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UK's July hydrogen strategy 'likely to include green CFDs'

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UK's July hydrogen strategy 'likely to include green CFDs'


Strategy expected before July 22: BEIS

Likely to include green H2 CFD auctions: ITM

Incentives for transport, industry expected

The UK government's hydrogen strategy will likely include measures for Contracts for Difference as well as incentives for green hydrogen in transport and large-scale industrial processes, ITM Power CEO Graham Cooley said June 10.

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Cooley, who sits on the government's hydrogen advisory council, which is compiling the strategy, said he had a positive view of the strategy, and expected to see CFD auctions and a renewable transport fuel obligation for green hydrogen.

"I hope to see incentives for green hydrogen that are contracts for difference auctions to incentivize large-scale industrial installations of electrolyzers, particularly for refineries, but also for ammonia," Cooley said at an ITM Power trading update.

"I would also like to see an RTFO [renewable transport fuel obligation] announced for green hydrogen," he said. "That's what I'm expecting to see."

The UK government's Department for Business, Energy and Industrial Strategy said it was set to publish the strategy before the parliamentary summer recess on July 22.

The publication of the strategy has been pushed back several times already from the start of 2021.

The strategy would cover both blue and green hydrogen, Cooley said. BEIS deputy director hydrogen economy Rita Wadey said in May the strategy would consider carbon intensity as the primary factor in market development.

The UK's RTFO introduced a "development fuel" obligation in 2019 which meant suppliers must provide 0.5% of such fuels. However, uptake of renewable hydrogen under the obligation did not materialize, law firm CMS said in April.

"Critics have attributed this to the lack of clarity over how hydrogen projects could participate in the RTFO," CMS said.

S&P Global Platts assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capex) at GBP4.56/kg ($6.45/kg) June 9. PEM electrolysis production was assessed at GBP5.64/kg, while blue hydrogen production by autothermal reforming was GBP1.77/kg (including capex and carbon).