Written evidence submitted by UK Hydrogen and Fuel Cell Association (CGE0034)

Introduction

This response is submitted by the UK Hydrogen and Fuel Cell Association (UK HFCA). The UK HFCA is a trade body, fully-funded by its membership, and works to ensure that fuel cell and hydrogen energy can realise the many benefits offered across economic growth, energy security, carbon reduction and beyond. Through the breadth, expertise and diversity of our membership, we work to trigger the policy changes required for the UK to fully deliver the opportunities offered by these clean energy solutions and associated elements of the supply chain.

We would be delighted to nominate our Chair to submit oral evidence to this inquiry as appropriate.

Clean Growth Strategy emissions reduction targets and the role for hydrogen and fuel cells

1. The Clean Growth Strategy aims to ‘deliver increased economic growth and decreased emissions through a set of comprehensive policies and proposals.’ Hydrogen and Fuel Cells (H&FCs) can help achieve the emissions reduction targets across the four key areas set out in the Strategy in the most cost-efficient way.

2. We would like to highlight that an energy system with H&FCs as a key component will keep costs down for businesses, and secure the economic benefits of the transition to a low-carbon economy, as well as providing a range of indigenous growth opportunities. Hydrogen provides flexibility and connectivity, and fuel cells deliver the very best efficiency and zero emissions.  H&FCs also offer significant air quality benefits in transport, heat, and power applications, eliminating emissions of pollutants such as NOX and SOX.

3. The UK cannot rely on low carbon, clean energy innovation technologies being invented and deployed elsewhere. Our future productivity requires a cost-effective, clean energy system and home-grown innovative solutions which will be the source of the UK’s competitive advantage and provide significant economic export value and trade globally.  Hydrogen is the only energy vector that is able to link a diverse range of energy generation sources with the various components of energy demand. Hydrogen will provide the flexibility, connections and networks to make the new energy system work cleanly and cost effectively, through short term and long term (seasonal) renewable energy storage, clean fuel for transport, decarbonised heat and beyond. Fuel cells are the most efficient and clean solution to generate electricity, and heat in CHP systems, in a decentralised energy system. Fuel cells can be used in stationary and mobile applications, either directly fuelled by renewable hydrogen derived from biomass, electrolysis or other means, or - in the short-term - hydrogen from industrial waste streams or derived from natural gas or other fossil fuel sources.

4. Many other countries, such as Japan, China, South Korea, California and Germany, have committed to ensuring that hydrogen and fuel cells (H&FCs) will play a key role in their decarbonisation strategies, to the benefit of their indigenous industries.

5. The UK H&FC sector is made up of a mix of innovative SME’s, business units of major corporates, highly innovative / motivated entrepreneurs, private sector investors, and globally renowned academic specialists. The UK is recognised as one of the leading H&FC markets in the world. This notwithstanding, to date the sector has received limited national support and has mainly relied on its own resources, European funding (with the UK being the second highest recipient of the EU funded FCH JU programme) and private investment.

6. In particular, H&FCs can help contribute to the emissions reduction targets in the following ways:

6.1   Delivering CO2 reduction, air quality improvements and economic benefits through hydrogen powered transport

-            Hundreds of millions of pounds could be created for the UK economy by 2025 by hydrogen road transport applications, including passenger cars, light commercial vehicles, buses, heavy duty vehicles and taxis[1].

-            In addition, there is a wide range of hydrogen fueled non-road transport applications, including aviation / marine / rail propulsion, auxiliary power in aviation / maritime vehicles, tractors, forklifts and unmanned aerial vehicles (UAVs).

-            Alongside hydrogen fuel cell vehicles, hydrogen combustion is efficient (3-10% energy use improvement), reduces tank to wheel and well to wheel CO2 emissions, and at the same time reduces NOx in real world cycles. Early stage trial data (available on request) can demonstrate this.

-            By 2025, fuel cell Unmanned Aerial Vehicles (UAVs) sales could generate up to £100 million in added value for the UK, and 100s of jobs[2].

-            Up to 30% of the European transport fleet could use hydrogen by 2050. This would correspond to a saving of over 30 MtCO2/year in the UK compared with today’s vehicle fleet[3]. 

-            Fuel cells for marine and rail applications are gaining momentum. By way of example, Alstom’s hydrogen fuel cell train is already in operation in Germany[4] and Norway[5] is focused on hydrogen and fuel cell for ferries.

6.2   Enabling system balancing and optimized use of zero carbon renewables through electrolysis and the opportunity for medium to long term energy storage

-            At present over 1TWh of renewable electricity is being curtailed in the UK and this will increase as wind / solar penetration increases, due both to Transmission & Distribution constraints and growing grid stability concerns.

-            If electrolysers were deployed to help utilise rather than waste this renewable electricity, then significant contributions could be made to the heat and mobility sectors.

-            1TWh of electricity produces nearly 18,000 tonnes of hydrogen, which is sufficient to fuel 90,000 FC cars each travelling 12,000 miles per year, while causing zero local emissions and carbon dioxide.

6.3   Delivering CO2 reduction, local air quality benefits and economic growth through decentralised fuel cells for CHP and power only

-            Deployment of large fuel cell CHP units could create up to £150 million in the UK economy by 2025[6].

-            The installed costs of FC CHP systems have fallen to around £12,000 for 1kW residential systems and £1m for 400kW commercial systems, and continue to further reduce at a rate of 10–15% per year[7].

-            With appropriate support, it is anticipated that 90,000 FC micro-CHPs could be deployed in the UK by 2025[8].

-            Stationary FCs can nearly fully eliminate local emissions of pollutants such as NOx and SOx as well as particulates and significantly reduce CO2 emissions.

6.4   Decarbonising the heating sector with hydrogen utilizing the existing gas infrastructure

-          Work to date has shown that converting the natural gas distribution network in a city the size of Leeds to hydrogen could save around 1.5-2.2 MtCO2/year in emissions from heating[9], as well as enabling hydrogen supply for transport with both low CO2 and with ultra-low air quality emissions.

-          Scenarios produced for the Committee on Climate Change show that by 2050 around 60% of heat demand in domestic, commercial and industrial applications could come from hydrogen, reducing GHG emissions from the residential sector from 29 MtCO2/yr in CCC’s central scenario to 3 MtCO2/yr[10].

How the development and deployment of technology can best be supported, and the extent to which the Government should support specific technologies or pursue a ‘technology neutral’ approach

7. There is growing recognition of the role for hydrogen in decarbonizing heat in the UK.  This is being progressed through a number of initiatives, including projects such as Leeds H21, HyDeploy, HyNet, Future Billing, Real-time Networks, Hydrogen 100 and Project Freedom, alongside the Government's £25m Hy4Heat programme[11].

8. In parallel with these developments, there are a range of synergistic, short term opportunities for hydrogen and fuel cells.  If the UK is to fully benefit from hydrogen for heat, both in terms of cost effectiveness, and wider policy benefits, such as air quality and energy security, Government needs to act on these opportunities now.  This will ensure that the full range of system benefits, extending across heat, transport, energy storage / balancing of renewables and distributed power can be optimally linked to deliver a more streamlined system for the future.

9. We believe that the newly established Hydrogen Economy team at BEIS will help the hydrogen and fuel cell industry to realise its full potential by taking a holistic approach across heat, power, transport and beyond. To enable the demonstration of the wide range economic and environmental benefits these clean technologies have to offer, and to ensure they are able to deliver on their potential, the team will require adequate resources and support from the Government.

10. ISCF funding could be used to support scaled adoption of whole system hydrogen energy demonstrations at scale, in local clusters, with an integrated approach that will deliver more cost-effective solutions than currently being proposed. 

11. More specifically, to help accelerate the development and deployment of H&FCs we would urge the Government to progress the following now:

11.1                        Implementation of an OLEV/DfT H&FC Roll-out programme: A nation-wide programme for hydrogen refuelling infrastructure clustered around hydrogen fuelled / fuel cell electric vehicles (FCEVs) would enable long-range ultra-low emission across road transport (including HGVs), trains and marine transport.

11.2                        The development of a policy framework that recognises the benefits of and supports the transition to green (or low carbon) hydrogen: There are various methods of assisting the transition to green hydrogen including: adopting a phased carbon intensity threshold for hydrogen, implementing a certificate scheme, applying feed-in tariffs for injection into the gas grid, biogas reforming, and electrolyser operation to provide grid services to aid renewables integration. A phased approach is likely to offer the most cost-effective way forward.

11.3                        Assessment of the role of more ambitious long-term emissions targets in stimulating the transition from brown to green hydrogen and optimising its role:  This would be in line with the Committee on Climate Change’s response to the Clean Growth Strategy.

11.4                        Support for innovation to deliver scale, energy system integration and optimisation using H&FC solutions, as part of the Industrial Challenge Fund: The actual innovation would be deliverable in the 2019/2021 timeframe, and would help to generate the evidence base on the quantifiable benefits of wider scale, integrated production of hydrogen as part of the wider energy system. 

11.5                        True valuation of the energy system benefits of hydrogen, to be reflected within relevant policy frameworks: For all applications, if the value that hydrogen offers to the energy system is valued outside of the price that the users pay, by using infrastructure support mechanisms, energy system service incentives, and decoupling the capital cost from the operational cost of making the hydrogen available for use, the Government will help to create a market that, once scale or the infrastructure changes have been implemented, will be self-reliant, without the need for subsidy. With some early fiscal and financial incentives in the 2019-2025 timeframes, to ensure that the price for hydrogen is cheaper than the incumbent energy source (including the price of hydrogen at the pump and the price of hydrogen to the gas network), a sustainable, and attractive market can be created that would not need further intervention. As a priority, we would work with Government to define principles and the overall budget needed. Industry would focus on delivering the energy system benefits that will accrue from the investment.

11.6                        Profile raising to highlight the opportunities of H&FCs for a range of stakeholders:  This could include a public database and case studies of all existing and installed systems in the UK.  Whilst many exist, a fragmentary approach has not yet resulted in a comprehensive picture.  Industry sector visits and similar would also be beneficial in helping familiarisation and buy-in.

11.7                        Actions to facilitate regional progress: These could include a devolved government programme to build localised energy system projects using hydrogen and co-ordinated public procurement standards and framework (similar to those being developed by LoCITY for trucks) that local administrations can use to procure hydrogen technologies.

11.8                        Continuation of Hydrogen for Heat Programme: Buidling on the ongoing work in this space, the UK has already adopted a leading role in this area of opportunity, and it will be important to maintain momentum to ensure that the benefits for both UK clean energy policy and wider economic growth can be realised. 

11.9                        Technology awareness campaign within the key routes to market for fuel cells: This could aimed at new homes, heating installers, utilities (following field trials), to foster dialogue between customers and suppliers.

11.10                    Strengthening of local noise and air pollution regulation in sensitive areas: This would facilitate the use of fuel cells as a zero emission (pollutants and noise) solution. Strict regulation could create a market opportunity for fuel cells.

11.11                    RD&D funding to ensure compatibility for fuel cells to run on a hydrogen grid: This would ensure that fuel cells currently running on natural gas could use hydrogen from the grid, once this becomes available through the Hydrogen for Heat programme led by BEIS.

11.12                    Industrialisation support aimed at allowing scale-up of UK fuel cell systems to market: This would ensure that home-grown fuel cell companies would continue the manufacturing process in the UK delivering thousands of ‘green jobs’ and supporting the UK growth.

October 2018