The UK committed £500mn ($680mn) for hydrogen infrastructure today, but gave few details about how the funds will work in practice.
UK hydrogen market participants had hoped for more information from the government's multi-year spending announcement this week. But London's energy plans focused on expanding nuclear power and its second wave of carbon capture and storage (CCS). The funding for CCS in Scotland and eastern England's Humber region appeared to cover studies at this stage and investment decisions are probably years away.
The UK said the £500mn would support its "first regional hydrogen transport and storage network", but it has not chosen the location and did not specify the mechanism to give funds. London has promised to launch subsidy schemes for hydrogen transport and storage infrastructure projects in 2025, but the government would not answer Argus' question if the funding was for these.
On hydrogen supply, the UK said it aims to award contracts in the second round of its subsidy competition for electrolysis projects by the first quarter of 2026. London must narrow down from the 27 projects it shortlisted in April.
Progress on CCS facilities could eventually unlock more CCS-based hydrogen production, the government said, but it gave no firm detail.
The Humber region's "Viking" project has no CCS-based hydrogen plant among its first users. Scotland's Acorn cluster had proponents for at least two CCS-enabled hydrogen plants, but there has been virtually no update on these from the proponents since 2022. Acorn's developers Storegga, Shell, and Harbour Energy would not give Argus an update on the status of hydrogen production linked to Acorn.
Separately, the UK recognised a proposed 50km hydrogen pipeline in the Humber region as being of "national significance". This should streamline approvals and decision-making under the secretary of state. The pipeline, proposed by Norway's Equinor, would link future hydrogen storage with production from Equinor at Saltend chemical park, Centrica at the Easington gas terminal and production projects south of the Humber. Equinor targets 2027 for its application, which might allow the company to start building from 2028-29, but this probably hinges on the UK subsidising the region's production plans and sorting out the UK pipeline subsidy scheme.
The UK is expected to set out more detail for hydrogen in its 10-year infrastructure strategy and its industrial strategy, due next week and at the end of June, respectively, market participants said. London will also issue its half-yearly "update to the market" sometime this summer and update its hydrogen strategy in the autumn, it has said.
