UK hydrogen strategy: scaling up regulatory framework needed

Out-Law News | 23 Aug 2021 | 2:03 pm | 3 min. read

Significant work must be done to ensure that the UK regulatory framework is suitable to support low carbon hydrogen production at scale, according to experts at Pinsent Masons, the law firm behind Out-Law.

The recently-published UK hydrogen strategy sets out what the government and industry need to do during the 2020s and beyond 2030 to establish a “world leading” hydrogen economy. The strategy sets an initial target of 5GW of low carbon hydrogen production capacity by 2030, with this continuing to increase through to 2050 as part of its plans to achieve ‘net zero’ emissions by that date.

The strategy recognises that delivering the government’s ambitions will require “rapid and significant scale up”, with virtually no low carbon hydrogen currently produced or used in the UK. This will present some “strategic challenges” including policy and regulatory uncertainty; the need for enabling infrastructure; and the need for ‘first of a kind’ and ‘next of a kind’ investment and deployment.

The government intends to work with the industry and regulators in the early 2020s to “identify, prioritise and address” the regulatory barriers faced by hydrogen projects, and aims to publish initial conclusions and proposals in early 2020. Some of this work is already underway through the EU-wide ‘HyLaw’ project, which has identified the current legal barriers to wider deployment of UK hydrogen; and the working group on standards and regulations established by the government’s Hydrogen Advisory Council.

However, the government expects the regulatory framework to grow and develop as the hydrogen network itself grows. While it expects to make some regulatory changes to support early network expansion by the mid-2020s, long-term arrangements “will likely not be in place until the late 2020s”, according to the strategy.

Health and safety law expert Sean Elson of Pinsent Masons described the strategy document as “a jumping-off point”.

“It appears as if all those involved in the development of policy, in bringing forward projects or who are potential end users and consumers of hydrogen will have opportunities to shape the future of the regulatory framework for this ‘fuel of tomorrow’,” he said.

“Although years of familiarity may mean the public thinks little of the risks from gas boilers in our homes or putting petrol in our cars, the perception is very different of the risks posed to safety from hydrogen. Perhaps for that reason, the government has tried to emphasise that the ramp-up proposed in the strategy must be ‘safe’. Although this sounds like stating the obvious, the reality is that initially the development of the hydrogen sector will be underpinned by existing health and safety law. But at a strategic level, the government proposals also include bringing together relevant regulators into a national regulator ‘forum’ in 2021 to examine whether fundamental regulatory changes are required to meet a rapid expansion through to 2030 and on to the ‘net zero’ date of 2050,” he said.

The government has already been working with the UK’s health and safety regulator, the Health and Safety Executive (HSE), on proposals to blend natural gas with up to 20% hydrogen for domestic heating supply, as laid out in last year’s ten-point ‘green industrial revolution’ paper. Other potential safety considerations highlighted by Elson include the transmission of gas through pipelines and transportation by road or rail; the use of hydrogen in industry and in transport; and those associated with hydrogen production and storage.

“The public are also inevitably going to be affected by any need to upgrade or adapt existing domestic boilers and heating,” he said.

The strategy also acknowledges that existing planning and permitting regimes, while adequate in the short term, will need to be considered further by the government as the market develops.

Planning and environmental law expert Nick McDonald of Pinsent Masons said: “At the moment, hydrogen projects would need planning permission or a development consent order (DCO), depending on whether the proposal is for production, transport or storage and on its location and scale”.

“A key question for the government is whether hydrogen production proposals should be brought into the DCO regime and, if so, at what scale,” he said. “The DCO regime has a number of advantages including set statutory timescales, high success rates and land acquisition powers. However, we have seen the 50MW DCO threshold for generating stations create a ‘dead zone’ whereby schemes, particularly solar schemes, over 50MW but not of very large scale simply don’t come forward as the economics aren’t viable using the DCO regime – the last thing the government wants to do is repeat that with hydrogen.”

Should hydrogen production projects be brought into the DCO regime, the government must also set out the relevant policy in a “robust” national planning policy statement, “particularly the need for schemes to come forward”, McDonald said.