Ed Birkett is Research Fellow in the Energy & Environment Unit at Policy Exchange and Benedict McAleenan is Senior Adviser at Policy Exchange.
In the fight against climate change, there are no silver bullets. We won’t solve it through technology alone, nor by telling people to mend their sinful ways. But there are some potential game changers, and among those is hydrogen.
The Prime Minister is reportedly a convert to the potential of hydrogen as a pioneering fuel that could kick-start a green recovery. As well as helping a recovery from the Covid-19 crisis, for some regions it would reinvigorate industry after decades of decline, delivering on the “levelling up” agenda.
In 2018, Policy Exchange explored the potential for hydrogen as a fuel of the future and highlighted the opportunities in northern industrial hubs. However, there’s a risk that our politicians will get carried away. It has huge potential but also very real limits, and there’s a danger of government investments going wrong.
Hydrogen isn’t the right answer everywhere
Hydrogen has huge potential as a low-carbon fuel and in revitalising industrial areas of the UK, making it a natural focus for the Government’s net zero and levelling up agendas. Our report, Fuelling the Future, described how hydrogen is widely used in industrial processes, including removing sulphur from fuels, manufacturing fertiliser, and even producing margarine. But most of this is hydrogen produced from natural gas, which releases carbon, leading to the nickname “grey hydrogen”.
There are already pilots underway to trial “green” hydrogen supply and Britain is a global leader in the technology needed for electrolysis (producing hydrogen from water using electricity). In the future, with lots of cheap, clean electricity from offshore wind farms, there is huge potential to scale up hydrogen in the UK, benefitting British manufacturing companies whilst decarbonising refineries and chemical plants.
Once the costs of hydrogen fall, it could be used in the blast furnaces of Port Talbot to replace coal and to secure jobs in our nationally strategic steel industry. It could then be expanded to other industries including glassmaking and manufacturing electronics.
But it is heavy transport that perhaps offers the biggest long-term potential for low-carbon hydrogen. Batteries look likely to dominate the market for passenger cars, with manufacturers like Nissan and Tesla offering vehicles with increasingly longer ranges and shorter charge times.
However, for heavy transport, including lorries, planes, buses and ships, the weight of batteries could be prohibitive. In these applications, hydrogen offers a solution. Once the right infrastructure is in place, hydrogen vehicles will offer fast refuelling whilst minimising weight. Several British manufacturers are champing at the bit to deliver hydrogen-powered public transport.
Despite this potential, hydrogen is not a silver bullet. When compared to petrol, diesel or natural gas, it is much less energy dense, which means it needs to be stored under high pressure, increasing costs and complexity. For many use cases, hydrogen’s Achilles’ Heel is that it is inefficient when compared to using electricity because there are many more conversion steps in the chain. This means that a hydrogen-powered car will use twice as much energy as a battery-powered car to travel the same distance.
Some have touted hydrogen as key to the UK’s energy security, ending our reliance on foreign fuels. The UK is a leading manufacturer of electrolysers, for instance, which produce hydrogen from electricity and water, which means that we could use UK wind farms to power electrolysers, generating hydrogen.
However, based on current forecasts, the bulk of the UK’s low-carbon hydrogen is expected to come from natural gas. The UK’s declining gas reserves means that we increasingly rely on imported gas, so a rapid expansion of hydrogen risks tying us into a fuel that we will increasingly import from countries such as Qatar.
Hydrogen hubs are the right place to start
None of this means that hydrogen doesn’t have an instrumental role to play in a Net Zero UK, but we need to be careful and to consider these challenges.
First, as we argued in 2018, we should create “hydrogen hubs”. This will support innovation in the areas that already use high-carbon hydrogen such as refineries and heavy industry.
Helpfully, demand for hydrogen is concentrated in areas that the Government wants to “level up”, such as Humberside, Teesside and Falkirk. These industrial centres can also deliver economies of scale and therefore cost savings, assuming that government carries some of the development risk in return for regional growth.
Second, these areas should pioneer wider uses of hydrogen, exploiting their engineering skills base to innovate and learn. The Government has already announced that the first “hydrogen transport hub” will be based in Teesside. The Teesside hub will be a testbed for hydrogen vehicles, including boats, trains and planes, following Policy Exchange’s 2018 recommendations.
Finally, the Government should engage the market wherever possible. The success of offshore wind in the UK is a combination of private sector innovation and Government support to push costs down. The same principles should apply to hydrogen. Efficient markets also keep options open if hydrogen remains too costly and other technologies emerge that are better and cheaper.
None of this is bad news. Acknowledging hydrogen’s limits allows us to design the best approach that puts British industrial towns back in the vanguard of an industrial revolution. It may not be the single answer to our future fuel needs, but it has huge potential.
At our Conservative Party Conference fringe event a few weeks ago, Tees Valley Mayor Ben Houchen called for the Government to “put hydrogen on the same footing and on the same platform as other technologies like electrification and batteries”. The Teesside hydrogen transport hub is the first step to achieving this, but there’s lots more still to do.