The Hydrogen Opportunity

In December 2020, the Scottish Government highlighted the opportunity for Scotland to be a leading hydrogen nation globally.

Its ‘hydrogen policy statement’ confirmed Scottish Government support for the strategic growth of a strong hydrogen economy. There is no doubt hydrogen has a key role to play in tackling the climate emergency.  However, there needs to be an immediate transition from strategy to production.

There are signs that this is starting to take place. Innovative projects are being proposed. The latest being the North of Scotland Hydrogen Programme, involving energy companies ScottishPower and Pale Blue Dot Energy, as well as the Port of Cromarty Firth and distillers Glenmorangie, Whyte and Mackay and Diageo. The proposal is that a ‘hydrogen hub’ is created in order that the ports and distilleries around the Cromarty Firth are supplied with hydrogen fuel created using the electricity generated by offshore and onshore wind farms.

The Scottish Government’s commitment to achieving net zero greenhouse gas emissions by 2045 and a 75% reduction by 2030 (against the 1990 baseline) means that relentless pace is crucial to deliver the required innovation, investment, regulation and market environment.

A target has been set to support the development of 5GW of renewable and low-carbon hydrogen production by 2030 (by comparison the Scottish Government is aiming to increase offshore wind capacity to 11GW of energy installed by 2030). There is also commitment to £100m of funding towards the development of Scotland’s hydrogen economy over the next 5 years.

Certainly Scotland’s ability to compete in this market on a global scale is strengthened by its natural resources, infrastructure and skilled energy workforce. These are strong foundations with which to attempt to secure export opportunities internationally.

Policy, regulatory frameworks, business models and market mechanisms to boost market certainty and investor confidence in hydrogen will require the Scottish Government to work closely with Westminster. The UK Government will publish their hydrogen strategy later this year. In their Energy White Paper the UK Government also set a target of 5GW of low-carbon hydrogen production by 2030 and the creation of a £240m Net Zero Hydrogen Fund.

The joint focus of Westminster and Holyrood on hydrogen is already evident. For example, a joint investment (£50m from both respective Governments) into the Islands Growth Deal includes a plan to establish the initial infrastructure to support the production of green hydrogen from onshore and offshore wind by the Outer Hebrides Energy Hub. This project will be developed to be replicable across the UK and the intention is that hydrogen production at the Energy Hub will be scalable to allow export of hydrogen by sea to identified European markets or by direct pipeline to the west coast Scottish mainland.

Hydrogen in Aberdeen

In terms of particular areas leading the charge towards net zero, Aberdeen and the North East of Scotland is pioneering the use of hydrogen.  Only last week the UK Government allocated £27m of the Budget towards Aberdeen’s Energy Transition Zone (ETZ), a project between Aberdeen City Council, Invest Aberdeen and Opportunity North East. This is a huge boost for the North East and will assist in their continuing leading roll in meeting UK carbon reduction targets.

As a region, Aberdeen and the North East of Scotland is at a geographical advantage in terms of its ability to produce both blue and green hydrogen. The development of the ETZ is possible because of the proximity to the new harbour development, as well as TECA, Aberdeen’s new £330 million event complex, which will house an energy centre. Significant work in relation to the ETZ will be focussed around the new harbour development which will provide approximately 40 hectares of development for business purposes relating to energy transition. The associated infrastructure is looking to attract high profile manufacturers and renewable projects. Local experienced supply chain will be relied upon to diversify and take advantage of the opportunities the region has to offer. The creation of an energy skills hub will support current businesses and create relationships and opportunities for the future, by working closely with local universities, the North East College and Skills Scotland. It is hoped that these initiatives will attract high investment and opportunities, and promote the message that the Aberdeen ETZ is very much open for business.

Whilst the ETZ is being rolled out, we can already see the role that Aberdeen has played in the race to zero to date. Aberdeen’s first hydrogen production and bus refuelling station was opened in 2015 as part of a £19 million green transport demonstration project. The world's first fleet of double decker hydrogen buses was officially launched into service in Aberdeen in 28 January 2021. Run by First Bus, in a project led by Aberdeen City Council, the hydrogen buses represent a major step forward in reducing climate change.

Aberdeen City Council have shown a further commitment to hydrogen activity in their Climate Change Plan for 2021-2025. As part of achieving the 2025 net zero target, the Council are taking the following steps which are planned to be achieved by 2025:

• The conversion of 42 refuse collection fleet vehicles to dual fuel (hydrogen/diesel);
• Produce a feasibility study to inform hydrogen for heat demand;
• Conduct a fleet review to identify numbers/cost for hydrogen and electric vehicles;
• Replacement of petrol and diesel fleet to hydrogen and electric vehicles; and
• Partnership working on a hydrogen fleet development and infrastructure study to determine the overall infrastructure requirements for further public sector hydrogen fleet.

Aberdeen continues to be the lead runner in the race to net zero with no signs of slowing down. Aberdeen’s message is clear that it is open for business with an ambition to deliver a reduction in emissions and diversify the economy. It is hoped that these measure will establish Aberdeen as an integrated energy capital, moving away from the city being identified predominately as the oil and gas capital, whilst delivering on the government’s commitment to reducing carbon emissions.

In order to facilitate the roll out of hydrogen activity, a robust and well resourced planning system must be at the heart of this delivery. The NPF4 Position Statement recognises the support required for renewable energy developments, including hydrogen networks, in order to meet the net zero emissions target. Potential policy changes are being considered to support a spatial strategy for net zero emissions, including the use of hydrogen. The aim is for climate change to soon be the guiding principle for plans and decisions. We are likely to see the incorporation of policies in Local Development Plans in due course which will encourage and support hydrogen activity as well as potential new Permitted Development Rights for “green development” being introduced. It is hoped that these changes will assist in achieving the ambitions of a net zero Scotland.