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SHEPHERD AND WEDDERBURN
By Euan Murray and Scott Rodger from Shepherd and Wedderburn
MEETING our net zero ambitions will require wholesale change.
Recent political announcements in Scotland and across the UK highlight how challenging the move to net zero is going to be.
In April 2024 Mairi McAllan, the Scottish Government’s Net Zero Minister, publicly accepted the pronouncement from the Climate Change Committee that the government’s 2030 targets are now out of reach (although the goal of reaching net zero by 2045 remains), triggering further political turmoil in Scotland.
Despite the politics, it is essential that we accelerate our efforts to decarbonise and Hydrogen will be a key strand to our low-carbon future.
Hydrogen comes in many ‘colours’. The main examples include grey (extracted from natural gas using steam-methane reforming), blue (produced from fossil fuels where carbon is captured and stored) green (produced using electrolysis powered by renewables), and there are a number of others.
We’ve known for some time that hydrogen has the potential to be a powerful enabler in decarbonisation and could be a significant factor in helping Scotland’s transition to net zero.
Examples include its use in decarbonising heavy industry (to power steam boilers and combined heat and power plants); as an alternative fuel in the transport sector, particularly in heavy goods vehicles, buses and in the aviation industry; and as an alternative heat source for homes, using it blended with or instead of natural gas.
It can also be stored and used to generate power, which is useful to address the intermittency of other renewable power sources.
However, developing the hydrogen sector poses significant technical and economic challenges, which is why sustained government support is crucial.
While the legal framework is taking shape, we need a sustainable pipeline of projects to boost both the demand and supply of hydrogen.
The UK Government announced financial support, through Low Carbon Hydrogen Agreements, for 11 production projects in December as part of Hydrogen Allocation Round 1.
These are effectively Hydrogen Contracts for Difference (CfD) where contractors receive stable revenues through a “strike price”, similar to offshore wind. Two of those projects (Scottish Power’s Whitelee Green Hydrogen Project and Cromarty Hydrogen Project) are in Scotland.
The second Allocation Round is in progress and contract awards are expected in early 2025 with additional rounds planned for the future.
In February, the Government also announced support of £21 Million for seven projects to make green fuel, which includes Veri Energy’s Sullum Voe Terminal Hydrogen Project and the Aberdeen Hydrogen Hub Project, a joint venture between Aberdeen City Council and BP, which will produce, store and distribute hydrogen.
On domestic heating, the UK government issued a strategic decision in December indicating support for blending of up to 20% hydrogen into the GB gas distribution network. Certainty on this policy will be a big enabler, as will a decision on blending in the gas transmission network, GB’s gas network backbone.
These pathfinder projects and strategic decisions are critical next steps, but more will be required. The legal and regulatory framework is evolving, and substantial investment and development is needed.
Whilst Hydrogen can help power our low-carbon revolution, create jobs and provide economic opportunities, continued commitment and pace will be essential if we are to achieve these ambitions.
Shepherd and Wedderburn are headline sponsor of All-Energy, the UK’s largest renewable and low-carbon energy exhibition and conference, taking place in Glasgow on 15-16 May
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