Scottish hydrogen: assessment report

Executive Summary

Hydrogen is set to play a key role in decarbonising the global energy system. Scotland's vast renewable resources, combined with its skills and supply chain focused on energy transition, are critical to establishing a prominent role for Scotland in the emerging global hydrogen market.

This report was commissioned by the Scottish Government in partnership with Highlands & Islands Enterprise and Scottish Enterprise. Global commitment to the deployment of hydrogen is accelerating, with national governments making increasingly ambitious commitments to the sector. Scotland will need to act decisively and provide clear policy support to position itself at the forefront of a growing a global industry. 

The ultimate scale of hydrogen deployment in the energy system is uncertain and will depend on technology commercialisation pathways for both electrification and hydrogen options. A future energy system will see increased electrification. However, it is likely that another energy carrier will be required to enable a more flexible, resilient and integrated system, and hydrogen is increasingly seen as playing a complementary role to electricity. 

The benefits of hydrogen for the energy system are becoming increasingly clear and the economic opportunity is significant. Scotland should focus on interventions in the hydrogen sector that are targeted and aligned with Scotland's skills and supply chain strengths. Policy should provide strong signals to industry, underpinning short to medium term investments and contributing to a post-COVID green economic recovery. Those investments will build the evidence base which informs the long term direction of travel. The Hydrogen Assessment Project engaged extensively with industry to develop three distinct and viable scenarios by which the Scottish hydrogen economy could develop out to 2045. These scenarios were used to understand the potential economic benefits associated with the production, transmission, supply and export of hydrogen. 

In the most ambitious scenario, establishing Scotland as an exporter of green energy to Europe could result in a £25 bn contribution to Gross Value Added (GVA) with over 300,000 jobs by 2045. This would be achieved by unlocking Scotland's vast offshore wind potential, but would be dependent on Scotland producing green hydrogen that is competitive in a European market. 

Supporting a domestic hydrogen market is likely to support anywhere between 70,000 to 175,000 jobs (£5-16 bn GVA) and is very dependent on the extent of the penetration of hydrogen in the energy system. 

The following organisations were engaged to inform the Hydrogen Assessment Project.