The UK still relies very heavily on gas. Typically, we use well over 700 TWh of gas each year, that’s a third of the UK’s energy needs.
If we consider one third is also provided by oil, that’s a huge energy deficit which would need to be met to eliminate fossil fuels but which represents a great opportunity for hydrogen in a transition to a low carbon economy.
SGN, the other gas networks and National Gas are undertaking a significant body of work to support the development of hydrogen and ensure it can be delivered safely through the delivery of both new infrastructure and re-purposing of existing infrastructure – this is a whole industry effort.
The UK is relatively well positioned to play a leading role in decarbonisation through the development of the hydrogen economy. Estimates suggest it could create 12,000 jobs by 2030 and 100,000 by 2050.
While there is a huge opportunity, there are also a number of key challenges which need to be addressed including investor certainty, collaboration and consumer confidence and choice.
Certainty and competition for capital
The hydrogen economy is developing globally and simultaneously. The UK is competing to secure investment on a global basis and must attract capital from investors who allocate capital at a global level.
We need to build on the UK’s strong track record of attracting investment through the creation of stable, regulated frameworks which provide certainty for investors and support lower cost financing.
We would urge government to accelerate the development of business models for hydrogen production, storage and transport ahead of the targeted 2025 milestone. This would help boost investor confidence and provide certainty. We’d also urge the Government to progress with the UK’s industrial clusters – key to supporting the development of scalable hydrogen production – to help maintain investment and commitment.
Collaboration, co-ordination and convergence
Establishing a scalable hydrogen economy and delivering the associated infrastructure is a complex problem requiring synchronicity across the value chain including production, transport, storage and demand. This will require close collaboration.
We believe a ‘whole system’ approach is required – rather than banking on an all-electric or an all-hydrogen energy future. Greater co-ordination than ever before across the energy industry will help ensure we develop solutions that are not only affordable and resilient but see the UK’s net zero ambitions realised.
Consumer confidence and choice
We must recognise that while most of us in the energy sector are deeply immersed in these debates and the role hydrogen can play, many consumers and businesses won’t have engaged with the issues and choices at this stage.
We need to bring consumers on this journey and provide a transparent and balanced view of the benefits hydrogen can offer. We will continue to demonstrate hydrogen is safe, affordable and that consumers can transition to it with limited disruption.
It’s important we also remember customers will expect a choice when it comes to their energy consumption.
There’s a lot of important work to deliver and some challenges to address. However, it’s exciting to be part of an industry which is at the forefront of decarbonising the UK’s energy system.
