Major boost for hydrogen as UK unlocks new investment and jobs

ENERGY Security Secretary Claire Coutinho has announced backing for 11 major projects to produce green hydrogen – through a process known as electrolysis – and confirmed suppliers will receive a guaranteed price from the government for the clean energy they supply.

This represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe, helping to place the country at the forefront of this emerging industry. Unlike blue hydrogen, which is formed using fossil fuels and capturing the carbon emissions, green hydrogen is made by using renewable energy to split water – helping provide cleaner fuel for energy intensive industries and transport.

In return for this government support, the successful projects will invest over £400 million in the next 3 years, generating more than 700 jobs in local communities across the UK and delivering 125MW of new hydrogen for businesses including:

  • Sofidel in South Wales, who will replace 50% of their current gas boiler consumption with hydrogen at their Port Talbot paper mill
  • InchDairnie Distillery in Scotland, who plan to run a boiler on 100% hydrogen for use in their distilling process
  • PD Ports in Teesside, who will use hydrogen to replace diesel in their vehicle fleet, decarbonising port operations from 2026

Energy Security Secretary Claire Coutinho said, “Hydrogen presents a massive economic opportunity for the UK, unlocking over 12,000 jobs and up to £11 billion of investment by 2030.

“This announcement represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe.

“These 11 major new hydrogen projects across the UK will create over 700 jobs and deliver new opportunities from Plymouth in England to Cromarty in Scotland.”

This funding represents the most significant step in scaling up the UK’s hydrogen economy to date – speeding up progress towards the government’s ambition to deploy up to 10GW low carbon production capacity by 2030.

Ministers have also today opened a new second round of funding that companies can apply for to support their projects and published a production roadmap, which sets out the government’s plan for future allocation rounds in 2025 and 2026. This includes ambitious plans to boost hydrogen capacity up to 1.5GW across these rounds, and award funding to projects to help deliver up to 4GW of CCUS-enabled, or blue, hydrogen and 6GW of green hydrogen by 2030 – giving businesses the confidence they need to invest in the UK.

Ministers have also announced their decision to support hydrogen blending in certain scenarios – subject to an assessment of safety evidence and final agreement.

Chair of the Environmental Audit Committee, Rt Hon Philip Dunne MP, said, “Up and down the country, new green hydrogen hubs will be created to spur low carbon energy on the UK’s road to net zero. When the Committee considered hydrogen in 2020, we were concerned that the Government was not offering a clear vision to the industry that could give confidence and encourage investment. Today’s announcement by the Government helps to offer this clarity, and will support jobs in areas all around the nation.

“Green hydrogen is yet another tool in the UK’s low carbon energy toolbox, and another move away from dirty fossil fuels. The UK is open for business and continuing to lead the way in renewable energy. The UK absolutely has the potential to be a leader in developing green hydrogen to decarbonise hard to abate areas in industry and transport.”

Currently, less than 1% of the gas in distribution networks is hydrogen. Under proposals, hydrogen could be blended with other gases in the network as an off-taker of last resort, working to reduce costs in the hydrogen sector by helping producers, and to support the wider energy system.

Hydrogen blending may help achieve the UK’s net zero ambitions, but would have a limited and temporary role as the UK moves away from the use of natural gas.

Ministers have decided not to proceed with a hydrogen trial in Redcar, as the main source of hydrogen will not be available. The government recognises the potential role of hydrogen in home heating and will assess evidence from the neighbourhood trial in Fife, as well as similar schemes across Europe, to decide in 2026 whether and how hydrogen could help households in the journey to net zero.

Sopna Sury, Chief Operating Officer Hydrogen RWE Generation said, “Today’s announcements on the first 2 hydrogen allocation rounds mark a significant milestone in the development of the UK hydrogen economy. They represent a shift from policy development to project delivery, giving industry more clarity on the route to final investment decisions. Alongside the wider policy publications, this demonstrates that the UK wants to be a leader in delivering the clean energy transition.

“These early projects are vital not only in driving the production of electrolytic hydrogen but also in signalling the need to build-out the T&S infrastructure for its wider distribution.

“As a company with ambitions to develop approximately 2 gigawatts of green hydrogen projects across all our markets, and to invest around 8 billion euros net in green technologies in the UK between 2024-2030, RWE looks forward to being part of building a thriving hydrogen ecosystem in the UK.”


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