Hydrogen is a key element the UK’s  journey toward net-zero emissions and a green industrial revolution.  

Hydrogen energy refers to the use of hydrogen as a fuel source, typically in fuel cells, to generate electricity or power vehicles. It's a promising alternative to fossil fuels because burning hydrogen produces only water as a byproduct, making it a cleaner energy source.  

Hydrogen is the most abundant element in the universe and a key component of many molecules in living things, but it's not readily available as a gas in nature. It can be produced from various sources, including natural gas, nuclear power, biomass, and renewable energy sources like solar and wind.  

In the UK, hydrogen energy is classified into different types based on its production method and the carbon emissions associated with it. The main categories are:  

• Green hydrogen, produced from renewable energy sources like solar or wind power using electrolysis; 

• Blue hydrogen, produced from natural gas with carbon capture and storage 

• Grey hydrogen, produced from natural gas without carbon capture.  

Other less common types include black/brown hydrogen (from fossil fuels) and pink/purple/red hydrogen (from nuclear power). Brown hydrogen is produced from coal1.  

Green hydrogen, produced from renewable sources, in particular is seen as a versatile fuel and energy source with potential to decarbonise transport, heating, and industry. It is produced by using renewable energy to split water into hydrogen and oxygen, resulting in a zero-carbon fuel that can be used for power generation, transport  and industrial processes.   

The UK government is actively promoting hydrogen projects and investment to create jobs and establish the country as a leader in this technology. 

Clean energy superpower 

According to the government, the industry has the potential to attract over £1 billion of private sector investment into the UK by 2029, supporting the mission to become a clean energy superpower. It advises that hydrogen will help deliver a new era of clean energy across the UK and decarbonise emission-intensive industries2. 

A new wave of hydrogen powered projects have been shortlisted to help cut emissions and create thousands of jobs in the UK’s industrial heartlands. There are 27 projects which have been advanced to the next stage of the flagship hydrogen programme as well as those focused on new clean power generation, glass manufacturing, brick making, and sustainable aviation fuel production. 

The government hopes that thousands of clean energy jobs will be created  in manufacturing communities, delivering on the Plan for Change by unlocking growth. 

SaveMoneyCutCarbon advises that hydrogen energy offers  significant opportunities along with considerable challenges for UK businesses, particularly in the context of decarbonisation and achieving net zero targets. Scaling up hydrogen production, distribution, and utilisation is a complex task, loaded with obstacles. 

Business opportunities 

Hydrogen is used industrially for various purposes, including refining petroleum, producing fertilisers and other chemicals, and processing foods.  

It also plays a key role in decarbonising heavy industry and transport sectors, particularly in areas like ammonia production, steelmaking, and the development of sustainable aviation fuel.  

Hydrogen can play a crucial role in decarbonising hard-to-electrify sectors like industry, heavy transport, offering a pathway to net-zero emissions. 

The “hydrogen economy” presents a significant economic opportunity, potentially creating jobs, driving investment, and building new infrastructure, according to the Hydrogen UK trade association3. 

Hydrogen can be used to store renewable energy, improving grid stability and providing a more resilient energy system, diversifying the energy mix beyond fossil fuels, reducing reliance on volatile global markets. 

Business challenges 

• The cost of producing and utilising hydrogen is higher than traditional fossil fuels, although costs are expected to decline as the industry matures.  

• Many hydrogen technologies are still at the development stage, requiring further innovation and testing before widespread deployment, according to the UK Hydrogen Strategy 

• Building the necessary infrastructure for hydrogen production, storage, and distribution (including pipelines, storage facilities, and refuelling stations) will be a major undertaking.  

• A clear and supportive policy framework is needed to encourage investment and drive innovation in the hydrogen sector, according to the UK Hydrogen Strategy  

• Balancing the supply and demand for hydrogen, including the need for large-scale storage and distribution, will be a complex challenge.  

• Hydrogen is a highly flammable gas, raising concerns about safety and requiring robust safety protocols and standards.  

• A skilled workforce is needed to support the development and implementation of hydrogen technologies, potentially requiring significant investment in training and education.  

• Developing a robust hydrogen market, including pricing mechanisms and demand forecasting, is crucial for encouraging investment and driving adoption.  

Hydrogen landscape 

Twenty-seven hydrogen projects have been selected for the next stage of the Second Hydrogen Allocation Round (HAR2) – supporting low-carbon hydrogen production in the UK. The industry has the potential to attract over £1 billion of private sector investment into the UK by 2029, supporting the government’s mission to become a clean energy superpower1. 

The government advises that hydrogen “will help deliver a new era of clean energy across the UK and decarbonise emission-intensive industries. It has already attracted £400 million of private sector investment in towns and cities such as Milford Haven in Wales and High Marnham in Nottinghamshire, and is creating over 700 direct jobs in construction and operations.”1   

It says that support for hydrogen will help create thousands more jobs in the sector and reindustrialise the  manufacturing regions. This includes roles for apprentices, graduates and technically trained professionals, such as engineers, welders, skilled construction workers, pipefitters and operations specialists.   

This builds on the success of the First Hydrogen Allocation Round which saw 11 projects being allocated over £2 billion in government funding. One recipient, Whitelee Green Hydrogen in Scotland, will produce hydrogen for the Inchdairnie Whiskey distillery which intends to sustainably distil whisky by 2027.   

This latest wave of shortlisted HAR2 projects, stretching across England, Scotland, and Wales, underlines the government’s commitment to create skilled jobs and establish clean energy hubs across Britain. The HAR2 shortlist could lead to projects that help support strong supply chains and the delivery of the clean energy superpower mission. 

Hydrogen and net zero 

The government aims to create the conditions up to 10GW of low carbon hydrogen production capacity by 2030 as central to a thriving hydrogen economy, supporting the deep decarbonisation of key sectors, particularly in “hard to electrify” industries, and can provide greener, flexible energy across power, heat, transport, and potentially heat in buildings4. 

It says: “The drive for renewables makes hydrogen especially valuable for energy security and independence by providing flexibility and energy storage: excess renewable electricity can be used to produce hydrogen, which can be stored over time and used to generate electricity when there is less sun or wind to power the grid.”4  

Analysis for the UK Hydrogen Strategy shows that low carbon hydrogen could play a key role in UK energy system potentially becoming comparable in scale to existing electricity use by 2050. Hydrogen demand could be 20-35% of UK final energy consumption by 2050: 

• industry – 25-55 TWh by 2035 

• Power – 5-30 TWh by 2035 

• Heat in buildings – 0-60 TWh by 2035 

• Transport – 20-30 TWh by 2035.4 

Bibliography 

1”Energy Security Bill factsheet: Hydrogen and industrial carbon capture business models” (Accessed May 2025) https://www.gov.uk/government/publications/energy-security-bill-factsheets/energy-security-bill-factsheet-hydrogen-and-industrial-carbon-capture-business-models  

2”New hydrogen power projects to boost growth” (Accessed May 2025) https://www.gov.uk/government/news/new-hydrogen-power-projects-to-boost-growth  

3 “The Job Engine of the Hydrogen Future” (Accessed May 2025) https://hydrogen-uk.org/hydrogen-in-the-uk/the-hydrogen-story/jobs-and-skills  

4“Hydrogen net zero investment roadmap: leading the way to net zero” (Accessing May 2025) https://www.gov.uk/government/publications/hydrogen-net-zero-investment-roadmap/hydrogen-investment-roadmap-leading-the-way-to-net-zero