The US and UK have signed an agreement focusing on energy security and accelerating decarbonisation. The pact primarily focuses on the further displacement of Russian gas in Europe with US LNG, with a target set for the US to export at least 9–10bn m³ of LNG into UK terminals over the next year—more than double the amount exported in 2021.

The two countries have also promised to expedite the rollout of clean energy technologies, including hydrogen.

But the tax credits offered by the Inflation Reduction Act (IRA)—which has already ruffled feathers in the EU over potential competition concerns—could result in the UK falling behind on hydrogen innovation as companies move to where there is stronger policy support.

While the prospect of direct hydrogen imports is “unlikely” in the short-to-medium term, there is a risk the UK could lose its early advantage in homegrown suppliers and patented technologies, according to Clare Jackson, CEO of industry association Hydrogen UK.

“There is no denying the IRA is a very generous scheme” Jackson, Hydrogen UK

“The reality is, we cannot deliver net zero without hydrogen. It is a matter of whether we are importing other countries’ technology and skills, or whether we can develop it here,” she says.

“There is no denying the IRA is a very generous scheme—although the [UK contract for difference] hydrogen business model offers far better value for money,” Jackson adds.

She notes that the UK scheme to support production was “designed early and announced early, but the legislation is still not yet in place to implement it”, presenting a further risk that the country could fall behind as an attractive place for hydrogen investment. The government is evaluating applications for its first round of support for electrolytic projects under the hydrogen business model scheme and is due to announce its shortlist early 2023.

“A lot of detailed thinking went into production, and certainly in the last 12 months, [the] focus is switching to the other two major parts of the puzzle—transportation and storage of hydrogen,” Jackson says.

While the government has recently closed a consultation and committed to designing a support scheme for hydrogen storage and transportation by 2025, “our view is that will be too late, it needs to be brought forward and the timeline accelerated”, she adds.

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Author: Polly Martin