Talking hydrogen - is it time to embrace imports?

As I joined fellow panellists on stage at the recent Hydrogen 4 Life conference in London, I found myself wondering what if the UK were to embrace imported green hydrogen more wholeheartedly in line with our European neighbours? Could this speed up our transition to becoming a clean energy powerhouse and give us a competitive edge?

I have long been convinced that low carbon hydrogen has a critical role to play in the UK energy mix as we transition to a decarbonised future. Demand for industrial use of hydrogen has tripled since 1975, and this trajectory is expected to continue to grow from now until 2050, according to the World Economic Forum. Hydrogen’s place in the future energy mix is widely reported, discussed and debated across the media. But its critics will rightly tell you that currently it is more expensive in comparison with contemporary hydrocarbon alternatives. The challenge for the UK is to create market conditions in which hydrogen production costs can be driven down to make it an affordable and practical choice for businesses and people.

At this point, you might steal another quick glance at my job role and wonder why ports are so interested in hydrogen anyway? Well, ports have the potential to support the development of the future hydrogen value chain. They will be an essential component to building and accelerating the development of hydrogen ecosystems centred around our locations. There are three fundamental ways this plays out in practice.

1.       Moving hydrogen

Our traditional role as a port operator is to facilitate the transit of goods, in this case, hydrogen. The Immingham Green Energy Terminal (IGET), project has the potential to be one of the first large-scale green hydrogen production facilities in the UK and will help to continue to Keep Britain Trading, at the same time as enabling the country’s net zero future. 

2.       Making hydrogen (and other fuels linked to hydrogen)

Ports are great places for making hydrogen as well as other low carbon fuels such as Sustainable Aviation Fuel (SAF). They are often located in industrial settings, which helps from a planning and consenting perspective. They are also close to potential demand – both industrial and a lot of transport. They also offer access to infrastructure for transporting hydrogen (and CO2 for blue H2) to market.

In addition to IGET, ABP’s locations are involved in projects across the hydrogen rainbow from green hydrogen production to replacing grey at the Port of Barry, and from blue hydrogen production at Saltend Chemicals Park to the potential for emerald production on the Humber.

3.       Using hydrogen

Hydrogen can also be used to power the port equipment of the future. This is applicable across cargo handling equipment, pilot boats, harbour tugs and more. In September 2021, ABP, in partnership with Uniper, Siemens Energy and Toyota Tsusho, successfully secured matched UK Government grant funding for a feasibility study on the production and utilisation of green hydrogen to decarbonise the Port of Immingham, as part of project ‘Mayflower’.

As we progress on the road to net zero, electrification will be the dominant solution to decarbonise certain applications such as light transport in the form of cars and vans. But hydrogen will play a key role when it comes to supporting the transition for industry and heavy transport. A recent example was when we initiated a hydrogen vehicle trial in January 2023, in association with Air Products, Toyota Tsusho and Terberg DTS. This project was funded by Innovate UK’s Hii fund through Offshore Renewable Energy Catapult and demonstrated the successful application of hydrogen in port operations.

The trial was the first of its kind in the UK, this hydrogen tractor port equipment demonstration, showcased the prospective role it can play to decarbonise port operations.

So how can imports help to make the difference?

To establish a hydrogen economy, the UK needs to create market conditions where hydrogen can be a competitive solution for industry. Within the current policy landscape, there is a requirement for the incremental cost of hydrogen produced in the UK to be met somehow. The Hydrogen Production Business model provides a framework for Government to fund this delta – but will it be able to continue to do this?

Unlocking growth in the hydrogen sector lies with demand – right now probably more appropriately described as “potential demand”. Rightly or wrongly, current government policy has set the expectation that industry will be able to buy low carbon hydrogen for the cost of gas. For many industrial processes the switch to hydrogen involves incremental capital expenditure to convert alongside a more expensive fuel in the long term. This means that the move is only possible where there is subsidy available to support the transition.

To put this in perspective, the first electrolytic hydrogen allocation round (HAR1) provided a route to market for 125MW of production capacity at a cost of £2bn. To get to our 10GW target, this would equate to a cost of around £160bn pro-rata. Is there a more affordable alternative?

For example, Europe is welcoming this in its energy mix with their hydrogen strategy and REPowerEU plan, placing imports directly alongside indigenous production. Imported green ammonia, produced in locations that benefit from lower production costs, can be used as an input to hydrogen production in Northern European economies. Lower cost imports can help to create sustainable demand and establish a hydrogen economy for domestic producers to sell into.

If the UK can establish itself as a hydrogen economy, it will have an opportunity in the medium to long term future to maximise its own geographic advantages for green hydrogen connected to the offshore wind industry from the East coast of Scotland and NE England as well as the Celtic Sea. In the short-term, the UK faces a major challenge around the affordability of green hydrogen as a result of high electricity costs, that will need to be addressed before we can be competitive on a global scale.

Most importantly, we need to ensure that the value follows the investment. The UK is recognised as a global leader in the deployment of offshore wind. But much of the investment has gone overseas to Germany, Denmark and the Far East. We want to see the investment in the hydrogen value chain here in the UK. Immingham Green Energy Terminal will unlock more than £1 billion of private investment, create 1,600 construction jobs and 1,400 FTE jobs in operations and help to reduce more than 500,000 tonnes of CO2 per year.

We want the UK to establish a long-term competitive position in the low carbon products market and that will require us to have affordable input costs. Imported hydrogen can help to support this in the short term, whilst domestic production establishes itself with suitable scale and a supply of curtailed green power to be price competitive. It is a case of AND not or here; we want to establish competitive domestic production and exports in the long term with imports as short term solution to bridge the cost gap. This of course relies on there being demand for hydrogen – bringing us back to the start of that circle.

We have a once in a generation opportunity to establish a hydrogen economy in the UK. We can’t afford to ignore the potential value imported ammonia could bring to establish this market in the short term to supplement domestic production.

Are you part of team hydrogen? Please share your views in the comments below.