Major boost for hydrogen as UK unlocks new investment and jobs

Over 700 jobs will be created across the UK in a world-leading hydrogen industry from the South West of England to the Highlands of Scotland, backed by £2 billion in government funding over the next 15 years.

On Thursday 14 December, Energy Security Secretary Claire Coutinho announced backing for 11 major projects to produce green hydrogen – through a process known as electrolysis – and confirmed suppliers will receive a guaranteed price from the government for the clean energy they supply.

This represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe, helping to place the country at the forefront of this emerging industry. Unlike blue hydrogen, which is formed using fossil fuels and capturing the carbon emissions, green hydrogen is made by using renewable energy to split water – helping provide cleaner fuel for energy intensive industries and transport.

In return for this government support, the successful projects will invest over £400 million in the next three years, generating more than 700 jobs in local communities across the UK and delivering 125MW of new hydrogen for businesses including:

• Sofidel in South Wales, who will replace 50% of their current gas boiler consumption with hydrogen at their Port Talbot paper mill
• InchDairnie Distillery in Scotland, who plan to run a boiler on 100% hydrogen for use in their distilling process
• PD Ports in Teesside, who will use hydrogen to replace diesel in their vehicle fleet, decarbonising port operations from 2026

Energy Security Secretary Claire Coutinho said: “Hydrogen presents a massive economic opportunity for the UK, unlocking over 12,000 jobs and up to £11 billion of investment by 2030. Today’s announcement represents the largest number of commercial scale green hydrogen production projects announced at once anywhere in Europe. These 11 major new hydrogen projects across the UK will create over 700 jobs and deliver new opportunities from Plymouth in England to Cromarty in Scotland.”

Minister for Energy Efficiency and Green Finance Lord Callanan said: “Today’s funding commitment represents a monumental step forward in helping producers to deliver a fuel of the future today, backing businesses to go greener. This will be essential to achieving our net zero targets, and will benefit people across the UK with the job and investment opportunities that this funding will bring. And we’re not stopping there with a new, second round of funding now available for producers to apply for, so they can develop the next round of projects and build on this success.”

The funding represents the most significant step in scaling up the UK’s hydrogen economy to date – speeding up progress towards the government’s ambition to deploy up to 10GW low carbon production capacity by 2030.

Ministers have also today opened a new second round of funding that companies can apply for to support their projects and published a production roadmap, which sets out the government’s plan for future allocation rounds in 2025 and 2026. This includes ambitious plans to boost hydrogen capacity up to 1.5GW across these rounds, and award funding to projects to help deliver up to 4GW of CCUS-enabled, or blue, hydrogen and 6GW of green hydrogen by 2030 – giving businesses the confidence they need to invest in the UK.

Ministers have also announced their decision to support hydrogen blending in certain scenarios – subject to an assessment of safety evidence and final agreement.

Currently, less than 1% of the gas in distribution networks is hydrogen. Under proposals, hydrogen could be blended with other gases in the network as an offtaker of last resort, working to reduce costs in the hydrogen sector by helping producers, and to support the wider energy system.

Hydrogen blending may help achieve the UK’s net zero ambitions, but would have a limited and temporary role as the UK moves away from the use of natural gas.

Ministers have decided not to proceed with a hydrogen trial in Redcar, as the main source of hydrogen will not be available. The government recognises the potential role of hydrogen in home heating and will assess evidence from the neighbourhood trial in Fife, as well as similar schemes across Europe, to decide in 2026 whether and how hydrogen could help households in the journey to net zero.

Johan Lundgren, Chair of the Hydrogen in Aviation alliance, a group of leading companies in the UK aviation and renewable energy sectors including easyJet, Rolls-Royce, Airbus, Ørsted, GKN Aerospace and Bristol Airport working to accelerate the delivery of zero carbon aviation, said: “The news of the 11 new green hydrogen production projects announced by the government today represents progress. The UK now must ensure this marks the start of a journey to significantly ramp up the supply and production in green hydrogen across the whole of the UK, which will be key to delivering hydrogen in aviation. When we formed our alliance in September, we called on rapid action to improve the supply of green hydrogen for hard to abate sectors like aviation and today’s announcements helps us in our collective goal to reach net zero by 2050. While there remains considerable work to be done, this is a positive and significant step in securing the UK’s future as a global leader in hydrogen production – something that could truly revolutionise the energy and transport sectors in the future and make decarbonised flight a reality.”