The UK Government has confirmed almost £22bn ($28.9bn) of funding over 25 years to two major carbon capture, utilisation and storage (CCUS) and blue hydrogen clusters.
The two sites in Teesside and Merseyside will have a combined carbon capture capacity of 8.5 million tonnes per year, storing carbon dioxide (CO2) in depleted gas fields in the North Sea and Irish Sea respectively.
“This game-changing technology will bring 4,000 good jobs and billions of private investment into communities across Merseyside and Teesside, igniting growth in these industrial heartlands and powering up the rest of the country,” said Chancellor, Rachel Reeves.
Prime Minister Keir Starmer, added, “Today’s announcement will give industry the certainty it needs – committing to 25 years of funding in this groundbreaking technology – to help deliver jobs, kickstart growth, and repair this country once and for all.”
HyNet, in England’s Northwest, will capture, transport and sequester CO2 from industrial players in the region, while EET Hydrogen plans to bring two blue hydrogen plants online.
HPP1 will provide 350MW of production capacity, with the second plant HPP2 will boast 1GW. The hydrogen arm of Essar intends to boast over 4GW of production capacity by 2030.
“HyNet was formed to meet the demands of industry wanting to decarbonise to deliver sustainable products and compete in the low-carbon economy,” said David Parkin, Chair of the HyNet Alliance.
In Teesside, bp plans to bring a 1.2GW blue hydrogen plant online, producing some 160,000 tonnes of hydrogen per year by 2030.
“Major projects like these have the potential to help stimulate economic growth – supporting thousands of jobs, helping UK companies prosper through the vast supply chains involved and creating the infrastructure to help major industrial companies with their decarbonisation plans,” said Louise Kingham, Senior Vice-President Europe at bp.
Equinor is also planning to build a 600MW blue hydrogen production project in the region, using the East Coast Cluster’s CCUS infrastructure to capture and store CO2.
Celia Greaves, CEO of the Hydrogen Energy Association, said the confirmed funding was a “vital step forward, catapulting hydrogen towards long-term certainty we need in the UK.”
Hydrogen UK CEO, Clare Jackson added, “The integration of CCUS technology with hydrogen production is pivotal for achieving our Net Zero targets. CCUS-enabled hydrogen not only provides a low-carbon, and scalable energy solution but also ensures the UK remains at the forefront of the global hydrogen economy.”
However, the decision to fund the clusters comes just days after a group of scientists called on the government to pause the funding for CCUS to produce blue hydrogen and cut emissions from gas-fired power stations.
In a letter, the group said the plans would lock the UK into fossil fuel production and result in upstream methane leaks.
“While not denying that both carbon capture and green hydrogen may be needed for specific uses in a zero carbon economy, we have concerns about the harms that could be done by locking the UK into a fossil-fuel based pathway with inevitable upstream emissions, displacing genuinely zero or low-carbon electricity generation,” it read.
Analysis: Is Europe’s demand for blue hydrogen waning?
Blue hydrogen has increasingly been positioned as a pragmatic, cheaper source of clean hydrogen that could meet demand in the early stages of the energy transition.
As a nascent industry – evidenced by recent data showing that committed investments fall short of the levels required to meet 2030 targets – blue hydrogen, derived from natural gas with carbon capture, has been heralded as the pathway to drive action.
“In 10 years, I don’t think anybody will be using grey hydrogen. Everybody will be using blue,” Air Products President and CEO, Seifi Ghasemi, boldly told an investor call this May.
The International Energy Agency’s (IEA) Global Hydrogen Review 2024, said that if all announced blue hydrogen projects are realised, production would increase eightfold from 0.6 million tonnes per annum in 2023 to 11 mtpa by 2030.
Amid the praise for blue hydrogen, trade associations, governments and its proponents have called to move away from traditional colour coding and instead focus on its carbon intensity, referring to it as low-carbon hydrogen.
However, recent events, including the scrapping of several large-scale and high-profile European projects, have suggested that hunger for blue hydrogen could be waning…
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