Written evidence submitted by Assystem Energy & Infrastructure (HC0002)

Call for Evidence – Hydrogen and Carbon Capture in Scotland

Assystem is an independent engineering group with over 50 years’ experience providing energy and infrastructure with engineering services and managing projects that are complex in size, technological content, and safety requirements. Assystem has more than 7,000 employees providing advisory and technical services in over 13 countries in Europe, Middle East, Central Asia, and Asia.

Assystem supports clients in the design, construction supervision, commissioning, and operation of their projects, ensuring safe, effective, technical, and commercial operations over the entire asset lifecycle. Our project teams successfully deliver design, project management, safety, and digital transformation services to a range of clients. Assystem is committed to supporting the development of a hydrogen economy and recognises the role of hydrogen as an energy vector for the transition to Net Zero. Assystem is interested in providing engineering and advisory services to the development of a hydrogen infrastructure in Scotland and providing exciting career opportunities for graduates.

Terms of reference: The Committee calls for evidence to be submitted on the following issues:

To what extent are the ambitions of the UK Hydrogen Strategy, published in August 2021, adequate for Scotland?

Assystem believes that Scotland should be ambitious with its hydrogen strategy because of its geographic location, industrial heritage, oil and gas industry, and highly technical workforce. The UK Hydrogen Strategy provides a holistic strategic ambition for hydrogen in the UK. Assystem expects the Scottish government to undertake a detailed analysis of how the UK Hydrogen Strategy can be implemented in Scotland and determine Scotland’s contribution to Net Zero greenhouse gas emissions by 2045 and a 75% reduction by 2030. This will enable Scotland to drive national economic growth and high-tech jobs in the hydrogen and transitional energy sector.

Assystem welcomes the Scottish government’s commitment to a hydrogen economy and recognise the commitment to enabling a thriving hydrogen industry demonstrated in the 'Draft Hydrogen Action Plan' (November 2021). Assystem looks forward to receiving further details of Scotland’s approach to supporting a just transition in the forthcoming Energy Strategy and Just Transition Plan later this year, which will provide details of the role of hydrogen in Scotland as part of an evidence based whole-system approach.

What should be the focus of UK Government investment to ensure that Scottish industry, supported by Scottish research, is able to become a world leader in green hydrogen for domestic use and export?

Assystem believes that Scotland is ideally placed to lead the early development of ‘blue’ hydrogen using its existing North Sea oil & gas industry with an onshore and offshore industrial infrastructure asset base and engineering expertise to take the lead to implement a just transition and become a world leader in the hydrogen industry.

Scotland is ideally placed to develop its renewable energy assets for ‘green’ hydrogen utilising onshore wind, offshore wind, and marine energy sources. Assystem believes that Scotland should also invest and develop technology and infrastructure for green hydrogen developed from renewable electricity sources.

By investing in both blue and green hydrogen Scotland can maximise its re-use of existing assets and skills from the oil and gas industry, while continuing to grow new high-value jobs in the renewable electricity and green hydrogen sectors.

Assystem would like to see Scottish universities compete for central government funding to commercialise novel technologies. In the period to 2030, we expect there will be sufficient demand for domestic hydrogen consumption within the UK to transition from a fossil fuel economy to a hydrogen economy for the transportation, industrial and process heat, domestic heat, and power generation sector. Developing an export market for hydrogen is potentially valuable to Scotland in the longer-term future, but the primary focus should be hydrogen production for domestic consumption.

For example, a scenario where ‘green’ hydrogen produced in Scotland is exported to England via the natural gas grid infrastructure is a plausible scenario.

Assystem believes that Scotland has the potential to become a world leading hydrogen producer through using its natural resources and existing industrial base to develop national economic activity.

Which market mechanism should be used to incentivise investment in producing low-cost green hydrogen?

Assystem is an engineering consultancy and does not participate in commercial hydrogen production. Currently the cost of producing 'green' and 'blue' hydrogen is uncompetitive to production costs for 'grey' hydrogen and ‘green’ hydrogen electrolytic technology requires scaling up and maturity. Both blue and green hydrogen will require a commercial support mechanism to bring it to market.

Assystem proposes a wide-ranging discussion to seek inputs from all hydrogen producing and original equipment manufacturers and investors to collaboratively support Scotland’s ‘green’ hydrogen industry. A key element for the successful introduction and expansion of a low-cost green hydrogen economy will require long term visibility of the hydrogen price and availability, to allow current fossil fuel industrial consumers to undertake technical and economic assessment of the merits of fuel switching and to be incentivised.

Assystem believes that it is important for the Scottish Government to incentivise potential hydrogen consumers to convert to the fuel as a power source, therefore stimulating demand and helping to establish a robust market. This could be by supporting conversion of public transport to hydrogen fuel, or developing ‘Hydrogen Towns’ with hydrogen supply, storage and consumption infrastructure.

What infrastructure, and investment in infrastructure, is needed for green hydrogen to be easily available for heavy transport and buses across the whole of Scotland?

Assystem believes that some of the infrastructure for the production and transportation of 'green' hydrogen is already in place and needs repurposing from oil and gas to be expanded for hydrogen.

For hydrogen to be used commercially for heavy transport and buses across Scotland requires:

Competitive and predictable hydrogen commercial terms (e.g., future price mechanisms) compared to diesel fuel.
Commercialisation of a hydrogen distribution and retail network e.g., depots and fuel forecourts and incentives (e.g., by guaranteed fleet vehicle purchase) for OEM vehicle manufacturers to produce hydrogen fuelled vehicular fleets.
Sufficient hydrogen supply nodes to eliminate ‘range anxiety’.
Development of an extensive vehicle maintenance, vehicle repair and servicing infrastructure with trained technicians throughout Scotland with specific skills in fuel cell and electrical propulsion operation, maintenance, and servicing expertise back by professional training accreditation and licensing.
Assystem encourages the Scottish Government to develop an appropriate number of supported and funded ‘well-to-wheel’ demonstration projects with a prerequisite that each project much comprise the participation of consortium partners from all segments of the value chain, hydrogen producers, OEM technology providers, EPC contractors, technical and project management service providers, and hydrogen users.
Assystem proposes that the Scottish Government considers developing a financial regulatory concept to ring fence a share of the tax revenues received from Scotland’s oil and gas industry for the development of a Scottish hydrogen industry with projects to be awarded to consortiums (with entire value chain participation) to develop the physical hydrogen infrastructure for Scotland.

It is paramount that the Scottish administration takes a leadership role in ensuring there are regulated standards, processes and procedures for vehicle safety standards and inspections along similar concepts as the annual MOT test.

What role should the oil and gas industry play in achieving a “just transition” to blue and green hydrogen in Scotland?

The oil and gas industry in Scotland has a strategic advantage for developing the UK hydrogen economy. The Scottish cities and towns with an existing oil and gas technical and industrial base, such as Aberdeen, should be fully supported by the Scotland administration in assuming the leadership role in implementing a just transition from an oil and gas economy to a future hydrogen economy. To prevent the migration of the existing highly skilled technical workforce away from Scotland, the administration is advised to take early measures to develop a hydrogen economy with parallel focus on blue and green hydrogen.

For example, if we consider a scenario where the existing offshore hydrocarbon exploration and production infrastructure comprising platforms and pipe networks are retrofitted and repurposed for producing 'green' hydrogen from seawater using electrolysis, then these assets can continue commercial operations as hydrogen producing platforms.

A techno-economic assessment will be necessary to determine the environmental, technical, commercial, and operational benefits of repurposing these assets with a highly technical workforce.

From a blue hydrogen perspective, the existing offshore infrastructure can be used to transport and store CO2 from the CCUS process of producing blue hydrogen.

The existing highly trained technical workforce can be retained, and new graduate employment opportunities developed. The existing pipe network could be repurposed for hydrogen export to Europe. Scottish ports infrastructure can be expanded to export hydrogen as a traded commodity using ocean transportation methods comparable to crude oil and LNG transportation. The depleted offshore hydrocarbon fields can used for strategic bunkering of hydrogen and reduce UK’s reliance on imported energy.

The Scottish government is encouraged to support the renewable energy industry to develop mega scale projects to harness Scotland’s world class wind and marine resources to produce both renewable clean electricity and green hydrogen. The renewable energy produced during periods of low electricity demand can be used for green hydrogen production and exported into England and to Europe.

Future offshore wind turbine structures with a hydrogen electrolyser plant co-located on the same platform can produce green hydrogen using electricity generated locally in-situ from the wind turbine and hydrogen produced from a seawater source (after desalination of seawater to remove brine). The key to success will be commercial incentives for offshore wind investors and utilities to implement this option with clear visibility of the commercial benefits of producing and exporting hydrogen as well as electricity. The Scottish Government will need to develop a long-term stable financial and regulatory framework for offshore wind investors to progress these options.

What training is required to build a hydrogen-ready workforce in Scotland? What is the long-term sustainability of the Scottish workforce for hydrogen power?

Assystem has a distinguished heritage of supporting technical jobs growth and development at all levels from apprenticeships to graduate / post-graduate recruitment and cross-training of experienced workers.

Assystem is aware that some leading UK universities are updating their engineering degrees with optional courses and modules on renewable technologies such as wind or hydrogen. We are supportive of these tailored courses and will target graduate recruitment activities at people with these skills.

The Scottish Government should support Scottish Universities to develop and expand these graduate courses and develop training courses aimed at professional development / cross-training of the workforce in existing industries in renewable and hydrogen skills.

Assystem believes that accredited technical apprenticeship schemes should be introduced and combined with industrial training and learning models to support employment opportunities.

Scotland’s leading academic institutions with their strong engineering and energy industry experience are ideally suited to create industry leading courses and skills to enable a robust and sustainable hydrogen workforce.

February 2022