HM Insights

The role of Green Hydrogen in decarbonisation

There is an indisputable buzz surrounding hydrogen in 2021, both for its promise to facilitate a more flexible and resilient energy system in the transition to Net-Zero, and for the economic benefits that a sophisticated hydrogen market could provide. With exciting projects announced on what seems like a weekly basis, it is clear to see why.

The North of Scotland Hydrogen Programme at the Cromarty Firth, and a proposed 20 MW electrolyser at Scottish Power's Whitelee wind farm, are just two recent examples in Scotland. The UK Committee on Climate Change says that low-carbon hydrogen will need to play a key role in meeting the UK’s net-zero target, and in its ‘Further Ambition’ scenario, it predicts that up to 270TWh of low-carbon hydrogen will be required every year by 2050.

The Scottish Government's Hydrogen Assessment suggests that a domestic market could add up to £16bn Gross Value Added to the Scottish economy alone, while establishing the country as an exporter of green hydrogen could produce up to £25bn GVA.

But what is hydrogen and what makes it 'green'? What role can it play in decarbonisation and what does that mean for the renewable energy industry?


What is hydrogen and how is it produced?

Hydrogen is the most abundant element in the universe; a lightweight gas found in water and hydrocarbons (such as oil and natural gas). While the use of hydrogen is nothing new, so-called 'green-hydrogen' is still in its infancy. Hydrogen is used as a carrier of energy, which means a primary energy source is needed for it to be produced; the energy source used will determine if the resulting hydrogen is 'green'. There are two main sources of hydrogen production:

  1. From fossil fuels, either gas using steam methane reformation (SMR) or coal. This is known as 'grey hydrogen' (or 'blue hydrogen' if the resulting emissions are captured); or
  2. From 'electrolysis' whereby electricity is used to split water into hydrogen and oxygen. Where the electricity used is from renewable sources, the end-product is referred to as 'green hydrogen'.

Hydrogen production from fossil fuels is well established. Electrolysis is a newer technology, which has made it difficult to scale-up green hydrogen production to date; according to the International Energy Agency, less than 0.1% of hydrogen was produced through electrolysis in 2020. However, that could soon change; a recent Bloomberg report suggests that the cost of electrolyser technology in Europe has fallen by 40% from 2014 to 2019. The falling cost of renewable energy, particularly wind, as a direct energy source for hydrogen production has also had a dramatic impact on the long term prospects of green hydrogen. 

As the cost of renewable energy falls and electrolysis becomes more sophisticated, we are seeing ever more ambitious potential applications for green hydrogen in the energy landscape. But how exactly can green hydrogen be deployed?

How can green hydrogen be used?

There are a multitude of possible applications for green hydrogen, ranging from the realistic to the currently theoretical. The two sectors where green hydrogen could have the greatest impact are heat and transport.


Green hydrogen could be used to heat buildings through 'hydrogen blending'; injecting the clean burning gas into the conventional gas network. There are ongoing projects to demonstrate the technical acceptability around hydrogen blending; HyDeploy is a network innovation trial led by Cadent and Northern Gas Networks in England, which aims to investigate the maximum potential blend of hydrogen that can be accommodated in the conventional gas network without consumer appliances needing to be altered or replaced. It is suggested that blending just 20% hydrogen into the gas grid with existing natural gas could save around 6 million tonnes of carbon dioxide emissions every year, the equivalent of taking 2.5 million cars off the road. The principal challenge is ensuring the blend of hydrogen does not exceed a safe limit for current end-user appliances.

Some projects are even aiming to demonstrate the viability of 100% hydrogen gas networks. SGN's H100 scheme in Fife will heat 300 homes using only green-hydrogen from a nearby wind-powered electrolysis plant. It is acknowledged that many necessary technologies for widespread domestic hydrogen heating are not yet commercially ready and will require financial support to bring those technologies to market. Over time though, in its best-case scenario, HMG estimates that domestic hydrogen consumption could be as high as 86 TWh by 2050 and envisages early hydrogen opportunities in the conversion of boilers to facilitate hydrogen gas.


Then there is the potential for hydrogen to replace gasoline as the primary fuel source for vehicles and ships. One method is simply modifying the traditional internal combustion engine to use hydrogen rather than conventional gasoline. These engines burn fuel in much the same manner that normal cars do; the main difference is the exhaust product in a hydrogen combustion engine is water vapour rather than carbon dioxide. However, this method has largely fallen out of favour for most vehicle applications due to the impracticality of storing sufficient quantities of hydrogen gas for the vehicle to have meaningful range. Some vehicles are therefore designed to hold low quantities of the green gas, reverting to gasoline for the majority of operation, which has minimal emissions saving benefits.

The more favoured technology is the hydrogen fuel cell. Broadly speaking, a fuel cell acts much like a conventional battery, but rather than storing electricity from an outlet, the fuel cell combines hydrogen and oxygen to produce electricity in real time. While fuel cells are still too expensive for wide spread deployment, trials are taking place all over the world, including in Dundee and Aberdeen where new hydrogen fuel cell bus fleets have been deployed.

The transport sector is the largest energy consumer in the UK, and contributes approximately one third of all carbon dioxide emissions, according to a Leeds University paper. Electric vehicles have become the favoured green solution in the transport sector but given how energy-intensive the battery production and charging process can be, the Leeds paper suggests hydrogen fuel cell vehicles may actually have the lowest carbon impact of any vehicle type, provided green hydrogen is used. There is therefore massive scope for carbon emissions savings through the use of green hydrogen in transport.  

Electricity storage

As an energy carrier, Hydrogen is by definition an energy storage technology. Surplus electricity is passed through water to create the hydrogen, which can then be stored or transported, and converted back to electricity by combining it with oxygen in a fuel cell. This can be useful when the supply of electricity from renewable energy sources is greater than demand, overcoming grid constraints and providing a decarbonised form of dispatchable generation to help meet demand as and when required.

Hydrogen could therefore facilitate a more flexible, resilient and integrated system, as we move towards greater electrification across the energy system.

Support for green hydrogen and opportunities for the renewable energy sector

Key to all of these applications will be a healthy supply of renewable energy to produce the necessary quantities of the gas which, depending on the extent to which green hydrogen penetrates the energy system, represents a significant opportunity for the renewables sector.

The financial viability of dedicated wind or solar farms for hydrogen production was questioned earlier this year by high profile Norwegian analyst Rystad Energy, but that hasn't stopped companies like Shell, Equinor, Vattenfall and others from investing in such projects. Siemens Gamesa, one of 27 members of the consortium behind a dedicated 10 GW AquaVentus offshore wind-to-hydrogen project in Germany, certainly considers the prospects to be positive; they predict that green hydrogen production alone will require at least 100GW of renewable energy globally by 2035, rising to at least 245GW by 2045.  

The Scottish Government is keen to take advantage of the potential future demand for green hydrogen, both by supporting early stage hydrogen projects while also emphasising the country's substantial complimentary renewable energy capacity for green hydrogen production. Its Hydrogen Policy Statement, published in December, commits to making hydrogen 'a key element of Scotland's decarbonisation plans'.  A recently announced 'Emerging Energy Technologies Fund' will support domestic hydrogen development. The Scottish Government predicts that a domestic hydrogen market alone could create 175,000 jobs and add £16b to GVA; "Scotland’s vast renewable resources, combined with its skills and supply chain focused on energy transition, are critical to establishing a prominent role for Scotland in the emerging global hydrogen market."

The UK Government's approach to reaching net-zero is generally technology neutral and market-focussed. However, it acknowledges that without some intervention it is unlikely that mass hydrogen will find a viable route to market. Accordingly, HMG is considering various market interventions – such as whether fuel standards could encourage industry to invest – and has announced new funding for hydrogen development; a £240 million 'Net-Zero Hydrogen Fund' to provide capital co-investment in early green hydrogen production; and a £60 million Low Carbon Hydrogen Supply competition (HYS2). The competition will be delivered via two streams; stream 1 for market entry projects and stream 2 for more advanced projects that can proceed quickly, potentially providing a pipeline of projects for the Net Zero Hydrogen Fund.

Investment is also flowing from the private sector. The North of Scotland Hydrogen Programme will see a new 'hydrogen hub' established at the Cromarty Firth, funded by Scottish Power, whiskey producers Glenmorangie, Whyte and Mackay and Diageo, and Pale Blue Dot Energy. Power would be supplied from current and future wind farms off the coast of the Cromarty Firth, as well as onshore schemes, and fed to the Hub. One of its first projects will provide distilleries in the region with green hydrogen. Longer term, it is hoped that the Hub will establish Scotland as a 'leader in hydrogen technology'. Projects such as these will require a reliable stream of renewable energy, increasing demand and providing real opportunities for renewable energy developers.


The potential of green hydrogen has been touted for some time now, but there now appears to be real momentum in government and the market for this fledgling technology. The benefits of widespread green hydrogen deployment – from increased flexibility in the energy system, greater energy security and emissions savings, to new economic opportunities – are clear. In 10 years' time, 2020-2021 may be seen as a pivotal year in the fortunes of green hydrogen in the UK.

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