Hydrogen action plan: draft

Part 3 – Investing in Our Renewable Hydrogen Future

The Emerging Energy Technologies Fund (EETF) is a £180m package of funding over five years that will provide capital support to accelerate low-carbon infrastructure projects that will be essential to deliver net zero. The Fund will make £100 million available to support renewable hydrogen projects in line with our Hydrogen Policy Statement.

Funding principles

The purpose of our hydrogen funding programme is to support the development of a hydrogen economy in Scotland, facilitate a just transition and help overcome challenges to scaling up hydrogen production and deliver lasting benefits for business and communities.

The production of renewable hydrogen involves proven technologies but the deployment of these technologies requires private and public sector investment to bring forward projects and support their commercial scale-up.

We are conscious that our funding programmes need to be delivered alongside and in complement to those offered by the UK Government, including their Net Zero Hydrogen Fund, and we will work closely with them as we finalise the design of EETF.

During the next 5 years, the Scottish Government will invest in the emerging hydrogen sector through its capital funding programme focusing on the following types of activity:

• Regional renewable hydrogen production hubs
• Renewable hydrogen production linked to demand case
• Innovation

Within the five-year horizon of the Action Plan we believe the establishment of regional and local production of renewable hydrogen will play an important role in helping build the domestic market demand, which may have the potential to scale up quickly (as described in Part 1). We wish to see renewable hydrogen projects coming forward for potential support from the £100m hydrogen funding programme. This will be a key focus of our funding support over the next five years.

During the lifespan of this Action Plan, large-scale renewable hydrogen production projects from offshore or onshore will require engineering and technical design development to enable final investment decisions to be reached later this decade.

All these represent new and sustainable economic activity and transition opportunity for our Scottish supply chain.

Scotland's success in the deployment of on-the-ground hydrogen demonstration has cemented our reputation abroad as a nation which can foster emerging sectors and get things done, and the Scottish Government has supported a variety of successful projects which have helped demonstrate the use of hydrogen in the decarbonisation of key sectors.

With an emphasis on balancing support for supply and demand and supply chain opportunities along the whole value chain, we will to continue to fund appropriate pre-commercial projects to accelerate demand and support the sector to move beyond small pilot stage to large scale commercial projects.

Innovation and research across hydrogen production, storage, distribution and end-use technologies will be central to driving the efficiencies, performance optimisation and cost reduction that will underpin the growth of commercial scale renewable hydrogen projects. The £10m Scottish Hydrogen Innovation Fund, to be launched in early 2022 as part of the EETF, will aim to support Scottish researchers and innovators to drive innovation that will support the realisation of Scotland's 5GW by 2030 ambition and to ensure Scotland benefits from and contributes to the global research and innovation network through international collaboration.

Scope

The scope of the Scottish Government £100m hydrogen funding programme, will be designed to bring forward a portfolio of renewable hydrogen projects. Any funding provided under the EETF will be complementary to the UK Government Net Zero Hydrogen Fund and in compliance with appropriate subsidy control rules.

Timeline

We are finalising the eligibility and project assessment criteria for the EETF, and invite will views on this from stakeholders ahead of a call for projects in early 2022.^[9]

Future Decision Making

The actions and funding principles set out in this document are intended to enable government, industry and academia to work together to lay down some of the early building blocks required to enable the growth of a strong and sustainable hydrogen economy in Scotland. It is important that the Action Plan stays current and responds to developments at a UK and international level. We will develop appropriate governance arrangements to provide oversight and strategic direction to allow us to adapt our approach where necessary to ensure our actions deliver the maximum impact. We will also work with key partners throughout the lifetime of the Action Plan to evaluate progress and to assess the support that will be required to accelerate this progress throughout the second half of the decade.

The opportunity for Scotland is substantial, and we are committed to working in partnership to realise it.