The writer, a former business secretary, is a non executive director of Element 2
When the high-profile battery-making company Britishvolt collapsed last month, it did not bode well for the country’s ambition to generate “green growth”. But other building blocks in the UK’s zero-carbon economy have been more successfully laid of late with the rollout of new hydrogen filling stations for HGVs.
Using hydrogen for HGVs is important: transport accounts for around a quarter of national carbon emissions and just under 20 per cent of that is from heavy lorries, The diesel used by these vehicles doesn’t just affect climate change but adds to air pollution through nitrogen oxide and particulates. And diesel vehicles, like petrol ones, will be phased out after 2030 under the net zero strategy.
The green choice now is between batteries to power electric vehicles and hydrogen, used in those with fuel cells. They each have relative merits in terms of cost, convenience and range. But the current thinking is that EVs are better suited to cars and hydrogen to heavy vehicles.
It would be foolish, however, to be dogmatic about the future mix and costs — technology will advance in both sectors. I was a teenage milkman, driving electric floats over half a century ago and General Motors launched a hydrogen-powered car at about the same time.
Much has happened since — today I’m a director of a hydrogen fuel infrastructure company. In practice, a mix of EVs and hydrogen vehicles will be needed to consign diesel to history.
Both, however, face a chicken-and-egg problem. Operators of truck fleets and manufacturers will only invest in the technology if there is a reliable supply of fuel: hydrogen or “green” electricity for battery charging. The producers of these fuels will only invest when they are sure there is a market. A failure of either is fatal.
Infrastructure needs to connect both sides of the market and take the commercial risk. That is now happening: the business model involves matching various sources of hydrogen supply with a wide range of consumer contracts.
Fortunately, given that the British Isles are especially well-endowed with wind power, we have an inbuilt advantage — the UK has the second largest wind industry after China. It should become even bigger and cheaper after the lifting of the damaging ban on onshore wind. Wind farms sell into the grid but can have surpluses to use to electrolyse water and create “green” hydrogen.
There is a veritable kaleidoscope of colours reflecting different degrees of pollution in extracting carbon. “Grey” hydrogen, for example, can be chemically manufactured from natural gas, tempting the big oil and gas companies to become unlikely — and awkward — competitors in the hydrogen business.
Customers want 100 per cent “green” hydrogen but, until the market develops, the best is the enemy of the good. Different sources — including imported hydrogen — are necessary. EV’s face similar problems: charging batteries from the grid can involve using electricity generated from natural gas, or even coal.
The private sector will continue to do much of the heavy lifting during the transition — the profit margin is higher than for diesel. But government needs to ensure market signals are aligned. It would help if hydrogen were treated as a fuel, carrying 5 per cent VAT rather than the 20 per cent charged on its use as a chemical.
There is a lot of hype around hydrogen’s potential for steel and cement — even domestic heating. It may or may not be justified. In transport we are, however, seeing the beginnings of a commercially realistic hydrogen economy based on UK resources.
The potential is vast, but Britain is being left behind in the greening of the economy. It doesn’t have to be.
