Does Hydrogen Present an Opportunity for Decarbonisation?

A new report from Policy Exchange, Fuelling the Future, considers the contribution hydrogen can make to the energy transition. The think tank calls for an informed debate, leading to a plan for hydrogen as an alternative low-carbon energy carrier that can be used as a replacement in transport, heating fuel, and storage.

When hydrogen is burned, it does not produce any greenhouse gases, but it can only be considered as low-carbon if the method of producing it is also carbon-free. If it is produced from fossil fuels such as methane, the process must be combined with Carbon Capture & Storage (CCS). If it is produced from water, via electrolysis, the electricity used in the process must be carbon-free. Lack of progress in developing CCS in the UK is presently a significant barrier to clean hydrogen production.

Hydrogen can be put to a range of uses:

Domestic. Barriers to converting the gas grid to hydrogen make 100% domestic use unlikely in the short term. For example, transmission pipes would need to be replaced, as would home appliances. On a more achievable scale, the H21 scheme aims to convert Leeds to hydrogen by 2025. The city’s proximity to the North Sea and local salt caverns make it ideally placed for hydrogen storage.

Industry. There is scope for replacing natural gas with hydrogen as a means to reduce emissions in an industrial setting. This could provide a significant opportunity for the carbon-intensive iron and steel sectors if the cost of hydrogen production can be reduced.

Vehicles. While the cost of electric vehicles has reduced, the same cannot be said for hydrogen vehicles. The Policy Exchange sees opportunities for transport sectors such as HGVs, buses, trains, and shipping. Hydrogen vehicles have the benefits of faster refuelling than chargeable electric vehicles and higher energy density.

To support renewables. Excess electricity generated from renewables can manufacture hydrogen via electrolysis, which can be stored for later use. While the cost of batteries is falling, electrolysis has the benefit of a quicker response time and can be used more flexibly.

It is advised that the government takes a systemic approach to policy decisions because hydrogen has the potential to interact with so many different elements of the energy sector.

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Action on Heat Decarbonisation

While public attention is often focused on the emissions reductions that can be achieved in the electricity generation sector, the decarbonisation of heat also plays an important part in meeting the UK’s 2050 energy target of an 80% reduction in greenhouse gases. Nearly half of the final energy consumed in the UK is used to provide heat, with around three-quarters of this heat being used by residential, commercial, and public buildings. The remainder is used by the manufacturing sector.

It was originally planned that the decarbonisation of heat would be achieved via a move to increased levels of heat being provided by electricity while at the same time reducing the Co2 from generation.  However, given the high level of heat demand in the UK combined with its seasonality, it is evident that not enough electricity could be generated to meet heat requirements.


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