UK falling behind rivals on low-carbon hydrogen development – FT.
The UK has fallen behind other leading economies in supporting the development of a low-carbon hydrogen industry, two trade bodies have warned. The Energy Networks Association and Hydrogen UK urged the government to “regain the momentum” after falling from second place two years ago, behind only South Korea, to eighth.
They said:
Though some progress has been made, the USA, Germany, Japan, Canada, the Netherlands and France have all leapfrogged the UK, at a time when competition to attract international investment in energy infrastructure has dramatically increased.
South Korea had retained its top spot, the report found. A joint report by the two trade bodies compared policies to develop clean hydrogen in the UK to those in 16 countries including India and Saudi Arabia. No significant low-carbon hydrogen production projects in the UK have yet reached a final investment decision, the study said, despite the government setting a target of 10 gigawatts of production capacity by 2030.
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The findings follow another study by Energy UK, the energy industry trade group, last month that highlighted the “low levels of expected investment in the UK” as other countries, such as the US, boost incentives for clean energy investors. In June, the Climate Change Committee, the government’s independent adviser, said the UK was making “worryingly slow” progress and had “lost its global leadership” on the road to reach its stated goal of net zero by 2050.
The warnings come amid a growing debate in the ruling Conservative party about its commitment to green policies in the run-up to the next general election, which is expected next year. Opinion polls show Tory voters are particularly resistant to the idea that carbon-cutting policies should be pursued if they result in extra costs to households.
Last week, Sunak promoted Claire Countinho, one his closest allies, to the role of energy secretary. Hydrogen does not produce carbon dioxide emissions when burnt, so it is hoped it can replace fossil fuels in several areas, such as heavy industry, although how widely it will be used is debated. Most hydrogen globally is currently produced from natural gas, releasing carbon dioxide in the process.
Producing low-carbon hydrogen involves either capturing these emissions, or using water as the source and extracting the hydrogen via electrolysis powered by clean electricity. Both of those processes are expensive and complex, requiring government support and planning to get up and running at scale.
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The joint report looked at metrics such as financial support for producers, and the development of infrastructure to transport and store hydrogen. It highlighted tax credits of up to $3 per kilogramme available for clean hydrogen producers in the US, one of the measures introduced by president Joe Biden’s Inflation Reduction Act.
“The certainty and simplicity of this funding mechanism is in stark contrast to the UK’s heavily negotiated contracts, competitions and allocation rounds,” it said. However, the findings contrast with a report by Cornwall Insight, the energy consultancy, in April.
It ranked 14 countries on their potential to “develop low-carbon advanced hydrogen economies” and put the UK third. It highlighted “substantial advancement” in the UK’s plans over the year. The government said in statement it was “committed to boosting hydrogen as an important step towards reaching our net zero goals”.
New measures in the energy bill, which is going through parliament, would “provide investors with the confidence to invest in the hydrogen sector, with the potential to create over 12,000 new jobs by 2030,” it added.
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UK falling behind rivals on low-carbon hydrogen development, September 2023
