Barclays has outlined four key policy recommendations for the UK government to support the scaling of private finance in order to deliver a pragmatic approach to clean hydrogen. These recommendations aim to help the UK harness hydrogen's potential in driving the transition to net zero.
The government has set an ambitious target of producing 10GW of green hydrogen by 2030, supported by new financing through the National Wealth Fund and recent announcements regarding support for 11 green hydrogen producers. However, Barclays emphasizes that for these ambitions to be credible, there must be a balance between enthusiasm for clean hydrogen and its cost- and climate-effectiveness.
In their paper titled "A pragmatic approach to clean hydrogen," Barclays suggests setting out a credible vision for the UK's role in a global hydrogen economy. This involves putting forward a pragmatic view on how the UK can leverage its competitive advantages internationally.
Another recommendation is developing a detailed hydrogen roadmap with specific enabling policy actions and investment pathways against clear timelines. This should encompass the entire hydrogen value chain within a broader National Transition Plan.
To secure a robust hydrogen ecosystem across the value chain, Barclays advises delivering demand-side policy interventions in collaboration with industry. These could include quotas or mandates and directives banning fossil fuel use by certain dates.
Finally, retaining a credible revenue support mechanism is crucial. The government should ensure this mechanism matures into a steady-state, price-based competitive allocation process that supports green hydrogen market development.
Marie Freier, EMEA Co-Head of Energy Transition Group at Barclays, stated: “Hydrogen has a major role to play in decarbonising the UK, but government must learn from setbacks faced by the US and European hydrogen markets." She stressed that instilling confidence requires delivering clear policies supported by strategic roadmaps.
The full policy paper draws insights from Barclays' work with hydrogen companies and discussions held during a roundtable event in June 2024. It aims to inform public policy solutions addressing economic and societal challenges related to climate change.
Barclays plans to invest £500 million into global climate tech companies by 2027 through its Sustainable Impact Capital portfolio. From 2020 to 2023, it invested £138 million into over 20 innovative firms as part of this initiative.