(^26) Analysis
MoneyWeek 8October 2021 moneyweek.com
Notsoverylongago,the idea that fossil fuelsmight
be replaced by hydrogen–which whenburnt or used
in fuel cellstoprovide energy releases no pollution,
butwater vapour –was forthe birds. It wasjusttoo
expensiveto produceand inefficientwhencompared
with thealready-available alternatives, and henceall
theinvestmentneededtodevelop thetechnology and
rollout thenecessary infrastructurewas unlikelyto
be forthcoming. Today, hydrogen is rapidlybecoming
global policy,asLeigh Collinspointsout on Recharge,
andset to becomeamulti-trillion-dollarindustry.
Chinarecentlyapproved amassive powerproject to
producehydrogen. Australiaisplanningtobuild a
renewableenergyhub tentimes thesizeofGreater
London to powerelectrolysersthat producehydrogen.
Countriesaccountingfor morethan athirdofthe
world’spopulation, includingIndia,Russiaand the
EU,havehydrogenstrategiesinplace.The USis
introducingone “bythe backdoor”, as Collinsputs
it,withaclause in thecountry’s giantinfrastructure
bill.And theUK’slong-awaitedhydrogenstrategy
wasfinallyannounced in August.Sowhenwill Boris
Johnsonfinallyflipthe switch on ourgreener future?
Ablue bridgeto agreen fu ture
Thosenervous abouttheimplicationsofour current
energy crisiswill be hopingthathetreadscarefully
(see page19).Somewill even be seekingtoweaponise
it to forceaU-turnawayfromall the“greencrap”,
as DavidCameron once called it.But that is unlikely,
saysJamesKirkupinThe Spectator. Scepticsof“net
zero”–thelegallybindingcommitmentthatBritain
be carbon neutralby2050–are asmall minority
amongToryMPs,mostofwhomsupport theprime
minister’sgreen ambition.Inarecent speech,Johnson
talked passionately aboutthe need to “growup”
andtakeresponsibilityfor thekindofplanetwe
will leaveour grandchildren. It wasthe speech of a
politi cian“burning hisboats andgivinghimself no
roomto retreatonthe environment”,saysKirkup.
Besides, what ourcurrent energy crisisshowsisthat
werely toomuchongas.Net zero is theanswer to this
problem, notabarrier to itsachievement.Indeed, even
as gaspricessurge andwinterlooms,the government
is pressingahead withitsplans to imposeagreen
surchargeonhouseholdgasbillsinanattempt to
nudgethemtolower-carbonalternatives.
Eventually, hydrogen maybeone of those
alternatives. TheUK’shydrogenstrategyispartof
theprimeminister’svisionfor a“greenindustrial
revolution”and lays out plansfor reaching 5GWof
low-carbon hydrogen production capacity by 2030
–enough to powerabout 1.5millionhomes –from
around zero today, withasimilar subsidymechanism
to theone used fortheexpanding offshore-wind
sector.Billions of pounds of taxpayers’ moneyand
fromhigher billsfor consumerswill be funnelledinto
theindustry. By 2030,the governmenthopes hydrogen
will play an importantroleindecarbonising energy-
intensiveindustriesthat couldnot easily be runon
Thegovernmenthas startedtor ollout itsplans forswitching
us over from fossil fuels to hydroge nand renewable ener gy.
Should investorsbuy in?StuartWatkins reports
electricityproducedbyrenewableenergy –industries
such as chemicalsand oilrefineries, steeland cement
making,and in heavytransport such as shipping,
lorriesandtrains. It mightalsoheatour homesand
fuel ourcookers andevencars–the plan is to expand
theinfrastructurethat’sneededfor morepeopleto
switch to hydrogen-powered vehicles. Up to35%
of theUK’senergyconsumption couldbehydrogen
basedby2050, accordingtothe strategy document,
andthatchangeoverwill be critical ifthegovernment
is to meet itsnet-zerotarget.
Thehopeisthatthe subsidieswill boost theindustry
andleadtoareduction in costs–currently oneof the
biggest barrierstothe widespread adoption of thefuel,
sincehydrogenmustitselfbeproducedthrough energy-
intensive,and oftencarbon-producing,processes. Most
of thekey decisionsabout thedevelopment ofabroader
hydrogen economyhave, however, been pushedinto
thefuture, says Collins.Decisions aboutthe extentto
whichhydrogenwill be used in domestic heating, for
example, andexactly howitistobeproducedinalow-
carbon way, have been kicked downtheroad.
That last pointinparticularsparkedcontroversy.
Most hydrogen is currentlymadeusing natural gas, so
committingtoahydrogen-fuelledfutureisone wayfor
fossil-fuelcompanies to clingontoarolefor themselves
in theenergytransition, saysJosh Gabbatissfor Climate
Brief.The governmenthas committedtopursuing
a“twin track”approach,which will includethe
production of both blue hydrogen (madefromnatural
gaswithcarbon captureand storagetechnology)and
greenhydrogen(made usingrenewable electricity and
A step closer to a
hydrogen economy
“Countries
accounting
for more
than athird
of the world’s
population
have
hydrogen
strategies
in place”BorisJohnson:it’stimeto“growup”