UK hydrogen, CCS sectors await direction from new prime minister

The resignation of Keir Starmer as UK prime minister has created further uncertainty for the country's low-carbon hydrogen sector, bringing the prospect of further delays to key funding and policy decisions, though the favorite to replace him could give the industry a boost.

Starmer announced his resignation June 22, ending a two-year tenure marked by an aggressive push to decarbonize Britain's power sector and by persistent concerns over high energy costs.

Energy Secretary Ed Miliband has led a strong drive to increase the country's renewable power generation, and continued policies from the previous government to roll out low-carbon hydrogen and carbon capture and storage projects.

The UK clean hydrogen and CCS sectors have suffered a series of setbacks and delays, some caused by political uncertainty.

There was a first delay to hydrogen project funding decisions after the Labor government won the last election in July 2024, followed by renewed commitments to the sector, and a funding pledge for CCS.

However, the industry is still awaiting a delayed hydrogen policy update, first promised by the end of 2025, and progress on a second round of CCS cluster funding has stalled.

"The UK's CCUS sector has made significant strides forward, with the first two clusters in Teesside and the North West and North Wales now in delivery," Olivia Powis, CEO of the Carbon Capture and Storage Association, said in a June 23 statement. "The CCSA remains committed to working closely with the government to build on this progress and maintain momentum."

The winners of the country's second electrolytic hydrogen allocation round are also still awaiting the results, following the shortlisting of 27 projects in April 2025.

Industry representatives have repeatedly called for urgent action to avoid delays in investment.

"We still do not have a confirmed date for either the Hydrogen Allocation Round 2, or the Hydrogen Strategy refresh," Hydrogen UK CEO Clare Jackson told Platts by email on June 23. "This is holding up investment and has a clear opportunity cost to UK plc."

Jackson called on the next prime minister "to create the policy certainty the industry needs as soon as possible."

The Hydrogen Energy Association, a fellow industry group, echoed the call.

"The hydrogen sector is committed, capable and ready to deliver investment, skilled jobs and long-term benefits for the UK's energy security, industrial competitiveness and net zero ambitions," HEA CEO Emma Guthrie told Platts by email on June 23.

Hydrogen-friendly successor?

Starmer's departure and the contest to appoint a successor are likely to further stall decision-making in the short term.

But the leading contender to be Starmer's successor, former Manchester mayor Andy Burnham, has form for supporting hydrogen projects, political consultancy Beyond2050 said.

"Burnham has historically been engaged with, and supportive of, the UK's hydrogen sector," the group said in an email on June 19. "Greater Manchester Combined Authority has had its own Hydrogen Strategy since 2021, and a refreshed version was consulted last year (now running from 2025-2030)."

Beyond2050 also noted that Burnham had been supportive of Carlton Power's planned renewable hydrogen production site in Trafford, in the Greater Manchester area, which has received funding under HAR1.

Burnham confirmed his intention to run for leader shortly after Starmer resigned.

Miliband is also touted as a possible finance minister in a Burnham government, which could lead to continued backing for clean energy projects.

Guthrie said the HEA hoped for progress on HAR2 and the publication of the updated hydrogen strategy.

"The sector is now awaiting the Invitation to Offer stage, with many companies relying on this next milestone to progress projects and unlock investment decisions," she said, noting an updated strategy would provide "important long-term direction for the industry."