The UK’s hydrogen strategy: hydrogen types and the funding available

6th September 2021 | Commercial Energy

The launching of a hydrogen economy is seen as being essential for achieving the 2050 net zero goal. As discussed in our earlier article, the UK government’s strategy for building this economy aims to create 5 GW of hydrogen production capacity by 2030, with 1 GW targeted as soon as 2025. To increase hydrogen production to these levels, the strategy outlines how the government will support innovation and stimulate investment now, in the 2020s, to scale up low carbon hydrogen. In this article we take a closer look at what is meant by “low carbon” hydrogen, and explore some of the commitments which will encourage innovation and investment.

Hydrogen offers much promise as an energy source which may produce zero greenhouse gas emissions. However, hydrogen is not abundantly naturally available, and therefore must be manufactured. Several different processes exist by which hydrogen may be mass produced. These manufacturing operations may be energy intensive and have carbon by-products. Hydrogen is often referred to by various colours which indicate its origin, i.e. the manufacturing process by which the hydrogen is produced. The government’s strategy focuses on “low carbon” hydrogen production, but other forms of hydrogen production exist. These include:

  • Brown or black hydrogen – Hydrogen made from brown or black coal via gasification. As acknowledged in the report, “town gas” has been around for some time, and is used in the UK’s gas network. Town gas was manufactured from coal using water and heat. The coal undergoes gasification resulting in a mixture of carbon dioxide, carbon monoxide, hydrogen methane, ethylene, and other gases. As carbon dioxide and carbon monoxide are not used, brown or black hydrogen may have a high carbon footprint.
  • Grey hydrogen – In this process hydrogen is made from natural gas which is produced via steam methane reformation where natural gas is reacted with steam to form hydrogen. Hydrogen and carbon monoxide/dioxide are produced. The carbon gases are released to atmosphere.
  • Blue hydrogen – Hydrogen manufactured in the same way as Grey hydrogen, but the carbon emissions are captured, used and stored (CCUS).
    Turquoise hydrogen – Hydrogen made using methane pyrolysis to produce hydrogen and solid carbon. Natural gas is used as a raw material. Carbon dioxide is not generated in the process. Turquoise hydrogen is often seen as falling between blue and green hydrogen described below.
  • Pink/Purple/Red hydrogen – Hydrogen generated via electrolysis powered by nuclear energy. This includes low and high temperature electrolysis. Directly splitting water into hydrogen and oxygen via high temperatures produced from advanced modular nuclear reactors (thermochemical water splitting) is also included.
  • Green hydrogen – Hydrogen produced via electrolysis of water where the electricity is used to split water into hydrogen and oxygen. The electricity is provided by renewable energy sources such as wind or solar power.
  • Yellow hydrogen – Hydrogen made through electrolysis powered by solar power. Arguably a subset of green hydrogen.
  • White hydrogen – Naturally occurring geological hydrogen found in underground deposits. As of yet there are no strategies for extracting hydrogen in this form.

Brown, Black and Grey hydrogen are “high carbon” and make up the majority of the current hydrogen production in the UK. Blue and Green hydrogen are considered “low carbon” (or zero carbon) and form the focus of the envisaged increased future production in the hydrogen economy. However, Turquoise and Pink/Purple/Red hydrogen are also mentioned in the strategy as important parts of future hydrogen economy.

Rather than face a technology ultimatum in selecting one “colour” of hydrogen for future production, the government is adopting a twin-track approach supporting both electrolytic (Green, Turquoise, Pink/Purple/Red hydrogen), and CCUS-enabled hydrogen (Blue hydrogen) projects. In order to grow these sectors, a number of competitions and funds have been proposed, and currently underway to promote development. These include:
CCUS Infrastructure Fund (CIF)

£1 billion has been allocated to address CCUS barriers. This fund is aimed at supporting capital expenditure on transport and storage (T&S) networks and industrial capture projects.

The fund has already delivered £171 million through UK Research and Innovation’s (UKRI) Industrial Strategy Challenge Fund (USCF) to nine projects ( This challenge is pursuing a reduction of CO2 emission in industrial clusters, and promotes hydrogen fuel switching. Offshore and onshore projects throughout the UK have been awarded significant finds to achieve these goals.

Further, in May of this year, the process of selecting at least two CCUS clusters for deployment in the mid-2020s has begun. Guidance and supporting information for cluster organisations seeking to enter the process has been published in Phase 1 for Cluster Sequencing for CCUS Deployment (

The importance of decarbonising industrial clusters is a key emphasis of the plans for the CIF. The role CCUS can play in low carbon hydrogen, e.g. Blue hydrogen, is evident from the projects supported by the CIF.

Low Carbon Hydrogen Supply Competition

This competition is already closed; but has supported development of methane reformers with higher carbon capture rates, scaling up of modules and support for the automated manufacture of electrolysers, and feasibility studying of electrolysis from low carbon nuclear. This competition has supported projects such as the Acorn CCS and Hydrogen project in St Fergus, Scotland.

The success of this competition has led to the opening of a second competition (Low Carbon Hydrogen Supply 2 Competition). This second stream offers maximum project funding of £10 million, and a total maximum budget of £30 million. The competition is open to technology innovations in the hydrogen supply chain relating to both low carbon (e.g. Blue hydrogen), and zero carbon (e.g. Green hydrogen).

Net Zero Hydrogen Fund (NZHF)

The NZHF aims to support at-scale development of low carbon hydrogen projects during the 2020s with £240 million of government co-investment. The fund is currently open for consultation to provide views as how the NZHF should accomplish this goal. Public consultation closes on 25 October 2021.

Of note, the consultation outlines includes input as to the technologies to be supported by the fund, and the type of funding the NZHF will provide. The fund is set to launch in early 2020.

Moving Forward

The UK government’s hydrogen strategy acknowledges the different technologies available in the production of hydrogen, and proposes a twin-track approach which aims to support a number of the hydrogen colours. The proposed and currently-available funds provide evidence the strategy considers innovation of these low, and zero carbon hydrogen production processes key to achieving these aims.

Protecting hydrogen innovations forms an important part of a company’s business strategy as the UK takes measures to reach net zero. Obtaining government subsidises through the funds discussed may involve a due diligence review of a in-house developed low or zero carbon hydrogen technology. Developing strong IP protection around such proprietary technology can therefore assist in securing financial backing, and ensure innovative businesses are able to stake their claim in the hydrogen economy.

The IP professionals in the Energy team at Marks & Clerk keep abreast of technical advancements in this subject-matter to advise on technology protection and IP strategy, including commercialisation, licensing, enforcement, portfolio management, and due diligence. For further information contact the author, Tomas Karger, or other processionals in the Energy team.

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