WE SHAPE A BETTER WORLD

Establishing a Hydrogen Economy

The Future of Energy 2035

www.arup.com/energy
The establishment of a strong hydrogen
economy is a very real opportunity and
within reaching distance. Private sector
investment, facilitated by appropriate
government policy will allow the UK to
benefit from significant decarbonisation
across the entire energy system. A hydrogen
economy could be a major differentiator for
the UK’s energy, transport and industrial
sectors with substantial export potential.
2 E S TA B L I S H I N G A HY D ROGEN ECONOMY
E S TA B L I S H I N G A H Y D R O G E N E C O N O M Y
Encouraging a future hydrogen
economy
The UK has a significant opportunity to decarbonise
our energy system and act as a role model for countries
looking at low carbon pathways. Following on from Arup’s
thought provoking report, ‘Energy Systems: A view from
2035’, it is clear there is a pivotal role for hydrogen in the
UK energy market of tomorrow.
This report explores the future of the UK’s This in turn will boost affordability and create
hydrogen economy and lays out a series of
action point. The insights captured here are the
numerous job opportunities for years to come –
benefits that can be shared by all.
result of extensive consultations and workshops
Hydrogen has great potential to be the catalyst
Arup has carried out across the country with
for decarbonising the UK energy system and
industry players, academics, and other key
with the work of Arup and others, we can
stakeholders. This work advances a much needed
transform this aspiration into reality. We need to
conversation on how best to take advantage of
see rapid progress in the coming years to meet
the opportunities presented by the hydrogen
our legally binding emission targets, and this
economy; the utilisation of hydrogen as an
report provides a roadmap to show that we all
important energy store and vector.
have a role to play on this journey.
Hydrogen in the UK doesn’t come without
challenges. There are many hurdles to overcome
before we see the development of hydrogen at
scale, but the potential benefits greatly outweigh
the challenges. It is difficult to see how the UK
can achieve a secure, resilient and decarbonised
energy system, able to balance supply and
demand, without a substantial role for hydrogen.
Building resilient infrastructure also requires
having the right policies in place to secure the
capital investment needed to create a successful
hydrogen economy. Arup’s report rightly
highlights the progress already being made
in utilising hydrogen for transport and heat,
albeit in small pockets. However, further policy
progress will require even closer collaboration
between academia, the private sector and other
stakeholders to shape future demand, change
consumer perception and create the strong
supply chains needed to allow the hydrogen
economy to thrive. KEITH MACLEAN,
UKERC BOARD MEMBER
E S TA B LI S H I N G A HY DRO G E N E CO NO MY 3
 E S TA B L I S H I N G A H Y D R O G E N E C O N O M Y

The essential hydrogen economy

Arup has undertaken significant work to explore

what the future energy system could look like through
IMPORTED

the transition to 2050. Our findings have identified

GLOBAL GREEN
HYDROGEN
REMOTE OFFSHORE CARBON CAPTURE
W I N D H Y D R O LY S I S AND STORAGE
OIL & GAS
EXTRACTION

hydrogen as an integral part of the future system to

IMPORTED

CO2
GLOBAL LNG
HYDROGE

assist in decarbonisation.
N

E L E C T R O LY S I S

N AT U R A L
GAS SHALE GAS CARBON
DIOXIDE
STORAGE

WIND
TURBINES
SOLAR
FA R M S
POWER
BIOMETHANE
PRODUCTION With hydrogen gaining traction in a number of ONGOING RESEARCH
countries across the world including the UK,
LARGE INDUSTRY CARBON

Following the Leeds City H21 projects, which

TO GAS
DIOXIDE
SMALL
MODULAR
NUCLEAR NUCLEAR

New Zealand and Japan, this report explores

INTERCONNECTORS

showed it might be possible to repurpose the

REACTOR
TIDAL
BARRAGE ELECTRICITY STEAM - METHANE
+HYDRO REFORMER

how we are on the cusp of a hydrogen economy.

MICROGRIDS
N AT U R A L G A S
GAS THERMAL
gas distribution network for hydrogen, there are
many research projects underway, largely funded
POWER - CCGT
DISTRIBUTION WASTE TO
ENERGY PLANT

HYDRO
PUMPED
CHP HYDROGEN GAS A FUTURE PERSPECTIVE by government bodies and the gas distribution
Arup undertook a series of workshops with companies. These are looking at a diverse range
STORAGE

TRANSMISSION H E AT STORAGE

public and private sector organisations involved of issues including safety, technical feasibility,
NETWORK CYBERSECURITY

THERMAL
STORAGE

S Y S T E M O P E R AT O R ( S ) or interested in hydrogen - from government economics and consumer acceptance.

and across a section of the supply chain. In an
There appears to be little need for new
emerging and immature market, our facilitated
STORAGE
TRANSACTIONAL ENERGY

technology as at a component level, much of this

workshops helped industry explore the
CYBERSECURITY
BLOCKCHAIN

already exists. It is the co-ordination between

CYBERSECURITY

challenges and opportunities. This perspective

S Y S T E M O P E R AT O R ( S )
government and industry players that is the key
explores the findings and the next steps to ensure
S Y S T E M O P E R AT O R ( S )

challenge that needs to be overcome.

LED STREETLIGHTS DEMAND SIDE
RESPONSE

COOLING
IOT EXPORT IMPORT ELECTRIC POWERED
PUBLIC TRANSPORT
a viable hydrogen economy.

It’s clear there is still work to be done

D ATA - C E N T R E S ,
O F F I C E S & R E TA I L VEHICLE TO GRID
HYDROGEN POWERED

THE UK AS A CASE STUDY

PUBLIC TRANSPORT
MICRO CHP
STORAGE BOILER

This report uses the UK as a case study and before hydrogen can fulfil its potential
S O L A R PA N E L S VEHICLE TO LIFE
ELECTRIC
VEHICLES

outlines how hydrogen will be a credible and as a key enabler in decarbonising the
B AT T E R I E S
HYDROGEN POWERED
I N T E G R AT E D P V HGVS

prominent feature to a 2035 energy system

PHEV

UK energy system.
ELECTRICITY HYDROGEN
FUEL CELLS

model.
EFFICIENCY
RETROFIT

H E AT P U M P S TRANSPORT

H E AT

THE CURRENT MARKET

In recent years considerable progress has been
made within the hydrogen industry across
Arup’s ‘Future of Energy production, transportation and use, including:
2035’ map, showing the
energy system of the future. -- Orkney Surf & Turf and Levenmouth Bright
Green Hydrogen demonstrators
-- Health and Safety Executive approval for
the HyDeploy, a project trialling up to 20%
hydrogen blend in the gas network
-- Transport sector using hydrogen-powered
trains, buses and fleet vehicles
-- The first demonstrations of H2 fuelled
domestic central heating boilers

4 E S TA B L I S H I N G A HY D ROGEN ECONOMY E S TA B LI S H I N G A HY DRO G E N E CO NO MY 5

E S TA B L I S H I N G A H Y D R O G E N E C O N O M Y

Hydrogen Economy 2035

By 2035, hydrogen could already be playing an important role in
the UK’s effort to decarbonise its energy system.
Our graphic demonstrates the different methods
for producing low carbon hydrogen, as well as
the opportunities for using the energy once it is
created. ONSHORE
RENEWABLES POWER GENERATION
E.G. GAS TURBINES
H Y D R O G E N C R E AT I O N AND FUEL CELLS HYDROGEN FOR INDUSTRY/
HYDROGEN FROM INDUSTRY
Electrolysis via renewables is a
TIDAL LAGOON
method in which electricity splits
water into hydrogen and oxygen. The
hydrogen can then be stored, and the oxygen can OFFSHORE WIND
SMALL MODULAR
NUCLEAR REACTORS
be released into the air or stored.

Reformation from methane is another SUBSTATION

way of producing hydrogen. Carbon HYDROGEN FOR
capture storage (CCS) technology can HEATING

capture the carbon dioxide that is produced from

the process.
GAS PEAKING PLANT/
PRESSURE POWER GENERATION
HYDROGEN USAGE REDUCTION
STATION
Transport: Improved fuel cell ELECTROLYSERS
HYDROGEN FOR
COOKING
technology for buses, trains and ferries
demonstrating hydrogen use where TRANSMISSION
its rapid refuelling time and higher efficiency NATURAL GAS NETWORK
EXTRACTION
density give it an advantage over batteries. LOW PRESSURE
DISTRIBUTION
NETWORK
OTHER SOURCES OF HYDROGEN
Industry: Heavy industry, for example (E.G. COAL GASIFICATION)

glassmaking and pottery, use high

temperature furnaces that emit large volumes
of CO2. A move to hydrogen offers a big
opportunity to decarbonise. Steel making also HYDROGEN FOR
has the potential to export hydrogen to the grid, EXISTING METHANE SHORT TERM
POWER
TRANSMISSION NETWORK STORAGE
as a by-product of the production process.

Homes: Using existing gas CARBON

SEQUESTRATION HYDROGEN FOR HYDROGEN FOR
infrastructure hydrogen could provide TRANSPORT MATERIAL HANDLING
METHANE REFORMER
a safe and reliable source of energy for heating, INTER-SEASONAL STORAGE
lighting and appliances, where retrofit for (UNDERGROUND CAVERNS)

electrification could prove costly. CCS TRANSPORT

INFRASTRUCTURE
HYDROGEN FOR
EXPORT

6 E S TA B L I S H I N G A HY D ROGEN ECONOMY E S TA B LI S H I N G A HY DRO G E N E CO NO MY 7

E S TA B L I S H I N G A H Y D R O G E N E C O N O M Y
What are the challenges the hydrogen
economy needs to overcome to succeed?
The UK needs to overcome numerous challenges over the
coming years to allow organisations, industry bodies and
individuals to feel confident in investing in the hydrogen
economy supply chain.
AT T R A C T I N G D E M A N D
Without growing demand, the large scale
production of hydrogen will not happen. This
demand could come from a number of sources,
all of which require a broad range of end user
appliances and equipment that is standardised,
desirable, safe and affordable. However, without
a strong supply chain which acts to reduce the
costs of hydrogen, and provide confidence in
the capability of industry to deliver a secure
and affordable fuel, consumers and public
and private sector buyers will be reluctant to
purchase hydrogen products.
This is the dilemma that needs to be
addressed: how to incrementally build
demand and supply in the most cost-
effective manner.
8 E S TA B L I S H I N G A HY D ROGEN ECONOMY
ENABLING INFRASTRUCTURE AND
INVESTMENT
Hydrogen requires infrastructure to get it from
source to end user. The capital investment
needed is significant and reliant on long term
indication and forecasts. If new business models
and new tariff arrangements are to emerge and
thrive, policy-makers need to establish a robust,
credible and flexible framework. This may
not necessarily take the form of the traditional
regulated network model. Especially if it is
based on a modular approach that increases
network size and applications over time, as
demand for hydrogen grows incrementally on
a regional or market basis.
The end goal is to have a sustainable
hydrogen economy with both the
production and infrastructure in
place and importantly - a demand
from end users.
ONE APPROACH TO POLICY
Government has an essential role to play for Goods and services
hydrogen to establish its place in the UK energy
system. Policymakers have both the opportunity
to stimulate demand and the tools to ensure
Contract payment
hydrogen is able to compete on a level playing
field with other decarbonisation pathways. The
Transportation
challenge for government is to establish how
consumers
Appliances
Production
Users and
Hydrogen
Hydrogen
Hydrogen
Demand
Supply
it can most effectively stimulate the hydrogen
economy, both for the established energy players
and disruptive market entrances. The challenge
for the industry is to speak to government with
one voice about what is needed.
Ultimately it is consumer demand that will Policy and regulation
support and sustain the business case for a future
hydrogen economy. The perception of hydrogen
must change so it is seen as a trusted alternative
to current fuels and as a means to decarbonise.
A strong narrative is required around how
hydrogen can deliver benefits to consumers
and value to investors. It is about providing
consumers a choice and allowing
the transition from one fuel source to another
fuel source. Continuing to bring together key
players in collaborative way will help push the
cause further.
Raising the awareness about the
challenges the different parties
face, identifying solutions and
establishing relationships across
the supply chain and government
is an essential next step.
E S TA B LI S H I N G A HY DRO G E N E CO NO MY 9
E S TA B L I S H I N G A H Y D R O G E N E C O N O M Y
How to achieve the hydrogen economy
A clear road map and vision should be established to make
the hydrogen economy achievable. Below are some key
considerations which can help the industry overcome the
challenges and grasp the hydrogen opportunity. These focus
areas have been a discussion point throughout the public and
private sectors from transport to large scale consumer. Some are
short term achievements whilst others are long term initiatives,
but all essential to a successful decarbonised energy system.
One thing is certain - action needs to start now
BRING CONSUMERS ALONG
Consumers are at the centre of the
hydrogen economy - they will drive demand for
hydrogen though their purchasing choices.
Effective communication with consumers needs
to be clear around the requirements to change
their behaviour to assist in decarbonising
transport and heat and use alternative energy
sources. It’s important there’s recognition that
remaining with the status quo is not an option
as it will lead to missing the legally binding
Climate Change Act targets, higher costs in the
longer term and a burden to future generations.
Consumer confidence is built
incrementally, with safety concerns
addressed over time, in a planned
and strategic way; however, there is
urgency to start now. The benefits
associated with hydrogen need to be
communicated in such a way that is
beneficial to consumers.
10 E S TA B L I S H I N G A HY D ROGEN ECONOMY
We need to highlight air quality improvements,
reduced noise and greater range extension on
electric vehicles. As part of this we also need
to focus on education, inspiring the younger
generation about a cleaner future and upskilling
the industry.
QUICK WINS
Focus should be on delivering high
profile projects quickly, such as
hydrogen use in transport - in particular public
transport and return-to-base fleets. This will
build confidence, experience and a supply chain
needed to tackle more complex challenges
such as using hydrogen for heating. Utilising
otherwise wasted surplus hydrogen - including
banning flaring – could be a significant step for
the industry.
Building on the good work already underway
to demonstrate hydrogen as a community
solution, particularly where renewable energy is
constrained. These examples should be used as
good models to support further roll out.
The limits placed on how bills are calculated
and the type of gas used in the network
requires expensive interventions and limits the
introduction of other gases such as hydrogen.
Changing this is a no regrets step to blending
hydrogen into the network.
Government should explore implementing
policy design to stimulate investment and lead Hydrogen is not an all or nothing
to a levelling of the playing field, given the
approach. The hydrogen economy isn’t
high levels of government support for other
low carbon technologies. It is important to seek
parallels and lessons from other transitions,
entirely dependent on the outcome of
where new technologies and industries have 100% hydrogen for heating. The case
for hydrogen in transport, industry, as
been successfully developed and emissions
reduced, following policy interventions.
One way to do this is to place an obligation on a blended fuel, and storage medium is
energy companies to supply increasing amounts
of decarbonised gas, such as hydrogen, in much sufficient to stand alone.
the same was that has been done for renewable
electricity.
INTO THE FUTURE
There should be a focus on
stimulating demand in stages. First around
transport and heavy industrial processes. This
would be followed closely by blending in the
gas network, before we can consider a move to
100% hydrogen for heat.
Ports and ferries are areas where uptake
of hydrogen solutions will have air quality
improvements and a range of benefits over
purely battery alternatives.
Heavy industrial processes provide an ideal
anchor for hydrogen projects. The construction
of a number of regional hubs, supplying
hydrogen to meet industrial demand, and
blending surplus into the gas network would
deliver substantial carbon savings. Gradually
increasing the proportion of hydrogen, up
to 20%, the point at which current domestic
applications can still work, will support the
incremental build-up of the capacity and
capability to produce hydrogen.
Investments can therefore be incremental,
with a reduced risk profile. It will lead to a
gradual reduction in the cost of hydrogen for all
applications, and prepare for a possible future
conversion to a 100% hydrogen gas network.
E S TA B LI S H I N G A HY DRO G E N E CO NO MY 11
E S TA B L I S H I N G A H Y D R O G E N E C O N O M Y

Hydrogen Roadmap to 2035 Hydrogen Roadmap to 2035

KEY EVENTS 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 This road map summarises
the key activities and
BREXIT
UK NATIONAL UK TO CLOSE
SDGS 2030 AGENDA outcomes which could
ELECTIONS ALL COAL PLANTS
occur on the journey to a
RIIO 1 NEW CLEAN
RIIO 2 RIIO 3 vibrant hydrogen economy
AIR ACT
by 2035.

3RD CARBON BUDGET (37% REDUCTION) 4TH CARBON BUDGET (51% REDUCTION) 5TH CARBON BUDGET (57% REDUCTION) 80% CARBON REDUCTION 2050
POLICY
CONVERSION MARKET AND FUTURE ALL APPLIANCES TO
EVIDENCE GATHERING AND POLICY FORMATION ENERGY MARKET DESIGNS BE H2 READY

FULLY FORMED REGS GOVT. DECISION ON

DEVELOPMENT OF GAS REGS, STANDARDS AND PRICING STANDS & PRICING HEAT DECARB. PATHWAYS

SUPPORT FROM CHANGING ATTITUDES VEHICLE RANGE

LOCALISED H2 AGENDA DEVELOPMENT CITY MAYORS TO POLLUTING VEHICLES EXTENSION

STAKEHOLDER
ENGAGEMENT INDUSTRY AWARENESS
& ACCEPTANCE
GROWING PUBLIC AWARENESS GROWING PUBLIC
ACCEPTANCE
WIDESPREAD PUBLIC ACCEPTANCE PUBLIC NORMALISATION

AND COMMS HY4HEAT COMMUNITIES COMMUNICATIONS

FOCUS GROUPS GROWING ACCEPTANCE
ENGAGED STRATEGY DESIGN

LARGE SCALE
UTILISING INDUSTRIAL
METHANE REFORMATION PATHWAY H 2 WASTE
PRODUCTION GLOBAL TRADE IN H2
WITH CCS

COMMUNITY ENERGY
GOV BAN H 2
ELECTROLYSIS FLARING REFINERIES
UTILISING CONSTRAINED
RENEWABLES ACROSS UK

PRODUCTION BEIS H2 PRODUCTION COMPETITION NATIONAL ROLLOUT FULL CITY

CONVERSION

DEVELOPING CCS CAPABILITIES

HYDEPLOY H 2 AVAILABLE GAS NETWORK

REGIONAL BLENDING DEVELOPMENT REGIONAL GAS NETWORK BLENDING START
NETWORK AND COMPLETION THROUGHOUT REPLACEMENT END
1 ST CITY

INFRASTRUCTURE DESIGN CONSTRUCTION HYNET

COMPLETION

0% CARBON GOVT
RETURN TO BASE FLEETS 5000H 2 BUSES 100% ZERO
PUBLIC TRANSPORT
& REFUELLING CENTRES OPERATIONAL UK
VEHICLE AND FLEET DEVELOPMENT CARBON CARS
COMMITMENT
TRANSPORT ABERDEEN 60+
H2 AVAILABLE ALL
500 REFUELLING 1ST UK 10,000H 2 BUSES ZERO EMISSIONS
1 ST H 2 FERRY H 2 TRAIN MOTORWAY
H2 FLEET STATIONS ACROSS UK MARINE FLEET OPERATIONAL UK RIVER THAMES
SERVICE STATIONS

PATHWAYS AND DEMONSTRATIONS FOR DECARBONISING INDUSTRY DEVELOPMENT OF REGIONAL H2 HUBS 100% DECARBONISATION INDUSTRIAL ZONES

INDUSTRY HYNET PROJECT ACORN OTHER REGIONAL HUBS

OPERATIONAL

1 ST PURPOSE
SAFETY CASE APPLIANCES
APPROVED
BUILT 100%
CERTIFIED MARKET APPLIANCE DELIVERY
H 2 NETWORK

HY4HEAT HY4HEAT COMMUNITY WIDESPREAD DOMESTIC PROPERTY CONVERSIONS

HY4HEAT PREPARATIONS FOR WIDE SCALE PROPERTY CONVERSION
HEATING
PROG. END CONVERSION PHASE

H100 H100

1ST COMMUNITY
H21 CONVERSION
DEMONSTRATION

ORKNEY SURF’N’TURF H2 ORKNEY DECARBONISATION ISLAND COMMUNITY DEVELOPMENT AND DEPLOYMENT

INTEGRATED FROM CONSTRAINED RENEWABLES

SOLUTIONS LEVENMOUTH H2
DEVELOPMENTS

ATTRACTION OF
UK EXPERTISE RETENTION OF EXISTING UK RECOGNISED
UK ECONOMY EXPORTED INDUSTRIAL BASE
NEW H2 DEPENDANT
INDUSTRIES
AS H2 LEADER

KEY: Enacted Process Enacted Milestone Recommended Process Recommended Milestone

12 E S TA B L I S H I N G A HY D ROGEN ECONOMY E S TA B LI S H I N G A HY DRO G E N E CO NO MY 13

 Special thanks to all those who
E S TA B L I S H I N G A H Y D R O G E N E C O N O M Y

What happens next? participated in various hydrogen

workshops to explore these issues.

Having explored the challenges and opportunities, what needs

to happen for the UK to establish a leading position, it is clear
there is urgent need for action.
Government policies are needed in the imminent -- Jobs and employment – the hydrogen
future to establish a robust supply chain, economy offers a fantastic opportunity to
encourage new business models and inject support high quality jobs which will require
investment into infrastructure. It's all possible highly skilled and trained workers, as well as
and achievable to reach emission and climate export opportunities for the UK in a growing
change targets. Below are some final thoughts to international market.
consider about the potential of hydrogen in the
UK as well as other countries. Hydrogen in conjunction with other
THE FUTURE OF HYDROGEN IS HERE
technologies represents a significant
-- Pilots and at scale demonstrations – to opportunity for the UK to decarbonise
support the development of policy, business the energy system and generate jobs.
cases, technology, consumer confidence and
build supply chain capacity. Taking action now will enable the UK
-- Public understanding – a shift in the public to take a leading role for the benefit of
perception of ‘energy’ as just electricity, the industries and the population.
need to decarbonise the entire energy system
and promote the role hydrogen could play.
-- Coordinated research – a centrally
coordinated group from across academia
and industry to determine knowledge gaps
and agree a portfolio of evidence gathering
research.
-- Learn from overseas – whilst the UK is
leading some elements of the hydrogen
economy, there are opportunities to learn and
build on best practice from across the world,
from advanced blending to repurposing
transmission pipelines.
-- Policy and market design – government and
industries must work together to develop
innovative market structures that provide
value for money for tax payers and offer
options to de-risk for the industry.

14 E S TA B L I S H I N G A HY D ROGEN ECONOMY E S TA B LI S H I N G A HY DRO G E N E CO NO MY 15

We shape a
better world

C O N TA C T
energy@arup.com
arup.com/energy