Net zero target
Key climate policies
Energy Bill (2022)
Powering Up Britain
UK Emissions Trading Scheme (UK ETS)
To meet these ambitions, the UK has committed to supporting both electrolytic and CCUS-enabled hydrogen production.
By mid-2020s, we could start seeing larger (100MW) electrolytic hydrogen projects and the first CCUS-enabled hydrogen production facilities based in industrial clusters. By the end of the decade, there could be multiple large CCUS-enabled (500MW+) production facilities across the UK.
Currently, over a dozen large-scale hydrogen projects are ongoing or pending (e.g. Acorn, Gigastack, H21).
By setting up a hydrogen certification scheme by 2025, a new Low Carbon Hydrogen Standard is being established. This will support the UK in playing an active role in the international hydrogen market.
Further information: Hydrogen Investor Roadmap; UK Hydrogen Strategy
The Net Zero Hydrogen Fund (NZHF)
The Net Zero Hydrogen Fund (NZHF) which is worth up to £240 million, will fund the development and deployment of new low-carbon hydrogen production to de-risk investment and reduce lifetime costs. NZHF’s grant allocation is split into the following 4 strands:
- Strand 1: Development expenditure (DEVEX) for front-end engineering design (FEED) and post-FEED activities, aims to build the pipeline of hydrogen production projects to measurably move these closer to deployment. The application window for strand 1 has now closed.
- Strand 2: Capital expenditure (CAPEX) support for hydrogen production projects that do not require revenue support through the Hydrogen Business Model (HBM). Applicants for Strand 2 must demonstrate how they will develop a credible project that will contribute to the at-scale production of low-carbon hydrogen by 2025. Strand 2 closes on 13 July 2022.
- Strand 3: CAPEX for non-CCUS enabled projects which require revenue support through the hydrogen business model.
- Strand 4: CAPEX for CCUS-enabled projects which require revenue support through the hydrogen business model. Strand 4 NZHF’s Expression of Interest process will launch following the announcement of the Phase-2 shortlisted projects, followed by a Strand 4 application process in early 2023.
CCUS Business Models (proposed)
Spring Budget 2023
The UK government earmarked new funding to support CCUS projects as part of the country’s Spring Budget 2023.
£20 billion was allocated over the next two decades for the early development of local carbon capture and storage projects that pump emissions underground, starting with projects from East Coast to Merseyside to North Wales, and paving the way for CCUS everywhere across the UK.
Further information: Spring Budget 2023
The Carbon Capture and Storage Infrastructure Fund (CIF)
The Carbon Capture and Storage Infrastructure Fund (CIF) represents £1bn of investment in CCUS in the UK and it is an important element of the government’s support of an emerging sector with significant potential. To enable the establishment of a new CCUS sector, the UK is seeking to develop CCUS clusters with T&S networks acting as the enabling infrastructure for a range of capture projects, including gas power plants, industry, low carbon hydrogen production, bioenergy, and direct air capture (DAC). Each of the areas of CCUS (T&S, power, industrial carbon capture, bioenergy with carbon capture and storage and low carbon hydrogen) will be supported differently and business models will be designed. This will provide bespoke commercial frameworks for each area.
Further information: CIF
The Industrial Decarbonisation Challenge
The Industrial Decarbonisation Challenge supports the development of low-carbon technologies and infrastructure, increasing industry competitiveness and contributing to the UK’s clean growth. It will reduce the carbon emissions from energy intensive industries, such as iron and steel, cement, refining and chemicals.
Further information: The Industrial Decarbonisation Challenge
Industrial Decarbonisation & Hydrogen Revenue Support
Through Industrial Decarbonisation & Hydrogen Revenue Support, the government will invest £140 million to fund new hydrogen and industrial carbon capture business models. This will include up to £100 million to award contracts of up to 250MW of electrolytic hydrogen production capacity in 2023, with further allocations in 2024.
Further information: Industrial Decarbonisation & Hydrogen Revenue Support