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UK government launches strategy for low-carbon hydrogen production

LONDON (Reuters) – The British government launched a strategy on Tuesday to meet its goal of 5 gigawatts of low-carbon hydrogen production by 2030 to replace natural gas in powering around three million homes, as well as industry and transport.

The government aims to replace gas with “green” hydrogen, made through electrolysis powered by renewable energy to split water into hydrogen and oxygen, as well as “blue” hydrogen, which is made from natural gas and steam. Unlike green hydrogen, blue hydrogen is not emissions-free, but the carbon emissions are captured, stored and used in other applications.

A UK hydrogen economy could be worth 900 million pounds ($1.25 billion) and create over 9,000 jobs by 2030, potentially rising to 100,000 jobs and worth up to 13 billion pounds by 2050, the government said.

As part of the strategy, it said it has launched a consultation on types of support for hydrogen projects that could bring the costs down, along the lines of its contracts-for-difference (CfD) scheme that incentivises investment in renewable energy.

Under the CfD scheme, the government guarantees qualifying projects a minimum price at which they can sell electricity, with renewable power generators bidding for CfD contracts in a round of auctions.

The government will also review the support necessary for network and storage infrastructure; work with industry on the feasibility of mixing 20% hydrogen into the existing gas supply, and launch an action plan early next year on how to help companies secure supply chain opportunities.

It will also consult on the design of a 240 million pound net zero hydrogen fund to support the commercial development of low-carbon hydrogen plants.

($1 = 0.7213 pounds)


(Reporting by Nina Chestney; editing by Barbara lewis)