The hydrogen revolution
Market Insight 08 December 2021 08 December 2021
UK & Europe
Projects & Construction
Last year marked a continued shift away from traditional fuel sources towards natural gas and renewable energy sources. In the UK, over the course of 2020, greenhouse gas emissions are estimated to have fallen by 8.9%, or 414.1 million tons. The attributed to the reduction in the demand for energy and fuels, in part due to the limited use of road transport during the COVID-19 nationwide lockdowns.
The UK Government Strategy
In 2020, the government announced its plan to ‘build back greener’, a commitment to progress the UK towards net zero emissions by 2050 and set out its commitment to reduce carbon emissions by 78% by 2035 in its sixth Carbon Budget. Notably, the government’s ambition is to deliver 5GW of low carbon hydrogen production by 2030.
In August 2021, the UK’s government department for Business, Energy & Industrial Strategy published its comprehensive Hydrogen Strategy, setting out how low carbon hydrogen is considered to be a key energy source for the future. The report addresses issues of infrastructure development, the creation of a distribution and storage network, and how to stimulate the demand from the domestic and industrial market to ensure that the UK is an international leader in hydrogen production. The strategy envisages a “whole systems approach” to revolutionise the energy industry and create a leading UK standard for a low carbon hydrogen energy market.
The UK government sees low carbon hydrogen as the key to decarbonising construction and will be implementing several strategies to mitigate the related risks and remove the barriers that are currently impeding progress. This is illustrated by:
- Hydrogen Strategy which sets out the UK government’s “Red Diesel Replacement Competition” to fund the development of new technologies to enable non-road machinery to switch to hydrogen, and provide an opportunity for the UK’s expertise to be utilised throughout the hydrogen supply chain;
- the launch of the £240 million Net Zero Hydrogen Fund in 2022 for the co-investment and support of new low carbon hydrogen production projects; and
- Hy4heat programme for researching and implementing projects across the country to replace the supply of natural gas with hydrogen in residential and commercial buildings and gas appliances.
The hydrogen revolution presents an opportunity for the construction industry with the creation of and investment in new infrastructure that will be required to meet the UK’s Hydrogen Strategy. Hydrogen technologies are also starting to play a part in the continued focus on modernising methods of construction to reduce carbon emissions during the build process; for example, with the development of hydrogen generators.
The industry should also be mindful of lessons learned from several high-profile infrastructure projects in the UK in recent years which have had significant time and cost overruns where new technology was core to the project. Cutting-edge design, limited supply chains with long lead in times for complex equipment, the potential for regulatory changes, stringent performance criteria and significant potential production losses will make early and considered risk allocation and management key to the success of these projects.
Major strategic planning and investment in policy, regulation, and funding structures are required to achieve a radical overhaul of the UK’s traditional energy production and supply systems. The UK government has indicated that the early 2020s will be used to create the necessary administrative framework for the hydrogen revolution, particularly from a regulatory perspective, following on from the EU-wide “HyLaw” project that has already identified the current legal obstacles to the UK hydrogen industry.
The investment potential and growth for the low carbon hydrogen industry is considerable. In order to achieve these aims, global production of low carbon hydrogen must increase from just 9Mt in 2020 to 528Mt in 2050. These ambitions must therefore be matched by considerable investment in and construction of both hydrogen powered energy stations and the accompanying infrastructure required to support its resulting energy storage and distribution. The UK government is developing its models for supporting investment in hydrogen infrastructure which is key to achieving its ambition for a world-leading hydrogen economy.
It is anticipated that the near future will see a surge in hydrogen projects, and the construction industry will play a vital role in making the UK government strategy a reality.