This blog outlines how the Scottish Government plans to use hydrogen energy to decarbonise key sectors on the path to net-zero emissions by 2045. This blog follows and is recommended to be read alongside, a previous blog outlining what hydrogen energy is, its applications and how it is produced.
Hydrogen is an element that can be used as a fuel, an energy carrier, and store. Hydrogen releases no carbon when burned as fuel, but current methods of hydrogen production release carbon (termed grey hydrogen). Zero-carbon hydrogen production methods are available (termed green or blue hydrogen) but these technologies do not currently exist at a commercial scale.
The next challenge for net-zero
Scotland’s ambitions to reach net-zero greenhouse gas emissions by 2045 rely on technological innovation to replace the energy demand historically met by carbon-emitting fossil fuels like oil and gas. Advances in renewable energy technologies (notably wind energy) have facilitated the rapid reduction of Scotland’s carbon emissions associated with electricity generation in the last five years. The next challenge in reaching net-zero will be to make significant emissions reductions in other energy-intensive sectors — the industrial, heat and transport sectors — which collectively account for 85% of Scotland’s greenhouse gas emissions and have been slow to decarbonise over the last 30 years.
Globally, hydrogen energy is seen to provide an opportunity to decarbonise these sectors with independent advisors, the Climate Change Committee (as well as industry and academics), advising that large amounts of hydrogen will be necessary to meet the UK’s (and Scotland’s) net-zero targets. In December 2020, the Scottish Government committed to investing £100 million between 2021 and 2026 into the development of a hydrogen-based energy economy. Further detail is expected to be set out later this year in a Hydrogen Action Plan, which will outline specifically how the Scottish Government aims to meet its target of 5 GW of energy generated from hydrogen by 2030, and 25 GW by 2045.
Scotland’s Hydrogen Policy Statement
In December 2020, the Scottish Government published its Hydrogen Policy Statement which sets out how Scotland’s natural resources, skills and supply chain may offer the potential for large-scale hydrogen production — with a £100 million commitment in funding for research and innovation development between 2021 and 2026. The statement highlights Scotland’s potential for generating green, zero-carbon hydrogen from offshore wind, and the repurposing of oil and gas pipeline infrastructure for hydrogen export to Europe.
The Policy Statement outlines three key phases in the Scottish Government’s proposed transition to a hydrogen-based energy economy — beginning with investment in blue hydrogen projects in the 2020s and eventually building up to green hydrogen production at scale by the 2045 net-zero target. Further detail is outlined in the infographic below. A more specific time frame for each of the phases is expected to be published later this year in the follow-up Hydrogen Action Plan.
The policy statement also outlines three potential hydrogen ‘scenarios’ that may be reached by 2045, based on the findings of the Hydrogen Assessment:
- Hydrogen economy: Hydrogen fulfils around 45% of Scotland’s energy demand (assuming the same energy demand as 2019) with some export. Around half of this is provided through blue hydrogen and half provided through green hydrogen.
- Green Export: Hydrogen fulfils 30% of Scotland’s energy demand, with most going to export. All hydrogen produced is green hydrogen.
- Focused Hydrogen Economy: Hydrogen supplies energy regionally, fulfilling around 15% of demand, with no export. Two-thirds of hydrogen is supplied from green hydrogen.
Each of the scenarios varies in its production of green and blue hydrogen and what the hydrogen is ultimately used for, showed in the plot below:
The policy statement also outlines the economic benefits that transitioning to hydrogen energy may bring, focussing on harnessing pre-existing jobs across the oil and gas industry to develop new hydrogen-based roles. Under the most ambitious Green Export scenario, there would be a predicted £25 billion annual gross contribution to Scotland’s Gross Value Added (GVA) with over 300,000 jobs supported by 2045.
A reliance on unproven technologies?
Regardless of the specific scenario reached, the Scottish Government centres its initial transition towards a low-carbon hydrogen energy economy around blue hydrogen. This is because initially (during the 2020s) blue hydrogen production is predicted to be cheaper and more scalable than green hydrogen, as green hydrogen production relies on periods of surplus energy production from renewable resources, which are not yet available. In a recent industry paper, the UK Hydrogen & Fuel Cell Association argue that blue hydrogen is essential in reaching the UK’s net-zero targets, stating that:
“Blue hydrogen is the fastest way to deploy large volumes of low carbon hydrogen and will pave the way for the ramp up of green hydrogen production in the longer term..”
However, the readiness of carbon capture and storage (CCS) technology required to produce blue hydrogen at scale — on the proposed timeframe — has been called into question. In response to the Scottish Government’s Climate Change Plan update on 4 March 2021, the Environment, Climate Change and Land Reform Committee outlined:
“Whilst these technologies have been proven in test facilities and at small scale, they do not currently exist at scales necessary to remove significant volumes of carbon. Timescales for developing and commissioning are therefore exceptionally tight….”
Further, non-governmental environmental organisations have warned that the roll out of blue hydrogen risks a lock-in of high carbon infrastructure and jobs due to it’s continued reliance on natural gas, a fossil fuel. There have also been questions surrounding the alleged efficacy of CCS technologies. It is hoped that upwards of 85% of carbon emissions from blue hydrogen production can be captured, yet CCS projects across the world are currently only reaching efficiencies of around 30%.
These concerns raise the question of whether focus should instead be on green hydrogen production, which does not emit any carbon in the production process. But as with blue hydrogen, green hydrogen is not without its own challenges.
Moving from blue to green
As green hydrogen production requires renewable electricity, the main bottleneck in green hydrogen becoming cost-effective will be the rate at which the cost of renewable energy (in particular offshore and onshore wind) decreases, in addition to the cost of electrolysers (the device required to split water into hydrogen and oxygen). The Scottish Government’s Offshore wind to green hydrogen: opportunity assessment predicts that by 2032, offshore wind costs will have sufficiently fallen to make green hydrogen cost-competitive with blue hydrogen, as more offshore wind farms are expected to come online in the near future. Between 2020-2025, blue hydrogen production costs are expected to stay largely constant, while on average green hydrogen costs are expected to half — although there is a large area of uncertainty associated with this estimate, as shown on the chart below.
Source: Scottish Hydrogen Assessment Report
What next?
Hydrogen Action Plan expected for late 2021
It remains uncertain whether the policy, technology and market economics will be in place to support a thriving green hydrogen economy in Scotland in the coming decades, and the newly formed parliament will play an essential role in ensuring the Scottish Government’s hydrogen plans are effectively scrutinised to this end.
Ultimately the regulatory and legislative components which will underpin Scotland’s development of a hydrogen energy economy are implemented at the UK level, and therefore Scotland will have to work with Department for Business, Energy and Industrial Strategy (BEIS) to deliver on its hydrogen energy plans. The UK Government has recently published it’s Hydrogen Strategy, in which it outlines how it aims to meet up to a third of the UK’s energy consumption by 2050 using hydrogen energy. The Scottish Government is expected to publish its own Hydrogen Action plan later this year, which is anticipated to provide specific detail on how the target of 5 GW of energy generated from hydrogen by 2030, and 25 GW by 2045 will be met. The Action Plan is expected to set out specific hydrogen policies with detail on how the £100 million investment will support hydrogen production, specifically through supply chain development and developing a skilled workforce.
The outlook for hydrogen
While hydrogen is widely touted as an effective solution to meet future energy demands, there are practical and policy hurdles to overcome before Scotland can realistically rely on hydrogen — of any colour — to decarbonise energy-intensive sectors. Neither blue or green hydrogen production is without its challenges, but the urgency of the climate crisis may mean that decisions on the rollout of hydrogen projects must be made based on how quickly they can help cut emissions, with longer-term sustainability becoming a later consideration.
The imminence of the climate crisis further raises the question of whether Scotland should instead be focusing on proven technologies to advance its climate change goals, or whether a tone of optimism and innovation is necessary to meet net-zero targets. It remains to be seen whether the necessary technological innovations, market economics and policy developments will develop at a rapid enough pace to see hydrogen rolled out at scale by 2045.
Roxana Shafiee, Researcher (Marine Environment, Climate Change and Energy)