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UK government misses latest hydrogen strategy deadline

Highlights

Delay risks UK hydrogen advantage: MP

Strategy to be published 'soon': minister

Budget finalizing possible reason for delay

The UK government has further delayed its long-awaited hydrogen strategy, pushing back publication to an unspecified future date as the Department for Business, Energy and Industrial Strategy seeks to finalize a budget for related support measures, a member of the government's hydrogen advisory council told S&P Global Platts.

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In June, BEIS said the strategy would be published before the parliamentary summer recess from July 22. A spokesman said on July 21, however, that the strategy would be published "in due course," but was unable to give a specific date.

The strategy is seen as a key tenet of the UK's plans to meet its net-zero CO2 emissions ambitions, and the industry is awaiting details of the strategy to inform investment decisions in the sector.

"We urgently need a hydrogen strategy so that businesses across the UK can unlock their true potential and develop a low carbon future," British Conservative Member of Parliament and vice-chair of the All-Party Parliamentary Group on Hydrogen Alexander Stafford said in emailed comments July 21.

"Any further delays would risk the UK losing our inbuilt hydrogen advantage, and allow other countries to rapidly close the hydrogen gap," Stafford said.

Investors waiting

Siemens Energy UK head Steve Scrimshaw told Platts that investors and hydrogen companies were waiting on details of the strategy before they could deploy the capital and technology they had ready.

"There is a real anticipation," Scrimshaw said. "People need to have clarity on this, so they can actually move forward."

He said it was important that the UK does not lose the leading position it has in the hydrogen space, but warned that clarity was needed on the strategy well in advance of the United Nations COP26 climate talks the government is hosting in Glasgow in November.

"It's really important that they need to move relatively quickly," he added.

Secretary of State for Business and Energy Kwasi Kwarteng said July 21 that the strategy would be published "in the next few weeks."

Speaking at the House of Commons science and technology select committee, Kwarteng said that it was likely to be published during the summer break, given the urgency and interest in the strategy.

"There are investors, there is a whole community out there, that are waiting for the hydrogen strategy, and I think we'll try and get it out as soon as possible," he said.

Nilay Shah, a professor at Imperial College London who sits on the BEIS Hydrogen Advisory Council, said July 22 that, while it was difficult to know the reason for the delay, it was likely BEIS was finalizing its budget with the Treasury, along with details on the geographical distribution of support measures.

In its industrial decarbonization strategy released in March, closely linked to UK hydrogen developments, the government announced support for a series of clusters, largely around industrial hubs in the north of England and Scotland.

The UK set a target of 5 GW of low-carbon or renewable hydrogen production capacity by 2030 in a 10-point plan for a "green industrial revolution" earlier this year.

Shah did not think there would be a significant issue for companies in the renewable and low-carbon hydrogen sector if the strategy were delayed until parliament returns in September. And a BP spokesman told Platts July 22 that large hydrogen and decarbonization projects such as its 1 GW low-carbon hydrogen Teesside development were making progress regardless.

Likely measures

The strategy is expected to 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, who also sits on the advisory council, said June 10.

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

S&P Global Platts assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capital expenditure) at GBP5.16/kg ($7.08/kg) July 22. PEM electrolysis production was assessed at GBP6.35/kg, while blue hydrogen production by autothermal reforming was GBP2.15/kg (including capex, CCS and carbon).