Source · Select Committees · Scottish Affairs Committee
Recommendation 6
6
Accepted
Paragraph: 30
We acknowledge the concerns raised by our witnesses around slippage in timings for hydrogen projects.
Recommendation
We acknowledge the concerns raised by our witnesses around slippage in timings for hydrogen projects. This could delay the delivery of low carbon hydrogen projects and result in a failure to meet net zero targets. Urgency is required now; timely decision making will also mean Scotland and the rest of the UK do not get left behind with technology development and hydrogen production when compared to other countries’ hydrogen sectors. We recommend that the UK Government sets out how it will address concerns we have heard around timings of decisions for hydrogen projects, including justification for the timing of decisions and an assessment of the impact the timing of decisions will have for the delivery of low carbon hydrogen projects, net zero targets and Scotland—and the rest of the UK’s— international competitiveness in the sector.
Government Response Summary
The government is progressing its electrolytic and CCUS processes and plans a second allocation round for electrolytic hydrogen later in 2023, aiming to move to price-competitive allocation by 2025, and will develop a hydrogen production delivery roadmap to show how hydrogen production can be scaled up, to be published by the end of the year.
Paragraph Reference:
30
Government Response
Accepted
HM Government
Accepted
Delivering up to 10GW of low carbon hydrogen production capacity by 2030 will involve a range of complex and challenging actions across every part of the hydrogen value chain, as set out in our 2021 UK Hydrogen Strategy. We are progressing our electrolytic and CCUS processes in line with our stated commitments and it is important to ensure a robust process to help bring forward the most suitable projects and ensure value for money for the taxpayer. In March 2023 we announced the project shortlist for inviting to due diligence for the first electrolytic allocation round, offering support from our Net Zero Hydrogen Fund (capital funding) and from the Hydrogen Production Business Model (revenue support). A second allocation round is planned for launch later in 2023 and we aim to run annual allocation rounds for electrolytic hydrogen, moving to price competitive allocation by 2025 as soon as legislation and market conditions allow. CCUS-enabled hydrogen projects have previously been invited to bid through the Phase-2 Cluster Sequencing process and in March 2023, the Department for Energy Security and Net Zero selected two CCUS- enabled hydrogen projects to proceed to negotiations for support through the Hydrogen Production Business Model. On 30 March 2023, we launched the CCUS Track-2 process. As recommended by the Independent Review of Net Zero, we will be developing a hydrogen production delivery roadmap to show how hydrogen production can be scaled up over the coming decade, to be published by the end of the year.