The United Kingdom is striving to position itself as a global forerunner in the production of low-carbon hydrogen, a fuel that emits zero carbon dioxide when burned. This ambition is part of the country's broader decarbonisation strategy. A clear illustration of these efforts is the small-scale production facility run by the startup Protium in South Wales. Having opened earlier this year, the facility generates up to 35kg of green hydrogen daily through electrolysis, using renewable electricity.
Challenges Faced by Low-Carbon Hydrogen Production
However, scaling up low-carbon hydrogen production is not without its challenges. These include limited global supply chains, insufficient green electricity, and the necessity to stimulate market demand. The UK government has set a goal of establishing 5GW of green hydrogen capacity by 2030. However, the present capacity is a mere 0.1% of this target.
In a bid to foster the industry's growth, the government intends to provide financial guarantees for up to 250MW of green hydrogen capacity. More subsidies are expected. However, the European Union and the United States have rolled out more robust support schemes for low-carbon hydrogen production and use. The EU has established a European Hydrogen Bank, and the US has announced billions of dollars in support for clean hydrogen hubs.
Landscape of Hydrogen Market
While integrated oil and gas majors like BP enjoy an edge with their existing customer base for their hydrogen projects, smaller firms face the uphill task of establishing a customer base from scratch. For instance, AFC Energy, a leading provider of hydrogen power and generation technologies, has launched its first ammonia-to-hydrogen cracker demonstration plant. This plant, located in the UK, uses ammonia sourced from OCI Global, marking a significant step in the hydrogen production process.
According to AFC Energy, the plant will be operated and validated over several months with targeted ISO-grade (99.97%) hydrogen production. The company's newest cracker technology advancements, whose purity was validated by the UK's National Physical Laboratory earlier in 2023, are expected to be retrofitted into the demonstration plant in 2024, replacing the existing cracker technology. This is projected to further enhance cost and efficiency performance.
The Road Ahead
As the UK aspires to become a global leader in producing low-carbon hydrogen, the journey ahead is filled with challenges and opportunities. The government's commitment to establishing 5GW of green hydrogen capacity by 2030, along with financial guarantees and anticipated subsidies, offers a glimmer of hope. However, overcoming hurdles such as limited global supply chains and insufficient green electricity will require strategic planning and execution. The success of these efforts all comes down to whether the UK can stimulate market demand and establish a robust and sustainable customer base for low-carbon hydrogen.