The new leadership of the UK Government have announced an emergency budget committed to accelerating the delivery of two blue hydrogen projects in the north of England. The budget referred to as “UK Growth Plan 2022” states that the government is prioritising major infrastructure projects as a critical way of driving economic growth, increasing long-term energy security and achieving net zero.
Among the projects detailed are the Hynet North West project and the East Coast Cluster in the northeast, both of which intend to reduce emissions in local heavy industries by supplying blue hydrogen. Blue hydrogen consists of natural gas with carbon capture and storage (CCS). Prioritising the use of additional natural gas during a challenging gas supply period has created rising inflation, and this has caused some concerns. Natural gas is currently so expensive that the UK Government will subsidise its use this winter at a substantial price. Industrial-scale CCS is a costly process, with high levels of carbon capture in blue hydrogen production yet to be delivered on a commercial scale anywhere in the world. There are also concerns with the emissions from blue hydrogen, with the risk of high upstream methane emissions and the inability to capture all CO2 released by methane reformation. Despite these concerns, some industry experts believe blue hydrogen is valuable, at least in the short to medium term, due to its capability of being scaled much quicker than green hydrogen.
Hynet, currently being developed as part of 41 companies with support from local authorities has promised to reduce CO2 emissions in the northwest by 10 million tonnes per year by 2030. Their mission statement explains that its hydrogen, derived from natural gas with 95% carbon capture will be used at a local oil refinery and then distributed via pipelines to manufacturing sites and power stations across the region, with some of the hydrogen mixed with natural gas. The East Coast Cluster is similar to Hynet, with blue hydrogen applied to heavy industry, oil refining and power production, and CO2 captured and stored from other non-hydrogen industrial activities. The responsible developers, BP, Shell, TotalEnergies and Equinox, along with network operator National Grid claim the project will remove 50% of industrial cluster emissions in the UK. Both projects are due to commence in the mid-2020s.
Six of the seven hydrogen infrastructure projects noted in the new budget proposal are different parts of the Hynet and East Coast projects, detailed new 100% hydrogen pipelines, hydrogen storage and CCS. The seventh project is regarded as Hydrogen Electrolyser Capacity Deployment, likely referring to the production of green hydrogen.
The plan is to accelerate the projects as quickly as possible, aiming to get the majority in the construction phase by the end of 2023. The Treasury document states that these projects may accelerate quicker through reforming plans, regulatory reform or other options to speed up construction and development.
In July, the UK government released the world’s first national clean hydrogen subsidy scheme, a proposal similar to contracts for difference that support funding an initial 1GW of green hydrogen and 1GW of blue, with a target of achieving 10GW of low carbon hydrogen by 2030.