Government should continue the hydrogen heating community trials, to inform decisions on the role hydrogen can play in heating. Additionally, by the end of 2023, government should update its analysis of the whole system costs of the mass roll out of hydrogen for heating, in order to ensure that the case for economic optimality and feasibility still holds. |
340. A recent report by McKinsey and Hydrogen Council stressed that demand visibility was of vital importance for government in scaling up hydrogen deployment.269 They recommend that policy makers should "enable demand visibility and regulatory certainty by adopting legally binding measures...such as targets or quotas for hydrogen consumption across end-use sectors". These can create 'ripple effects' through the value chain, stimulating investment in supply, manufacturing, and infrastructure.
341. It is also possible to give visibility to demand and catalyse investment without adopting legally binding targets. For example, by testing and evidencing the licensing, consenting, and regulating regime. Developing the evidence to determine the end uses that achieve highest carbon savings and cost efficiencies can also help drive investment.
342. The Review therefore recommends that government deliver a comprehensive programme of trials and projects across different end use technologies and sectors to expand the evidence base for determining most suitable end uses of hydrogen.
343. Wherever possible, these trials and projects should be locally-led and place-based, focusing on areas where the use case is strongest, and a hydrogen eco-system can be supported by co-locating supply and demand.
344. For example, more hydrogen transport hubs should be considered,270 supporting areas such as the South West, where leading organisations have formed a hydrogen consortium to create an infrastructure ecosystem to bring the benefits of hydrogen and drive growth and jobs in the region. The collaboration creates links between supply and demand centres in the region, enabling partnerships across sectors that will drive the development of hydrogen infrastructure and technology.271 Expanding into more hubs will help grow the evidence base and give local areas more options for decarbonising.
345. As has been done with production through the clusters, we recommend Government provides early certainty where possible on likely locations/hubs for demand. This will provide investors with greater confidence and encourage greater anticipatory investment into infrastructure in certain areas.
346. Government should continue the hydrogen heating community trials, to inform decisions on the role hydrogen can play in heating. Additionally, in light of recent high energy prices and projections for this continuing, government should, by the end of 2023, update its analysis of the whole system costs of the mass roll out of hydrogen for heating, in order to ensure that the case for economic optimality and feasibility still holds. This analysis should also consider any relevant evidence emerging from the preparations for the hydrogen heating community trials.