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The UK Government has Announced a Low-Carbon Hydrogen Production Strategy.

Last Updated on 08th January 2024

The British government announced a plan to reach its target of producing 5 gigawatts of low-carbon hydrogen by 2030 to replace natural gas in powering about three million homes, industry, and transportation.


The government wants to replace gas with "green" hydrogen, which is generated by splitting water into hydrogen and oxygen using electrolysis powered by renewable energy, as well as "blue" hydrogen, which is made from natural gas and steam. Blue hydrogen, unlike green hydrogen, does not produce zero emissions, but the carbon emissions are absorbed, stored, and utilised in other ways.


According to the government, a hydrogen economy in the UK may be worth 900 million pounds (USD 1.25 billion) and produce over 9,000 employment by 2030, growing to 100,000 jobs and worth up to 13 billion pounds by 2050.


It has initiated a consultation on methods of support for hydrogen projects that could lower costs, similar to its contracts-for-difference (CfD) system that incentivizes investment in renewable energy, as part of the strategy.


The government guarantees eligible projects a minimum price for selling electricity under the CfD scheme, with renewable energy generators bidding for CfD contracts in a round of auctions.


It will also provide input on the design of a 240 million pound net zero hydrogen fund to help low-carbon hydrogen reactors get off the ground commercially.


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