National Infrastructure Commission
Hydrogen strategy "an important milestone" but clarity on costs needed soon
The Commission has welcomed today’s publication (17 August 2021) of the government’s UK hydrogen strategy and associated consultations, noting that the outcomes of the latter will need to address the challenges of reducing the cost of hydrogen production and ensuring a fair distribution of those costs.
Sir John Armitt, Chair of the National Infrastructure Commission, said:
“This strategy provides a platform for hydrogen to take its place as part of the solution for decarbonising our economy. The proposed twin-track approach to both blue and green hydrogen development presents a realistic pathway to meet the breadth of potential uses across different parts of the economy including industry, transport and power. As recognised by government, it is vital that we concentrate on truly low carbon hydrogen production, and therefore the proposed development of technical standards is welcome.
“The big question is how to drive down the costs of hydrogen production, and its relationship with the low cost of natural gas. That will only happen by scaling up production, so alongside the positive measures to kick start the sector there needs to be a longer term funding model that provides investor confidence in the same way the UK has successfully achieved in the offshore wind sector. Government will also need to decide how best to ensure the cost of natural gas reflects the cost of carbon.
“Clarity on where the costs will fall in such a model, and how they will be distributed fairly, is needed soon in order to secure industry and public confidence and support.
“This strategy is an important milestone, and industry will now look forward to seeing details of the business model, funding mechanism and sector development plan in the coming months.”
The Commission’s Annual Monitoring Report 2021 called on government to “develop clear, actionable, and funded plans to deliver on commitments made in the Ten Point Plan for a Green Industrial Revolution, and the National Infrastructure Strategy, including setting out next steps on heat decarbonisation and the development of a hydrogen industry”. This builds on previous Commission recommendations in the first National Infrastructure Assessment to help build an evidence base on the future use of hydrogen for domestic heating.
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