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Developing the hydrogen economy
Why it is important
Hydrogen is expected to play a crucial role in Scotland’s energy future. It could be used to store and carry energy, with the potential to reduce emissions in sectors and industries traditionally reliant on fossil fuels such as long-haul transport, chemicals and steel. Hydrogen could address grid capacity issues by storing excess renewable energy, potentially saving up to £2.5bn by 2030 in extra payments to operators of wind farms.
In 2022, the Scottish Government’s Hydrogen Action Plan set forth Scotland’s ambition to become a leading producer and exporter of hydrogen.
It predicts that hydrogen will account for 15% of Scotland’s energy demand by 2030. By 2045, the installed hydrogen production capacity could be five times more than in 2030.
ClimateXChange work
To advance these ambitions, ClimateXChange commissioned several studies to identify the skills and workforce needed to support the hydrogen sector, evaluate Scotland’s export potential and explore options for energy storage.
ClimateXChange helped refine research questions from the Scottish Government. Studies focused particularly on green hydrogen, produced by electrolysis using electricity from renewable sources.
The studies:
- modelled the scale of economic activity in the hydrogen sector and, in consultation with key industry stakeholders and skills providers, defined skills needs in the emerging hydrogen economy
- explored the costs of producing green hydrogen in Scotland and a follow-up study compared these with costs of producing and exporting hydrogen to EU markets in other major exporting countries
- investigated whether hydrogen could be used to store excess renewable electricity through a literature review and stakeholder engagement
- assessed the value of electrolysis to manage network constraints through developing future scenarios.
Impact
ClimateXChange has built evidence across many and complex questions on the development of Scotland’s hydrogen economy. We ensured that policymakers were provided with the best, clear and timely answers, with our reports significantly influencing policy and strategic directions.
“The ClimateXChange report on hydrogen as a storage medium was an important first step for us in developing our policy positions on energy storage and hydrogen”
– Stuart McKay, Head of Hydrogen Policy at the Scottish Government
This study on hydrogen as a storage medium demonstrated hydrogen’s utility to store energy, which prompted a deeper investigation into the viability of hydrogen storage in different geological formations across Scotland. This could be crucial for the energy grid’s long-term storage solutions.
Findings from the study drove conversations with significant stakeholders such as the National Energy System Operator, and previously the National Grid Electricity System Operator, which is looking at a strategic network across the UK.
The study frequently informs briefings to ministers and contributes to responses in parliamentary questions about energy storage and hydrogen use.
Overall, our research highlights hydrogen’s potential value to Scotland’s economy. It informed strategic documents in Scotland and wider UK, including the hydrogen action plan, green industrial strategy and the upcoming hydrogen sector export plan.
Related reports
Mapping the hydrogen skills landscape
Hydrogen as a storage medium in Scotland
Redirecting excess renewable energy to produce hydrogen
Cost reduction pathways of green hydrogen production in Scotland
External publications
UK Parliament report: Hydrogen and carbon capture in Scotland
Policy Exchange report: Turning wasted wind into clean hydrogen