Policy & Socio-Economics

The following report accompanies the Committee on Climate Change’s 2017 report on energy prices and bills. It was written by Ricardo Energy and Environment.

The report provides an analysis of the opportunities to UK businesses to supply global markets with low carbon materials and goods and services. The report considers: the position of the current UK low carbon economy the size of the market opportunity for UK businesses in 2030 and 2050 the barriers to UK business capturing a larger share of the global market the opportunity to increase the UK’s share of future global markets

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This research considers the potential role of hydrogen in meeting the UK’s carbon budgets. It was written by consultancy E4tech.<br/>The CCC develops scenarios for the UK’s future energy system to assess routes to decarbonisation and to advise UK Government on policy options. Uncertainty to 2050 is considerable and so different scenarios are needed to assess different trajectories targets and technology combinations. Some of these scenarios assess specific technologies or fuels which have the potential to make a significant contribution to future decarbonisation.<br/>Hydrogen is one such fuel. It has been included in limited quantities in some CCC scenarios but not extensively examined in part due to perceived or anticipated higher costs than some other options. But as hydrogen technology is developed and deployed the cost projections and other performance indicators have become more favourable.

When looking out to 2050 there is huge uncertainty surrounding how gas will be consumed transported and sourced in Great Britain (GB). The extent of the climate change challenge is now widely accepted and the UK Government has introduced a legislative requirement for aggressive reductions in carbon dioxide (CO2) emissions out to 2050. In addition at European Union (EU) level a package of measures has been implemented to reduce greenhouse gas emissions improve energy efficiency and significantly increase the share of energy produced from renewable sources by 2020. These policy developments naturally raise the question of what role gas has to play in the future energy mix.



To help inform this debate the Energy Networks Association Gas Futures Group (ENA GFG) commissioned Redpoint and Trilemma to undertake a long-range scenario-based modelling study of the future utilisation of gas out to 2050 and the consequential impacts of this for gas networks. Our modelling assumptions draw heavily on the Department of Energy and Climate Change (DECC) 2050 Pathways analysis and we consider that our conclusions are fully compatible with both DECC‟s work and current EU policy objectives.



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Natural gas plays a central role in the UK energy system today but it is also a significant source of greenhouse gas (GHG) emissions. The UK committed in 2008 to reduce GHG emissions by at least 80% compared to 1990 levels by 2050. In June 2019 a more ambitious target was adopted into law and the UK became the first major economy to commit to “net-zero” emissions by 2050. In this context the Energy Networks Association (ENA) commissioned Navigant to explore the role that the gas sector can play in the decarbonisation of the Great Britain (GB) energy system. In this report we demonstrate that low carbon and renewable gases can make a fundamental contribution to the decarbonisation pathway between now and 2050.

This report commissioned by the Hydrogen Council and announced in conjunction with the launch of the initiative at the World Economic Forum in January 2017 details the future potential that hydrogen is ready to provide and sets out the vision of the Council and the key actions it considers fundamental for policy makers to implement to fully unlock and empower the contribution of hydrogen to the energy transition.

In this paper we explore the role of hydrogen in the energy transition including its potential recent achievements and challenges to its deployment. We also offer recommendations to ensure that the proper conditions are developed to accelerate the deployment of hydrogen technologies with the support of policymakers the private sector and society.

You can download the full report from the Hydrogen Council website here

Hydrogen solutions have a critical role to play in the UK not only in helping the nation meet its net-zero target but in creating the economic growth and jobs that will kickstart the green recovery.

The Government must act now to ensure that the UK capitalises on the opportunity presented by hydrogen and builds a world-leading industry.

COVID-19 has caused significant economic upheaval across the country with unemployment expected to reach up to 14.8 per cent by the end of 20201. The UK must identify those areas of the economy which have significant economic growth potential and can deliver long-term and sustainable increases in GVA and jobs. It will be important to consider regional factors and ensure that investment is targeted in those areas that have been hardest hit by the crisis.

Many major economies have identified hydrogen as a key part of both decarbonisation and economic recovery. As part of its stimulus package Germany announced a €9billion investment in green hydrogen solutions aiming to deploy 5GW by 2030. The Hydrogen Council estimates a future hydrogen and equipment market worth $2.5 trillion globally by 2050 supporting 30 million new jobs.

Hydrogen offers the UK a pathway to deep cost-effective decarbonisation while delivering economic growth and job creation. It should therefore be at the heart of the Government’s green recovery programme ensuring that the UK builds back better and greener.

• Economic Impact Assessment Summary 
• Economic impact Assessment Methodology
• Economic impact Assessment of the Hydrogen Value Chain of the UK infographic
• Imperial College Consultants Review of the EIA.

The Energy Innovation Needs Assessment (EINA) aims to identify the key innovation needs across the UK’s energy system to inform the prioritisation of public sector investment in low-carbon innovation. Using an analytical methodology developed by the Department for Business Energy & Industrial Strategy (BEIS) the EINA takes a system level approach and values innovations in a technology in terms of the system-level benefits a technology innovation provides. This whole system modelling in line with BEIS’s EINA methodology was delivered by the Energy Systems Catapult (ESC) using the Energy System Modelling Environment (ESMETM) as the primary modelling tool.

To support the overall prioritisation of innovation activity the EINA process analyses key technologies in more detail. These technologies are grouped together into sub-themes according to the primary role they fulfil in the energy system. For key technologies within a sub-theme innovations and business opportunities are identified. The main findings at the technology level are summarised in sub-theme reports. An overview report will combine the findings from each sub-theme to provide a broad system-level perspective and prioritisation.

This EINA analysis is based on a combination of desk research by a consortium of economic and engineering consultants and stakeholder engagement. The prioritisation of innovation and business opportunities presented is informed by a workshop organised for each sub-theme assembling key stakeholders from the academic community industry and government.

This report was commissioned prior to advice being received from the CCC on meeting a net zero target and reflects priorities to meet the previous 80% target in 2050. The newly legislated net zero target is not expected to change the set of innovation priorities rather it will make them all more valuable overall. Further work is required to assess detailed implications.

Where does hydrogen fit into a global sustainable energy strategy for the 21st century as we face the enormous challenges of irreversible climate change and uncertain oil supply? This fundamental question is addressed by sketching a sustainable energy strategy that is based predominantly on renewable energy inputs and energy efficiency with hydrogen playing a crucial and substantial role. But this role is not an ex -distributed hydrogen production storage and distribution centres relying on local renewable energy sources and feedstocks would be created to avoid the need for an expensive long-distance hydrogen pipeline system. There would thus be complementary use of electricity and hydrogen as energy vectors. Importantly bulk hydrogen storage would provide the strategic energy reserve to guarantee national and global energy security in a world relying increasingly on renewable energy; and longer-term seasonal storage on electricity grids relying mainly on renewables. In the transport sector a 'horses for courses' approach is proposed in which hydrogen fuel cell vehicles would be used in road and rail vehicles requiring a range comparable to today's petrol and diesel vehicles and in coastal and international shipping while liquid hydrogen would probably have to be used in air transport. Plug-in battery electric vehicles would be reserved for shorter-trips. Energy-economic-environmental modelling is recommended as the next step to quantify the net benefits of the overall strategy outlined.

Hydrogen will play a pivotal role in achieving an affordable clean and prosperous economy. Hydrogen allows for cost-efficient bulk transport and storage of renewable energy and can decarbonise energy use in all sectors.

The European Union together with North Africa Ukraine and other neighbouring countries have a unique opportunity to realise a green hydrogen system. Europe including Ukraine has good renewable energy resources while North Africa has outstanding and abundant resources. Europe can re-use its gas infrastructure with interconnections to North-Africa and other countries to transport and store hydrogen. And Europe has a globally leading industry for clean hydrogen production especially in electrolyser manufacturing.

If the European Union in close cooperation with its neighbouring countries wants to build on these unique assets and create a world leading industry for renewable hydrogen production the time to act is now. Dedicated and integrated multi GW green hydrogen production plants will thereby unlock the vast renewable energy potential.

We the European hydrogen industry are committed to maintaining a strong and world-leading electrolyser industry and market and to producing renewable hydrogen at equal and eventually lower cost than low-carbon (blue) hydrogen. A prerequisite is that a 2x40 GW electrolyser market in the European Union and its neighbouring countries (e.g. North Africa and Ukraine) will develop as soon as possible.

A roadmap for 40 GW electrolyser capacity in the EU by 2030 shows a 6 GW captive market (hydrogen production at the demand location) and 34 GW hydrogen market (hydrogen production near the resource). A roadmap for 40 GW electrolyser capacity in North Africa and Ukraine by 2030 includes 7.5 GW hydrogen production for the domestic market and a 32.5 GW hydrogen production capacity for export.

If a 2x40 GW electrolyser market in 2030 is realised alongside the required additional renewable energy capacity renewable hydrogen will become cost competitive with fossil (grey) hydrogen. GW-scale electrolysers at wind and solar hydrogen production sites will produce renewable hydrogen cost competitively with low-carbon hydrogen production (1.5-2.0 €/kg) in 2025 and with grey hydrogen (1.0-1.5 €/kg) in 2030.

By realizing 2x40 GW electrolyser capacity producing green hydrogen about 82 million ton CO₂  emissions per year could be avoided in the EU. The total investments in electrolyser capacity will be 25-30 billion Euro creating 140000- 170000 jobs in manufacturing and maintenance of 2x40 GW electrolysers.

The industry needs the European Union and its member states to design create and facilitate a hydrogen market infrastructure and economy. Crucial is the design and realisation of new unique and long-lasting mutual co-operation mechanisms on political societal and economic levels between the EU and North Africa Ukraine and other neighbouring countries.

The unique opportunity for the EU and its neighbouring countries to develop a green hydrogen economy will contribute to economic growth the creation of jobs and a sustainable affordable and fair energy system. Building on this position Europe and its neighbours can become world market leaders for green hydrogen production technologies.

A core theme of the UK Government's new Industrial Strategy is exploiting opportunities for domestic supply chain development. This extends to a special ‘Automotive Sector Deal’ that focuses on the shift to low emissions vehicles (LEVs). Here attention is on electric vehicle and battery production and innovation. In this paper we argue that a more straightforward gain in terms of framing policy around potential economic benefits may be made through supply chain activity to support refuelling of battery/hydrogen vehicles. We set this in the context of LEV refuelling supply chains potentially replicating the strength of domestic upstream linkages observed in the UK electricity and/or gas industries. We use input-output multiplier analysis to deconstruct and assess the structure of these supply chains relative to that of more import-intensive petrol and diesel supply. A crucial multiplier result is that for every £1million of spending on electricity (or gas) 8 full-time equivalent jobs are supported throughout the UK. This compares to less than 3 in the case of petrol/diesel supply. Moreover the importance of service industries becomes apparent with 67% of indirect and induced supply chain employment to support electricity generation being located in services industries. The comparable figure for GDP is 42%.