30%?

The EIC believes that intervention is needed – firstly, to help businesses to stay rooted and healthy in the UK, and secondly, to address their export-shyness barriers to internationalisation.

The EIC believes that hydrogen provides unique and timely answers to these challenges.

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