A Trading Nation - realising Scotland's hydrogen potential: plan for exports

4. Connectivity Pillars

In addition to the necessity for supply and demand to align effectively, several foundational connectivity pillars have been identified as essential for the export of hydrogen. These pillars will be instrumental in fostering the growth of the hydrogen sector.

4.1 Ports

Scottish ports have already demonstrated their importance in unlocking the wider renewable energy potential in Scotland and will play a crucial role in the growing hydrogen sector. They are central to the creation of hydrogen hubs for land-based users such as distilleries, shoreside cold ironing for marine vessels, bus networks, and hydrogen-based chemical manufacturing. They can also facilitate the export of hydrogen and hydrogen products to external markets either via pipeline or through shipping. Maritime transportation of hydrogen from Scottish ports via shipments could be facilitated either in its liquid or gas form or as part of a chemical compound such as ammonia or LOHC.

With Scotland well-placed in terms of proximity and infrastructure connectivity to key hydrogen import locations in north-western Europe, we are continuing to support tangible industry-led projects that look to investigate and demonstrate the delivery of hydrogen and hydrogen products from Scottish ports into north-western Europe. These include the ports and authorities of Port of Cromarty Firth, Forth Ports, Aberdeen, Peterhead, Shetland, and Orkney Islands Council.

The proximity of port infrastructure to industrial sites might facilitate the export of hydrogen derivatives that require pre-treatment such as ammonia or LOHC. Scotland’s existing industrial capabilities around some of its ports may be a critical factor to develop distribution networks into the UK and Europe, and coordination will be required to ensure port adaptation efficiency^[18].

Hydrogen can also be transported in its pure form as a compressed gas or as cryogenic liquid. While liquifying hydrogen uses energy due to the extremely low temperature conditions required, research to improve liquefaction technology, as well as improved economies of scale, could assist in lowering the energy required and the cost.

The need for coherence in transport and infrastructure planning is already driving a review of Scottish ports and terminal infrastructure preparedness for hydrogen exports, the results of which include the recent investments in Aberdeen, Arnish and the £100 million investment in Ardersier (£50 million from UK Investment Bank and £50 from Scottish National Investment Bank). Inverness and Cromarty Firth Green Freeport and Forth Green Freeport have been jointly selected by the Scottish and UK governments to become Scotland’s first Green Freeports^[19], positioning them well to host hydrogen as well as offshore wind projects and companies.

In parallel with reviewing our domestic networks, we are engaging with key European ports such as the ports of Rotterdam, Antwerp, Wilhelmshaven, and Hamburg, which we expect to become major hydrogen hubs. This includes work with the ports of Rotterdam, Sullom Voe, Peterhead and other strategic partners on Phase 2 of the LOHC for Hydrogen Transport from Scotland Project (LHyTS)^[20], led by the Net Zero Technology Centre (NZTC).

This project has carried out a feasibility assessment for a pilot trial for the shipment of LOHC from Scotland to the north-western European mainland via Rotterdam, indicating the viability of a strategic export route for hydrogen between Scotland and the EU. The assessment has also provided an understanding of the infrastructure requirements at the ports of Sullom Voe and St Fergus for the storage, handling, and shipping of LOHC to Europe.

Liquid Organic Hydrogen Carriers: Hydrogen Transport from Scotland to Rotterdam (LHyTS)

Phase 3 of the project, led by NZTC, is currently being scoped and will consider front-end engineering design for the LOHC technology both at Scottish and Dutch ports.

Additionally, developers such as MHP and LH2 Europe are currently taking forward projects looking to establish end-to-end liquid green hydrogen and e-methanol supply chains and commercial-scale export, including via marine transport, from Scotland to Germany using liquefaction technology.

Other innovativge examples include Scottish start-up Flexergy which is developing unique technology for ultra-efficient compression, storage, and distribution, an area with huge scope for improvement over current solutions, and has been supported by Scottish Government funding through the Energy Technology Partnership (ETP)^[21]. If developed further, high pressure hydrogen gas compression technology may have potential to assist the maritime transport of compressed hydrogen across distances covering Scotland and north-western Europe.

Over the coming years we will continue to engage, seek and facilitate strategic partnerships with developers and Scottish and European ports and terminals to support the development of export infrastructure and options in Scotland and ensure that these are aligned with key north-western European import hubs.

4.2 Pipelines

The development of hydrogen offshore pipelines offers a strong strategic opportunity to support the large-scale transportation of hydrogen exports from Scotland to north-western Europe, given our proximity just 700km away from the Netherlands and 750km from the north German coast^[22]. This will assist us to maximise Scotland’s vast potential offshore energy resources by providing an additional route to market through the production of renewable hydrogen.

The NZTC Hydrogen Backbone Link Phase 1 report in September 2023 , and supported by the Scottish Government, considered several options for pipeline routing offshore that could connect major energy hubs in north east Scotland to the onshore European Hydrogen Backbone. It concluded that whilst it would be feasible to use existing pipelines, the development of a new pipeline would enable accelerated deployment. In particular, developing pipelines linking St Fergus, Port of Cromarty, Flotta and Shetland and then to Germany could reduce transportation costs to 32 pence per kilogram of hydrogen, making the cost of delivered green hydrogen produced in Scotland internationally cost-competitive^[23]. Phase 2 of this project is now well underway and will sit alongside studies from Crown Estate Scotland and Scottish Futures Trust which look further into the commercial case for a pipeline.

The scope of Phase 2 also includes investigating a hydrogen import link from the Irish Sector to Scotland. The Scottish-Irish Backbone Link addition considers how a hydrogen pipeline network could be established between the two countries to facilitate the cost-effective, safe and secure future of Europe’s energy needs.

The location of international transport infrastructure will need to be strategically considered alongside the build-out of the UK’s domestic hydrogen production, transport, storage, networks, and locations. Given Scotland’s projected supply of excess energy and current grid constraints, we will continue to make the case for pipeline connectivity to come out of Scotland, thus leveraging Scotland’s renewable generation potential, industry skills and existing infrastructure assets.

It will also be critical that we continue to engage with our EU partners to explore and facilitate cooperation and off-take agreements, as well as work with UK and EU governments to assist the development of business models for international hydrogen transport pipelines.

Cooperation between North Sea countries and regions, as well as Ireland, will be essential to capitalise on the existing infrastructure and renewable generation potential, and to overcome the regulatory and technical hurdles to establish a well-functioning international market for hydrogen and hydrogen products. To this end, we will continue to work through our international offices and with the UK Government^[24].

4.3 Large-Scale Storage

For hydrogen exports, flexible, large-scale integrated storage solutions are critical to provide confidence to off-takers that there will be a robust and continuous supply of hydrogen. Security of supply was identified as a key issue during our stakeholder engagement process, which informed the development of this plan.

Hydrogen storage solutions will be required at all scales to suit different scenarios. Storage of hydrogen for export markets in the long term will require large geological storage. However, interim projects will be able to utilise alternative small- and medium-scale solutions. Many projects are already assessing the case for hydrogen storage at different scales in Scotland. A number of Hydrogen Innovation Scheme^[25] projects that received Scottish Government funding in May 2023 were supported to further develop understanding of hydrogen storage, including H2GEN, H2Shore, StorageUpscale and Green Hydrogen Integration at Sullom Voe.

In addition, Edinburgh University has evaluated offshore geology and suitability for large subsurface hydrogen storage through its HyStorPor project^[26]. The project has shown that subsurface geological storage of hydrogen is possible.

Nonetheless, over the coming years, further feasibility studies and subsurface trials will be required in porous media and lined rock cavern storage in order to confirm their suitability for hydrogen storage in Scotland.

Opportunities for the geological storage of hydrogen will need to be assessed and coordinated with the strategic ambition and vast potential for CO₂ storage in the North Sea, which is estimated at up to 46 Gt of CO₂ storage in Scottish waters^[27].

Offshore hydrogen transport pipelines also offer the potential to store large quantities of hydrogen through line-packing – putting more gas into a pipe than is being withdrawn – thus requiring strategic coordination for the development and operation of multiple storage options.

The UK Government is currently developing a hydrogen storage and transport business model that will support up to two storage projects at scale and associated regional pipeline infrastructure to be in operation or construction by 2030. UK Government are committed to designing, by 2025, a new business model for hydrogen transport and storage infrastructure.

Additionally, the development of onshore pipeline infrastructure currently being considered through National Gas Project Union will be key to enable the large-scale export of hydrogen to demand centres in the south of the UK. This project is critical to providing developers in Scotland with further assurances of demand by connecting production and storage with end users domestically. It is likely that the first large-scale storage sites in the UK will be situated in the North of England, with the highest levels of hydrogen production coming from Scotland it is therefore essential that good connectivity to those sites is needed to help enable our large-scale production ambitions.

However, neither the hydrogen production business model nor the transport and storage business models are currently designed to support hydrogen for export. We will continue to make the case for the UK Government to expand the hydrogen storage and transport business model to include revenue support for the storage of hydrogen for international export.

In addition to enabling hydrogen exports, storage can also assist the development of hydrogen supply chains, the delivery of employment opportunities and increase labour force skills.

4.4 Certifications and Regulations

A fit-for-purpose international regulatory regime and interoperable certification schemes should reduce barriers to trade and ensure high standards in the hydrogen economy. To be able to export hydrogen from Scotland, we need to ensure that the hydrogen produced meets the requirements of importing countries. International regulatory co-operation is of vital importance to achieve this.

The UK Government has introduced a Low Carbon Hydrogen Standard^[28] that sets the threshold for the level of carbon emissions permitted in the production of hydrogen for it to be considered ‘low-carbon’ in the UK. This standard is currently voluntary unless applying for financial support through government schemes, and the UK Government intends to introduce a certification scheme based on the Standard^[29]. The introduction of this scheme recognises the importance of offtaker confidence that purchased hydrogen complies with an agreed standard and emission limits.

To avoid fragmentation of standards and certification within the UK, we do not plan to develop Scotland-specific versions and are working with the UK Government to ensure that the regulations it proposes do not act as a barrier to our export ambitions.

The UK Government has committed to publishing a pathway to international alignment ahead of launching its certification scheme. We will work with the UK Government to ensure that the UK hydrogen certification scheme and standard can facilitate trade for producers looking to export hydrogen or its derivatives.

There is also movement internationally around accepted methods for determining the emissions associated with hydrogen production. The International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE),^[30] and subsequently the International Organisation for Standardization (ISO),^[31] have been developing an agreed methodology for determining the greenhouse gas intensity of hydrogen production.

We commissioned a study that compares existing and developing emissions related standards for hydrogen globally, including the UK Low Carbon Hydrogen Standard. The study also quantifies the greenhouse gas (GHG) emissions associated with producing and exporting hydrogen to the EU from Scotland and other countries, and how these compare to EU requirements. The study finds that in terms of GHG emissions, electrolytic hydrogen produced in Scotland and exported to the EU could be one of the most competitive of the countries considered. The study will be published via ClimateXChange in the coming months.

To achieve our hydrogen export ambitions we must ensure that the regulatory framework for renewable hydrogen developments supports the scale-up of hydrogen at pace, whist protecting the environment and communities. Since the regulatory regime for hydrogen in Scotland is a mix of reserved and devolved powers, we are working closely with the UK Government through the UK Regulators Forum to assess regulatory requirements and ensure that action is taken to address any identified gaps and issues.

As development of regulations and standards gathers pace, we will look for opportunities to influence the appropriate international regulatory and standards system through collaboration with standards-setting bodies.