Hydrogen investment in Britain faces uncertainty as government signals reduced ambitions

Industry groups have warned that Britain risks losing tens of billions of pounds in potential investment if the government downgrades its hydrogen ambitions. A new strategy for the sector is anticipated within weeks and is seen as a critical moment for the country’s emerging hydrogen industry.

The previous Conservative administration set a target to achieve 10 gigawatts of low carbon hydrogen production by 2030. However, recent setbacks, including BP’s decision to abandon its proposed one gigawatt plant on Teesside, have made this target appear increasingly unlikely. Concerns have been voiced by lobby groups representing gas and hydrogen interests, as well as the GMB union, who issued a joint letter highlighting the importance of government policy in attracting private capital. They maintain that limiting the scope of hydrogen use could divert investment to Europe and the United States, where hydrogen economics are rapidly progressing.

Michael Shanks, the current energy minister, recently described a ‘more focused and essential role for hydrogen’, prompting speculation that the government may prioritise sectors such as chemicals, metals, and glass, while excluding others from state support schemes. The industry bodies argue that prescribing which sectors should have access to hydrogen and which production methods are permitted would stifle growth and delay the crucial reduction of costs associated with scaling up production.

A government source maintains that there is no intention to restrict hydrogen usage to select industries. The Department for Energy Security and Net Zero has reiterated that the forthcoming hydrogen strategy will outline a clear vision for the UK sector, aiming to stimulate clean energy investment and create thousands of skilled jobs nationwide. Despite these assurances, the letter from industry representatives urges policymakers to keep ambitions high and support broad-based development in order to retain international investment and foster innovation.