Is the UK’s hydrogen strategy propping up the gas industry?
In August, the government finally published it’s hydrogen strategy with great aplomb. For several years the government has made it clear that it sees the nascent hydrogen industry as a major piece in tackling climate change (a view shared by the Green Party of England and Wales), a major economic opportunity (as does the European Union), and a source of jobs for deprived areas that could drive Conservative electoral success. However, the choices made in the hydrogen strategy clearly prioritise the latter two objectives at the expense of climate action. It confirms some of the worst fears of environmentalists who warned that hydrogen could be a back door for the gas industry to perpetuate its hold on energy policy at the expense of everyone else.
What can hydrogen do?
One of the reasons for the excitement that hydrogen has generated in recent years is that it holds out the promise of the technological fix for the range of energy sources. Hydrogen at the point of burning generates no greenhouse gases, in stark contrast to similarly energy dense sources such as methane or natural gas. This means that it is potentially useful for some industrial processes that cannot currently be electrified. It may be able to provide carbon free transport for large vehicles in a manner batteries cannot yet do, such as for shipping, heavy goods vehicles and maybe even at some point in the future, planes. One use of hydrogen could be in replacing the gas network with some retrofitting for pipes and cooking appliances.
Hydrogen paired with ammonium can also theoretically be transported around the world in a manner similar to oil, but that electricity cannot. Thus opening up the possibility for Europe to access the abundant renewable energy resources of Australia. It can also be stored inter-seasonally, potentially enabling a balancing of a European electricity grid that often finds itself with a surfeit of electricity in April, while struggling to keep the lights on in November.
A helpful diagram by Michael Libreich at Bloomberg highlights the sectors where hydrogen is the only option – primarily industry.
This all sounds great, and governments around the world are very excited. As are the utilities and gas sector. As hydrogen is a gas, it will be transported using their pipes and likely stored using their expertise.
This technology exists but is not present at scale yet. There are some hydrogen villages with hydrogen buses and hydrogen heating, but a mass transformation requires a massive and expensive infrastructure change. The cost of retrofitting Leeds for hydrogen use alone is approximately £2 billion. There is also not presently enough hydrogen production. Just 1GW of Green Hydrogen capacity exists in Europe, while UK domestic heat demand annually is around 434 TWh. This is another reason why the gas lobby is excited.
Hydrogen in many colours
Hydrogen requires human intervention to extract it. This makes it quite energy inefficient, as energy lost in the additional processes.
Approximately, 95% of current hydrogen production is as made using coal via steam reformation. This is grey hydrogen. It is incredibly carbon intensive, more so than directly using coal to produce the same unit of energy. This is the hydrogen we have today. Moving from coal to this type of hydrogen is a bit like trying to get off beer by starting on vodka. This is also called Black and Brown Hydrogen by the national grid.
The other method of producing hydrogen is with an electrolyser that passes a current though water. These electorysers are very expensive, though the cost is going down. They are most useful when there is an abundance of cheap electricity, as there is often in Europe on windy days, leading to the problem of wind curtailment. The thinking goes that this additional renewable energy could be funneled into hydrogen production. This would be green hydrogen, which is hydrogen produced using renewable energy. Still energy inefficient, but if there is spare energy this is less of an issue. It is the other end of the spectrum from grey hydrogen.
There is also pink hydrogen – hydrogen produced by nuclear power, an approach that has been attractive to France. The principle is the same – turning nuclear power stations on and off is exceptionally inefficient – so if they are not needed due to low demand, the extra power could be used to produce hydrogen.
Finally, there is blue hydrogen, this is the same as grey hydrogen, but instead uses Carbon Capture and Storage (CCS) to capture the emissions. This is a controversial process, some dispute it works, while others claim it is essential. It has a long history of being used as a tactic by the fossil fuel industry to avoid any environmental action, and after two decades of promises of it being just around the corner we are only now seeing it used at the margins.
The UK government has gone heavily in on blue hydrogen, prompting the CEO of the UK Hydrogen Fuel Cells Association, Chris Jackson to resign, calling the tech an “expensive distraction”.
The strange choices of the UK Hydrogen strategy – colour
For hydrogen to be a significant player, it needs to scale up fast. It thus makes some sense to start with what is already there. To decarbonise the electricity system, the UK needs a massive build up of low carbon power. Asking for surplus overbuild to produce hydrogen means a potentially unrealistic amount of renewables, particularly if you are part of a government that is making it harder to use electricity from Europe. Therefore, it makes some sense to use the abundant fossil gas.
Critics like Chris Jackson and indeed the Green Party’s Green New Deal Spokesperson Zoe Hatch believe that this will lock in fossil fuel infrastructure and carbon capture will either not work, or will never be deployed.
⚠️ Blue hydrogen is primarily created from fossil fuels. ⚠️
Subsidising the creation of blue hydrogen takes investment away from genuinely green options for energy creation.
The government should stop greenwashing and look at this again.
— The Green Party (@TheGreenParty) August 17, 2021
It should be noted that others – such as the Committee on Climate Change – argue that blue hydrogen will be needed to produce sufficient Hydrogen. They do note however that as Blue hydrogen is low but not no carbon,
“If hydrogen from gas with CCS is deployed in very large quantities, the emissions savings may be insufficient to meet stretching long-term emissions targets.”
This does reflect a choice to not focus as much on green hydrogen, in favour of getting as much hydrogen as early as possible. It also represents the best possible outcome for gas giants such as Shell, who get to use their North Sea gas investments extensively. These firms are both, leading members of the UK Hydrogen Council and close political allies of the ruling party.
The strange choices of the UK hydrogen strategy – domestic heat
Given the problems with producing enough hydrogen – particularly of the green kind – it might make sense to focus on industrial sectors, or transport areas where hydrogen is often the only substitute available to the UK.
Instead, much of the press around the strategy focused on domestic heat. Heat is a hard to decarbonise sector in the UK. There is a lot of poorly insulated housing stock still heated by gas. The Committee on Climate Change has suggested a hybrid approach with some hydrogen in 11% of homes, and electrification, but has repeatedly called for a decision to be made on this approach as soon as possible.
Electrification increases energy efficiency, with retrofitting, it reduces consumer bills, creates lots of jobs and if the electricity sector is decarbonised, then it becomes a clear power sector. Clear does not mean easy. This requires transforming millions of properties and due to two decades of disastrously implemented policy – mostly managed by large gas firms – there is a massive skills bottleneck.
Gas firms hate the idea of mass retrofitting to lead to electrification. They do not know how to do it and – if done right – it would reduce energy demand and thus eat into their profits.
The government’s strategy has instead suggested looking at blending, adding enough hydrogen to the UK gas system alongside fossil gas up to the limit of where it is safe – about 20%. The justification being that this creates a market for hydrogen, even with little practical benefit. It aims to have a value for money case by 2022 with a decision by 2026. This is a bizarre approach as it ensures we continue to use fossil gas with hydrogen that is often going to be of the grey variety. It is the most expensive option for consumers on the table as it involves paying for hydrogen with no benefit. At a time of record low renewable energy prices this will lead to the UK paying more for dirtier and less reliable heat.
The winner again is the gas industry. As the New Scientist quotes Aurora energy group saying, “it is no surprise considering how strong the gas lobby is”. The industry will get to produce fossil gas like they always have, with a bit more to get though the energy inefficient process of producing grey and blue hydrogen. As hydrogen has been widely greenwashed they will also get to appear to be climate champions.
It should be said that while the press focuses on heat and blending the strategy leaves considerable backdoors for the government to climb out of. We could have no hydrogen being used in heating by 2050, or it could be the most common use for limited hydrogen stocks.
This brings us to the last and recurrent problem the government has. Despite bold proclamations, many of the difficult choices needed to decarbonise the economy have been endlessly delayed. A heat strategy has been hanging around unpublished since before we had even heard of Covid. These sectors take time to develop, they need extensive support and they need it now. Even with its favoured sectors – such as hydrogen – the government seems largely content to push the problem down the gas pipeline.
A victory for industry?
In 2018-19 gas industry lobbyists thought that the industry was in real trouble. The move to electrification would undercut demand and the move to renewables would in the next decade undermine it’s role in the electricity system. Hydrogen might allow them to use some of their infrastructure a bit, but no European government development was planned at a scale that would save them. It turns out that Britain might do just that.
Hydrogen is a useful and probably essential part of the path to decarbonisation. It is good to finally see a strategy for the sector and a target of 5GW of capacity to be developed. This hydrogen strategy is a thinly disguised greenwashed bailout of every struggling coal and gas plant in the country, saved only by the government’s characteristic fudge. At a time of climate chaos it should be should be widely opposed and condemned.
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Image credit: Raimond Spekking – Creative Commons