Trade association for the UK downstream oil sector the UK Petroleum Industry Association (UKPIA) has called for Government to accelerate development of its ‘business model for low carbon hydrogen transport and storage’.
In response to the Government’s consultation that ran from 21st August to 22nd November 2022, UKPIA has stated that plans to publish the business model by mid-2023 could risk delaying major projects needed for Net Zero.
The consultation sought views on hydrogen transport and storage infrastructure business model designs, regulatory arrangements, strategic planning and the role of blending.
According to the UKPIA, before any final investment decisions (FIDs) are made some low carbon hydrogen projects will require transport and storage infrastructure to be built, which could take up to four years.
“The message from our members is clear – the timescale for publishing the business model is too long and risks delaying investment decisions for vital hydrogen projects,” said Elizabeth de Jong, CEO of the UKPIA.
“Government should consider how it can bring forward the publication of the business model to help bring these projects to fruition as quickly as possible.”
To ensure that hydrogen production has an associated demand that can be supplied, UKPIA stated that a ‘coordinated approach’ is needed to align the development of transport and storage infrastructure with that of major production facilities.
For a successful journey to Net Zero, both UKPIA and the Government believe that the business model for hydrogen and that for natural gas need to be compatible.
This includes the use of blending hydrogen into the existing gas grid. As outlined in the Gas Safety Management Regulations 1996, hydrogen is currently limited to 0.1% (by volume) in Great Britain’s (GB) natural gas networks.
The Government has stated that it has not yet decided whether to enable blending of up to 20% hydrogen (by volume) into GB gas networks and are targeting a policy decision in 2023, subjective to the outcomes from ongoing economic and safety assessments.
Despite this, BEIS (Department for Business, Energy & Industrial Strategy) currently views blending as a transitional option and – if enabled – it will have a limited role in heat decarbonisation as the country moves away from use of natural gas for heat.
“Hydrogen is expected to play a more valuable role in other parts of the economy, such as industry, heavy transport, or power generation,” said BEIS in the Government response to the consultation on a Low Carbon Hydrogen Business Model.