Following the failure of UK policy makers to increase hydrogen availability in the UK, the Mission Innovation Hydrogen Champion proposes a simple 3 step solution to building a UK green hydrogen ecosystem: 1) National strategy, 2) Regional clustering, 3) Democratise technology funding

Hydrogen technology has emerged globally as a vital future fuel in the fight against climate change, and a precious tool to secure energy futures.  While hydrogen’s potential, performance, and safety are all proven, the UK Hydrogen Strategy of August 2021 resulted in reduced hydrogen availability across the UK.  Questions continue that create uncertainty, about water resources, energy security, the commercial reality of carbon capture and storage (CCUS) and blue hydrogen made from fossil fuels.  The UK discussion has become overly complex and needs a reset.

The UK Hydrogen Strategy of 2021 proposed a twin track approach that included blue hydrogen sold by the carbon industry.  However as natural gas prices reached record highs (almost seven-fold) following the invasion of Ukraine, and electricity costs also rocketed in some markets, green hydrogen from renewables became more commercial than fossil [blue] hydrogen.  Clean hydrogen—which is produced from renewables with zero or next-to-zero carbon emissions—could play a vital future role in reducing emissions, but in the UK fossil [blue] hydrogen remains on the table.  To build renewable infrastructure, the appropriate policy and permitting frameworks will need to unlock investment bottlenecks to the regions and diverse groups. Other countries championed different, more successful approaches, and the UK can learn a lot from following the positive examples.

Hydrogen fuel can reduce emissions from the most energy intensive industries in the economy including industrial and chemical processes and heavy-duty transport, including trucks, rail and marine, but technology is also key.  Hydrogen technologies were ignored in the hydrogen strategy and we have no strategy to date.  A strategy proposed to BEIS back in 2017 by the Midlands Fuel Cell and Hydrogen Network can now be actioned, but only if it can be understood by government.

Unlike other countries pioneering hydrogen such as Japan, China, the US, Korea even Chile, Portugal and Uruguay, the key levers in a UK hydrogen transition are not yet functioning because there are no hydrogen technology experts in government.  Most notably for transport and homes, there is a structural absence of policy and even competence in key replacement technologies like batteries and fuel cells, at a time when the incumbent technologies the UK makes successfully today are being outlawed.  How could a government design a winning replacement strategy without key competences?  While questions need to be asked about how this was allowed to happen, there are three key steps that successful companies in the hydrogen space have taken.

National Hydrogen Strategy for National Security

The UK energy ecosystem requires realignment for green hydrogen to break through.  On the Coronation Weekend, a reorganisation of UK Business, Energy and Industrial Strategy (BEIS) creates the Department of Energy Security and Net Zero (DESNZ) vitally linking the two issues.  This creates new opportunity in national government to provide thought leadership, insights, and SMART, actionable plans in the green hydrogen ecosystem.  In order to do this, regions require national coordination to engage all local assets for the energy ecosystem, from wind and solar power requirements to additionality, water sustainability, electrolyser technologies, and investment and policy.  The Whitehall-down approach did not work.  Hydrogen technology manufacturing can play a role in stimulating economic development, and create new jobs to replace those the UK are outlawing.

Other countries identified manufacturing green products many years ago as a means to achieving emission reductions.  For example, China has long pursued a national hydrogen technology strategy, since at least 2013 as part of their new energy vehicle (NEV) programmes.  FC and hydrogen (FCH) technology innovation is one of the 15 key tasks listed in the 2016 NDRC Innovation Action Plan and Roadmap, which listed target disruptive technologies ripe for industry innovation.  The aim was for China to move up the green manufacturing value chain through innovation research and IP development.  In the longer term, the clear ambition was to realize the large-scale application of FC and hydrogen (by 2030) and create mass markets for hydrogen energy and FCs (by 2050).  China is on track and even ahead of schedule to achieve this.

The US now also sees clean hydrogen as a pillar in the emerging clean energy economy, potentially allowing the US to reach 100% clean grid power by 2035 and net zero carbon by 2050.  The Biden-Harris Administration created the Bipartisan Infrastructure Law in the US in 2022, which seeks to accelerate the widespread use of green hydrogen and scale up commercial hydrogen deployment within a decade.  The first tranche recently authorised $1 billion for research development demonstration and deployment, and an estimated $26 billion is now available for hydrogen fuel and technology commercialisation.  The US created the Hydrogen Shot programme which aims to produce $1 clean hydrogen within a decade.  Making green hydrogen is an important US goal, with the first phase of funding advancing electrolysis technologies and improved manufacturing and recycling capabilities.

Regional Clusters

Strong national hydrogen technology policies fix multiple problems associated with energy, but overseas the hydrogen economy is cultivated most successfully as regional clusters.  The US, China and Australia – amongst many other countries – have all created hydrogen hubs, with tax incentives following federal funds through central hydrogen programmes for research and development.  Regional clusters create local markets for new fuels and technologies, solving regional challenges and diversifying the market conditions – and thus solutions emerge.  Regions are key to delivering success to Britain and Levelling Up is touted as a strategic mechanism to do that. However failure to change the structures of delivery coupled with a lack of strategic thinking at a national level has created further risk to the regions.  In March 2023, Demos released a study that showed the Black Country – a key levelling up as a Priority 1 region – risks losing 20% of manufacturing workforce by 2032 as national net zero policies outlaw the products being produced there today.  Not only is the Black Country the home of manufacturing, housing a high number of energy intensive businesses, the Midlands is also home to the threatened [and soon to be outlawed] supply chains of the internal combustion engine markets.

The emphasis for the hydrogen community in 2023 has to be on joined-up hydrogen ecosystems as clusters, accelerating in unison and realising the latent potential of hydrogen pioneers that are already operating.  Financing diverse wealth creators in those clusters – not just a boys tech club – will be vital.

Financing A Fair Energy Transition

One of the key goals of the US programmes is to increase diversification in financing and policy making.  The US Department of Energy openly encourages applicant teams that include stakeholders within academia, industry, and national laboratories across multiple technical disciplines. Teams are also encouraged to include representation from diverse entities such as minority-serving institutions, labour unions, tribal nations, community colleges, and other entities connected through Opportunity Zones.  By enabling a sustainable clean hydrogen economy, local investments help reduce harmful emissions in the disadvantaged communities that have suffered disproportionately from local air pollution.

Smaller UK companies outside London get none of the access to finance offered to larger businesses through the banks, local authorities and through local projects e.g. HS2 or the Commonwealth Games.  Local public procurement could change that in an instant, funding valuable UK assets that have been ignored to date.  Instead of the discredited ESG funding that provides female led businesses with only 1% of equity financing goes to women (<0.02% goes to non-white female founded companies), access to funding must cut across all groups to stimulate diverse solutions and prevent further stagnant policy making by in-crowds.  In a report in 2018, less than 7% of UK government technology funding went to female scientists.  Few UK departments or banks gather or publish diversity data, obscuring it and negatively targeting anyone who starts to ask questions.

Diversity of ideas, skills and assets is key to the success of US and Chinese hydrogen technology policies, and insistence on equality in government and private funding has only strengthened those nations that harness diverse talents to solve complex problems.

Urgent Action Now

Reliance on the market to fix the environment (as touted by Kwarteng and Truss) already created an energy security and a cost of living crisis.  This approach has now resulted in the import of not just our essential fuels, but the prospect of importing all the technologies we increasingly rely upon to meet our Net Zero obligations.  If this UK policy failure goes unaddressed, the UK is set to double the UK energy security risk we experience today, by making the UK reliant on imports of not just fuel – as today – but also the technology supporting every device we use, from cars to homes.  In that context, the most effective way to help people out of energy poverty, stimulate the UK economy and increase UK energy security is to encourage cost effective manufacturing of energy efficient technologies we know the UK – and the rest of the world – require.