Hydrogen action plan

Part 5 – Investing in Our Renewable Hydrogen Future

The Emerging Energy Technologies Fund (EETF) is a £180m package of funding up to 2025/26 that will provide capital support to accelerate low-carbon infrastructure projects and unlock private sector co-investment that will be essential to deliver net zero. The Fund will make £100m available to support renewable hydrogen projects in line with our Hydrogen Policy Statement.

In June 2022, we launched the first tranche of the EETF through the £10m Hydrogen Innovation Scheme (HIS). The remaining £90m Green Hydrogen Fund will follow in early 2023.

Funding principles

The Scottish Government’s hydrogen funding programme will 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.

The Scottish Government’s hydrogen funding programme is complementary to funding offered by the UK Government, including the Net Zero Hydrogen Fund.

In the period up to 2025/26, 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; and
• Innovation.

The establishment of regional and local production of renewable hydrogen will facilitate the potential to scale up quickly and this will play an important role in helping build the domestic market demand. We wish to see as many renewable hydrogen projects as possible coming forward for potential support from the £100m hydrogen funding we are making available. The production of renewable hydrogen from onshore renewables by the mid-decade and in particular, production from onshore wind generation, that is constrained or that cannot be connected to the electricity grid, is the key focus of our hydrogen investment programme in this Parliamentary term in order to inject the necessary pace into the establishment of a thriving hydrogen sector in Scotland.

We also wish to provide support for the development stages of large-scale regional renewable hydrogen energy hubs which will require engineering and technical design development to enable Final Investment Decisions to be reached for these strategically important projects.

The roll-out of renewable hydrogen production linked to domestic demand and the establishment of regional renewable hydrogen hubs represents new and sustainable economic activity and a transition opportunity for our Scottish supply chain.

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

Building on this track-record, and with an emphasis on balancing support for supply and demand and supply chain opportunities along the whole value chain, we will 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 EETF Hydrogen Innovation Scheme aims to support Scottish researchers and innovators to drive innovation to support innovative renewable hydrogen production, storage and distribution solutions as well as the development of test and demonstration facilities in Scotland that will support the realisation of our 5 GW by 2030 ambition and ensure Scotland benefits from and contributes to the global research and innovation network through international collaboration.

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.

The Action Plan implementation will be monitored to ensure that it stays current and responsive to developments at a UK and international level and that 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 the realisation of our hydrogen future.

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