Rarely a week goes by in politics without a reminder of the Conservatives’ ambitions to hit net zero by 2050. But how well do they understand the path to get there? Amidst the barrage of funding announcements and energy strategies, there remain outstanding questions about the road ahead – and one of the most persistent is around the role of hydrogen.
To its advocates, this abundant chemical element could be the key to weaning large economies off their dependence on natural gas, providing a reliable and greener power source that can be deployed at scale. Yet to its doubters, the hydrogen dream remains inefficient and impractical – rendering it a costly distraction from the real decarbonisation challenge.
When it came to investment, there was one clear impediment: hydrogen was still very expensive to generate
For its part, the Conservative government has attempted to keep its options open: announcing funding packages for a series of discrete hydrogen trials, while pressing ahead with electrification en masse. But had they backed the wrong horse? To find out, The Spectator assembled a panel of experts and industry voices at our inaugural energy summit, tasked with unpacking the great hydrogen question.
‘We see hydrogen as a tremendous opportunity, but a very specific one,’ said Lord Callanan, a former Conservative MEP and now Rishi Sunak’s minister for energy efficiency. ‘We are interested in hydrogen as an energy source for those large industries that can’t necessarily be electrified, for example. We are also doing some limited trials to explore how it can be used in heating – but that side of things is much less guaranteed.’
It is certainly true there are no guarantees. But that hadn’t dampened the excitement amongst those who believed hydrogen could replace gas – allowing us to power homes and businesses without having to install potentially unreliable heat pumps. Jake Tudge, corporate affairs director for Britain’s gas grid, National Gas (who sponsored the event), was happy to make the case.
‘I think when you talk about hydrogen, you have to start by talking about natural gas,’ he said. ‘The gas network comprises some 8,000 kilometres of high-pressure pipeline, which go right across the country. We currently use that to heat 23 million homes and fuel over 500,000 businesses.’ That leads to an obvious question: what if that same network could be adapted to run on hydrogen instead?
While a wholesale conversion to hydrogen might be a moonshot prospect for now, Jake Tudge explained how the gas sector was already testing the potential for ‘blending’. As its name suggests, this process involved supplying end users with a blended supply of hydrogen and gas (currently around 20 per cent hydrogen to 80 per cent gas).
‘We’ve actually run some trials doing just that,’ he said. ‘Afterwards the local distribution network asked people what they thought, and the overwhelming consensus was that there was no change whatsoever,’ he said. Like others in the sector, National Gas was now encouraging the government to look at building on these trials to explore the wider use of hydrogen.
At the other end of the spectrum was the industrial case for hydrogen: namely the idea that this less carbon-intensive fuel source could be used to power things like heavy industry and shipping. But as James Richardson, chief economist at the National Infrastructure Commission, explained, this was likely to be limited to specific industrial clusters – at least for the time being.
‘The first thing you need to do is build more pipes, as you can’t use those that are already being used to supply gas,’ he said. This was what was happening, he added, at the industrial clusters at Teesside and Merseyside. ‘Hydrogen is being created by stripping the carbon off natural gas – and storing that underground – and then it is being pumped to large industrial users in the clusters.’
Like most major infrastructure projects, though, the plans would require billions of pounds in investment. And when it came to investment, there was one clear impediment: hydrogen was still very expensive to generate. That might not have stopped the White House from subsidising hydrogen producers via the gargantuan Inflation Reduction Act, but Whitehall was signalling more caution.
‘Value for money is always going to be a key metric when it comes to investment,’ said Jake Tudge. ‘But value for money can change over time, as we’ve seen over the past year. Look at the criticism that George Osborne faced when he signed the contracts for the Hinkley nuclear power plant, for example. People said it was bad value for money. But they wouldn’t say that now.’
For Vicky Parker, the head of PwC UK’s power and utilities team, it was important to avoid being overly pessimistic about new technologies. ‘I remember talking to financiers when we were first looking at offshore wind and there was a lot of scepticism that it would never get off the ground,’ she said. Yet two decades later the industry was more than commercially viable, thanks, in part, to those who had the courage to stick to their guns.
Yet wind power had only taken off after the government had committed its initial investment. So would it be doing the same with hydrogen? ‘If we’re going to get the industry kickstarted, that support has to come from somewhere, whether that’s from general taxation or energy bills,’ said Lord Callanan.
Was that a hint, then, that the government might be about to move forward on the mooted hydrogen levy on energy bills to help subsidise heavy industry projects like those on Teesside and Merseyside? It was an idea that had reportedly found favour with energy secretary Grant Shapps – yet the Conservatives (and Lord Callanan) remained tight-lipped.
On the question of whether hydrogen will soon be flowing to our homes, the minister was more upfront. ‘To my mind it is very clear: the most efficient way of generating heat from electricity is from heat pumps,’ he said. ‘That isn’t to say there won’t be a role for hydrogen, but the vast majority will come from electrification.’ Perhaps those boilers will be coming out after all, then.
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