Explained: Scotland's plans to 'capitalise' on hydrogen

Launching the plan, Acting Energy Secretary Gillian Martin described hydrogen as “one of Scotland’s greatest industrial opportunities since oil and gas was discovered”. The plan, she said, sets out the “key steps required to secure and maximise the economic benefits”.

Hydrogen, in other words, is key to Scotland's future as an energy-exporting nation. It is seen as a key mechanism to unlock and export the energy from excess wind. The Scottish Government has long been supportive on the development of its production and export, funding innovative projects and producing a Hydrogen Action Plan two years ago.

This new plan, titled A Trading Nation: Realising Scotland’s Hydrogen Potential - A Plan for Exports, delivers the targeted actions needed to secure Scotland as a key producer and exporter of renewable hydrogen by 2030. It outlines where the opportunities for growth lie for businesses and investors, if Scotland is “to capitalise on the economic and net zero opportunities provided by hydrogen and hydrogen products”.

Gillian Martin, Acting Net Zero and Energy Secretary (Image: Andrew Milligan/PA)

Will the demand be there? 

Hydrogen is likely to be used in subsectors such as refineries for fuel production, ammonia production, and the iron and steel industry. However, some still advocate it for use in transport and heating. Some of the zero emissions aeroplanes being pioneered are designed around hydrogen.

Certainly, demand predictions in Europe are substantial. The European Commission is targeting 330 TWh (10 Mt) of imported hydrogen by 2030. Other analysis, the Worley Hydrogen Demand study, has show that, in scenarios where lack of domestic hydrogen supply is forecast, the volume of imports needed from countries such as Scotland ranges from 112-298 TWh in 2030 and 240-1725 TWh in 2050 - making Scotland a significant supplier.

One of the key recommendations of the new export plan is to evidence the "growing market demand across the UK and Europe for hydrogen and hydrogen products – to help attract investment in the production, transport and storage of hydrogen”.

Links to Germany

Many of these connections are already in motion. Two years ago, the German state of Bavaria and Scotland signed a memorandum of understanding iin order to jointly develop green hydrogen.

Research by the UK Net Zero Technology Centre (NZTC) and German consultants Cruh21, published earlier this year, found that Scotland could satisfy all of Germany’s hydrogen import volume by 2045. The report, Enabling Green Hydrogen Exports: Matching Scottish Production to German Demand, showed that Scottish hydrogen exports could meet at least 22%, and even as much as 100% of Germany’s hydrogen by that year.

The current export plan echoes many of the suggestions made in that NZTC report, which recommended two critical stages. The first, short-term and up to 2030, said it ”encompasses early production and end-use activities preceding the installation of hydrogen pipelines". The second, from 2030-45, would involve “the commissioning and ramp-up of pipeline infrastructure to facilitate enhanced distribution at a low cost to export 94TWh of hydrogen”.

It's literally in the pipeline

Naturally, the talk is often about the pipeline - which has been previously estimated to cost £2.7 billion - and the jobs that come with it.

The Scottish Government's new  export plan makes clear that a pipeline is key. It notes that developing pipelines linking St Fergus, Port of Cromarty, Flotta and Shetland, and then to Germany, “could reduce transportation costs to 32 pence per kilogram of hydrogen, making the cost of delivered green hydrogen produced in Scotland internationally cost-competitive”.

A report last year found that while it would be possible to link major energy hubs in north-east Scotland to the onshore pipelines dubbed the European Hydrogen Backbone, the development of a new pipeline would enable accelerated deployment.

(Image: Shaun Dakin on Unsplash)

What else is needed?

The hydrogen economy also requires a support chain that is not yet there, and the plan will develop “Scotland’s domestic support chain, capabilities and skills – through regional hydrogen hubs and filling the gaps in hydrogen production, transport and storage”.

New or improved infrastructure will also be required for hydrogen export, and the export plan proposes “improving the infrastructure and systems around exporting hydrogen, including creating hydrogen storage facilities”.

Also key to becoming a major hydrogen exporter will be "aligning hydrogen regulation in Scotland with existing EU rules and exploring the viability of hydrogen pipelines from Scotland to mainland Europe and Ireland”, according to the report.

But pipelines are not the only option. Already work is being done on how ports may be upgraded.

One project has carried out a feasibility assessment for a pilot trial for the shipment of hydrogen from Scotland to the north-western European mainland via Rotterdam, finding it viable. Also mentioned in the report is new technology from Scottish start-up Flexergy which can deliver ultra-efficient compression, storage, and distribution.

A question of storage

Storage, too, will be necessary, and if Scotland is looking at export markets, it will in the long term will require large geological storage, the report states.  Hydrogen can be transported and stored in its pure form either as a compressed gas or as a cryogenic liquid - but it can also be converted to  ammonia,  a liquid organic hydrogen carrier, or synthetic hydrogen carbons to facilitate its transport and storage.

Green or blue hydrogen

The drive to create a hydrogen economy has received some backlash from climate campaigners. This is because while one type of hydrogen - green - is a clean energy, produced by hydrolysing water using renewable energy, the other, blue hydrogen, is produced by splitting and processing fossil fuels, and requires carbon capture. 

Last year, Friends of the Earth accused the Scottish Government of greenwashing the use of hydrogen as fuel, criticising the categorising of blue carbon as "low carbon".

St Fergus gas terminal, site of an Acorn Project blue hydrogen project (Image: PA)

Certainly, data from past years suggests that blue has dominated. Eighteen per cent of global hydrogen was produced from fossil fuels in 2020. Last year, a report by Westwood Global Energy Group found that the UK was on track to hit a target of 17GW hydrogen capacity by 2030, but that the majority - 84% - of this is blue hydrogen, rather than the 50% that is the UK target.

However, a graph in the export plan from Scottish Enterprise of planned installed capacity in Scotland to 2030 shows the vast majority of installations are planned to be green hydrogen.

According to the  Scottish Government export plan, evidence suggests that Scotland could potentially deliver "up to 3.3 million tonnes of green hydrogen per year by 2045, the energy equivalent of around 90% of Scotland’s total current energy demand".

Green hydrogen is one of the sectors being targeted by a pot of £5.8bn of the National Wealth Fund’s capital, along with carbon capture, ports, gigafactories, and green steel.

 What hydrogen production is already in the pipeline

There are also already over 90 hydrogen production projects at varying stages of development, “the vast majority of which are renewable hydrogen production”, the export plan says.

Recently, Scottish Enterprise reported there had been a massive surge in new green hydrogen projects,  with the number rising by two-thirds in two years. 

In December 2023, the UK Government announced the results of the first Hydrogen Allocation Round (HAR1) receiving £2bn in revenue support under a 15-year revenue support model, similar to a Contract for Difference.

Two of these flagship projects are in Scotland: the Scottish Power Whitelee Green Hydrogen Project at the Whitelee Windfarm near Glasgow (green hydrogen) and the Cromarty Hydrogen Project in the Highlands (green hydrogen). The latter is a hub that revolves around the local distilleries. Earlier this year, RWE announced plans for a large-scale green hydrogen plant at Grangemouth. 

In blue hydrogen, a key developer is The Acorn project, which is working to develop a production facility at the St Fergus gas terminal

But development and innovation in this area is starting to move at pace. Earlier this year, a new network was set up by Scottish Enterprise - SHINe, the Scottish Hydrogen Innovation Network. There are also plans for what is called in Europe a "hydrogen valley" in north-east Scotland, and 14 regional hubs for hydrogen innovation.

Gillian Martin unveiled the plan during a visit to Hydrasun – a Scottish-based company which designs, makes and installs hydrogen refuellers and associated parts, and has been delivering hydrogen systems across Europe and Scandinavia.