Low-carbon hydrogen is increasingly recognised by Governments around the world as having an important role to play in reducing GHG emissions, especially in sectors which are difficult to decarbonise with other solutions. Projections from the Committee on Climate Change and others show a significant increase in low-carbon hydrogen demand by mid-century from existing levels.

In November 2020 the UK Government outlined a Ten Point Plan for a Green Industrial Revolution, which included a target to install 5GW of low carbon hydrogen production capacity in the UK by 2030 and up to £500m of funding to support new production facilities and trials of hydrogen for heat. More details are expected as part of the UK Hydrogen Strategy, due to be published in spring 2021. Hydrogen also features as part of the Energy White Paper issued December 2020.

In summer 2020 the Welsh Government commissioned Element Energy to study the opportunities for hydrogen across different sectors in Wales. The hydrogen pathway presented in this report builds on the Hydrogen Development in Wales: baselining report, which summarises the current hydrogen initiatives and hydrogen expertise in Wales, aligned with Welsh energy policy ambitions for achieving net zero ambitions.

A key aim of the hydrogen pathway is to inform activities that will take place in the short term (to 2025). At the time of writing (December 2020), the role of hydrogen in the energy sector as a whole is uncertain and will depend on national level policy making (e.g. strategy to decarbonise heat) and international developments (e.g. carbon taxation). Focusing on short term actions, whilst starting to plan for larger-scale
projects in the mid- to long-term will ensure Wales is well positioned with respect to hydrogen and fuel cell technologies.

This hydrogen pathway presents ten key objectives, which will help to generate momentum in the Welsh hydrogen sector and lay the foundations for scale-up and commercial deployment from the end of the 2020s. The objectives cover both hydrogen supply and end use, with a focus on short-term opportunities where the commercial case is more developed.

This consultation seeks views on the Welsh Government’s commissioned ‘Hydrogen in Wales’. This document sets out a proposed pathway and next steps for developing the hydrogen energy sector in Wales.

Key points

Energy Systems Catapult responded to the consultation Hydrogen in Wales: A pathway and next steps for developing the hydrogen energy sector in Wales. The key points in our response were:

• Creating a clear pathway for the development of a hydrogen sector in Wales is important. Our whole energy system analysis scenarios show that hydrogen will play a major role in reducing GHG emissions from hard to decarbonise sectors like industry, aviation & transportation. It also has great potential to complement renewable energy technologies like solar and wind.
• Our analysis supports early action in the 2020s to develop hydrogen production at scale.
• Due to the lack of certainty around the shape of a future hydrogen economy, a clear action plan in Wales which can help manage this uncertainty and enable action in the short term is needed. These activities would benefit from alignment with the UK’s wider Hydrogen and Net Zero Strategies.
• The optimal mix of hydrogen generation technologies is uncertain. We support different technologies being developed in the next decade to maintain optionality.
• Building hydrogen, supply, distribution and demand will be difficult without supporting this domestically. Short term domestic action is low regret. Regular studies should be conducted to understand the potential for low-carbon hydrogen to be imported so that if this opportunity occurs it is capitalised upon.
• There is the potential for a substantial role for hydrogen in shipping before 2025. Industry could also be a user of hydrogen by 2025, but this is heavily dependent on the incentives to switch to H2. The same applies for the use blended hydrogen by industry and CCGTs.
• We believe the Hydrogen Strategy for Wales should also consider the following low regret areas:
  • Support for biomass gasification with CCS.
  • A section on the transmission and distribution of hydrogen.
  • Clear actions for Wales to remove barriers to hydrogen use.
  • Considering the synergies between projects.
  • The pathway in the report focusses heavily on the use of hydrogen as a transportation fuel (fuel cells). Ambition should be increased for the use of hydrogen in industry and the use of hydrogen as ammonia in shipping.
  • Produce an assessment on the potential of imports.