As a government, we are convinced that hydrogen, alongside renewable electricity, will play an extremely important part in our energy system going forward. Electrification will do the heavy lifting in our march towards net zero, but there are parts of our economy and energy system that are very difficult to electrify, and hydrogen could provide a solution for sectors such as heavy-duty on and off-road transport, shipping, aviation and industrial high temperature heat. Innovative and smart climate action will also include the use of hydrogen in the production of synthetic fuels and in energy storage solutions to help increase flexibility and balance the grid and there is some scope for hydrogen to support parts of our domestic heating systems.
Scotland has vast renewable energy resources. Subject to planning and consenting decisions and finding a route to market, we have a potential pipeline of over 40 GW of offshore wind generation projects. This could enable the use of surplus electrons for the creation of low-cost renewable hydrogen. This generating potential opens up new economic opportunities for our nation to become a leading producer and exporter of renewable hydrogen. International demand for hydrogen is growing, with Germany, the EU and the UK Government all increasing their respective hydrogen production ambitions in 2022.
Countries that need hydrogen are now looking beyond their borders to nations that can produce and provide that hydrogen at scale. Given how well-placed Scotland is to service future export markets for hydrogen and hydrogen derivatives at scale, hydrogen, powered by renewable electricity, could present Scotland’s greatest industrial opportunity since oil and gas was discovered in the North Sea.
We are already embracing the development of a hydrogen economy here in Scotland by making available £100m in capital funding for renewable hydrogen projects. The first tranche of our hydrogen investment programme, the £10m Hydrogen Innovation Scheme, opened in June 2022 and is supporting innovation in the production, storage, and integration of renewable hydrogen in our energy system.
Our priority is to get as much renewable hydrogen into the energy system as quickly as possible, while also supporting the establishment of low-carbon hydrogen production at scale in the 2020s, linked to carbon capture and storage (CCS). Economic impact estimates based on scenarios developed for the Scottish Government indicate the development of a hydrogen economy in Scotland could mean between 70,000 to over 300,000 jobs could be protected or created with potential Gross Value Added (GVA) impacts of between £5 billion and £25 billion a year by 2045 depending on the scale of production and the extent of exports.
In this Hydrogen Action Plan, we confirm our commitment to support the development of the hydrogen sector in Scotland and reconfirm our ambition of at least 5 GW installed renewable and low-carbon hydrogen production capacity by 2030 and 25 GW by 2045.
Hydrogen has a role to play across Scotland, in our islands and rural places, communities, cities and industrial clusters. Strategies for production and application are expected to vary across these geographic regions and we are committed to realising the growth opportunities of hydrogen for our regions and local communities. We will therefore support the establishment of strategically important regional hubs of hydrogen activity across Scotland, recognising the differing resources, strengths, and focuses of each location.
Our draft Hydrogen Action Plan was published in 2021. Since then a suite of studies and reports have been commissioned by the Scottish Government and its agencies to help us identify and understand the opportunities and potential barriers to the growth of our hydrogen economy in Scotland. These include the development of supply chain opportunities, including electrolyser manufacturing, production costs analysis, hydrogen demand and use case, as well as hydrogen production location requirements and export infrastructure, all of which will aid and inform the development of our hydrogen policies.
A strong, collaborative relationship with business will be required to accelerate renewable hydrogen production from onshore renewables by the middle of this decade, increase demand across sectors, improve supply chain and skills capability, and establish the necessary infrastructure to store, transport and distribute hydrogen to where it is needed.
Hydrogen production from onshore renewables will pave the way for gigawatt-scale hydrogen production linked to offshore wind and carbon capture utilisation and storage (CCUS) towards the end of the decade and the establishment of several regional hydrogen hubs servicing industry, heat and multi-modal transport, alongside the export market.
It is clear that hydrogen represents a pivotal opportunity for both decarbonisation and the economy and is a key driver in our just transition. Scotland has the resources, the people, and the ambition to realise the benefits of becoming a leading hydrogen nation. This is our ambition – but government cannot achieve it alone. Joint action will be required by the Scottish Government, UK Government and businesses working together to realise our hydrogen future.
I hope this clear signal of intent, founded on evidence and engagement, and set out in this Hydrogen Action Plan will allow industry and investors to respond with confidence. The global hydrogen market is developing rapidly, international partnerships are already being established and forward hydrogen supply contracts for off-takers are already being signed, and so, with shared ambition, co-ordination, collaboration and pace, we look toward to achieving a sustainable energy transition and realising our exciting hydrogen future. When we think hydrogen, we think Scotland.
Michael Matheson MSP Cabinet Secretary for Net Zero, Energy and Transport
Scotland has the opportunity to become a leading nation in the production of reliable, competitive, sustainable hydrogen
Scotland’s hydrogen ambition
Ambition of 5 GW of hydrogen production capacity by 2030 and 25 GW by 2045
Our 5 GW by 2030 renewable and low-carbon hydrogen ambition can be translated to more than 450,000 tonnes of hydrogen produced annually for both domestic and international use
Scotland’s renewable potential
Subject to planning and consenting decisions and finding a route to market, we have a potential pipeline of over 40 GW of offshore wind projects
Our supply of renewable energy is likely to provide more than we need for domestic electrification, so would enable us to use surplus electrons for the creation of low-cost renewable hydrogen
Hydrogen economy in Scotland has potential GVA (Gross Value Added) impacts of between £5 billion and £25 billion a year by 2045 depending on the scale of production and extent of exports
Developed scenarios suggest the hydrogen economy in Scotland could support the protection or creation of between 70,000 to over 300,000 jobs protected or created
REPowerEU sets a target of 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of renewable hydrogen imports by 2030
Global hydrogen demand could reach 115 Mt by 2030
By 2045 approximately 3.3 Mt (126 TWh) of renewable hydrogen could be produced in Scotland with approximately 2.5 Mt (94 TWh) exported to the UK and other European markets annually
£100 million of funding made available for renewable hydrogen projects
Hydrogen Innovation Scheme designed to support research & innovation in renewable hydrogen production, storage and distribution launched June 2022
Green Hydrogen Fund targeting support for renewable hydrogen production opens in 2023
Think Hydrogen Think Scotland
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