Fuelling the Future

Sep 20, 2018

Scotland and North East England offer the best opportunities for successful hydrogen production hubs, while investment in cost-effective hydrogen production technologies – such as electrolysis – would open up export opportunities and address both the Industrial and Clean Growth strategies, according to the new report from Policy Exchange’s award-winning energy team, with a Foreword from the first elected Tees Valley Mayor, Ben Houchen.

Fuelling the Future, by Policy Exchange’s Senior Energy and Environment Research Fellow Joshua Burke, recommends that:

  • The hydrogen economy offers big opportunities to decarbonise, but without coordinated leadership from industry and central government (targeted at lowering the cost of sustainable production) we will not benefit as we should.
  • As part of the Industrial Strategy Challenge Fund, investment should be focused on R&D to lower the cost of hydrogen production via methods like electrolysis, which has the potential to provide flexible services to help balance intermittent renewable energy.
  • In the short term, long distance freight offers the best opportunities for implementing hydrogen use at scale, and national and local government should work with the private sector to invest in the necessary refuelling network as well as innovation grants for pilot programmes.
  • Hydrogen production using electrolysers and ‘spare’ curtailed wind can replace less than 1% of the gas used in domestic heating, while production using fossil fuels is incompatible with domestic decarbonisation targets without carbon capture and storage (CCS). Scotland and the North East of England are the best places in the country for decarbonised hydrogen production hubs using renewable energy and/or CCS so the Government should consider targeting investment there.

 

Lead author Joshua Burke said:

“The versatility of hydrogen offers big opportunities to help overcome some of the challenges the UK faces when transitioning to a low carbon economy – but we are far from realising them yet. Two issues need addressing. Firstly, we need to focus on getting cost-effective, scalable and sustainable production methods to reach mass market. Targeting investment towards reducing the high cost of producing large volumes of low carbon hydrogen is crucial. Secondly, we must decide the most appropriate applications of hydrogen within our economy, given potential uses are likely to be highly interconnected and this will have implications for the energy system.

 

“Challenges to decarbonising the domestic heating remain. If hydrogen was to fully replace natural gas by 2050, from 2030 installed hydrogen capacity would have to grow at a rate 3 times as fast as the wind sector, and do so consistently for 20 years. As there is no silver bullet, decarbonising hard to reach sectors will need a nuanced approach, with an understanding that no one measure will suit every area. For example, we might see a hydrogen transport hub in the North East, heat pumps in rural off-grid areas and district heating networks in areas that are heat dense and where CHP plants are being developed.”

 

In a Foreword, Tees Valley Mayor Ben Houchen said:

“Hydrogen has been used industrially for generations, but a new era presents us with new opportunities. It can play a leading role in heating and powering our lives and can reduce the environmental impact of doing so.

 

“Tees Valley currently produces 50% of the UK’s hydrogen.  We have a strong base from which we can do more.  As policy develops we need informed debate.  It is important to understand the wide range of opportunities, from home heating to fuel cell vehicles, and to carefully consider how best to pursue them.

 

“The UK is well placed to be a world leader.  We have strong clusters of relevant industry and production.  We have a significant domestic demand and the potential to meet it.  We should grasp the opportunities that the hydrogen economy represents.

 

“I want the UK, and Tees Valley, to lead the way in developing the hydrogen economy, creating jobs and reducing environmental impact.  Informed debate is needed as we set off down this path.  It seems likely hydrogen will be an even larger part of our future than it has our past.  It is right that we plan for it now.”

Author

Joshua Burke

Joshua Burke
Senior Research Fellow, Energy and Environment Read Full Bio

Matthew Rooney

Matthew Rooney
Energy and Environment Research Fellow Read Full Bio

Stay Up To Date

Latest Tweets

What is the role of #CCUS in delivering #cleangrowth? We were delighted that @claireperrymp joined us at #cpc18 to debate the issue - to mark #GGBW, watch the video here: youtu.be/fqJCXUsuJyw