Teesside’s decision to make hydrogen a driving force of its new economy has received powerful backing from a new Government strategy.

The Government says subsidies could be paid to hydrogen producers as part of its plans to scale up the use of low-carbon fuel to cut climate emissions.

The new report said its overall hydrogen strategy, which includes a road map for developing the fuel over the next decade, would support more than 9,000 jobs and be worth £900 million to the UK economy by 2030.

It said it was proposing a twin-track approach to develop both zero emissions ‘green’ hydrogen made using renewable power, and ‘blue’ hydrogen which uses fossil fuel gas and can be made low carbon with technology that captures and stores emissions underground.

The Teesside focus on the cheaper blue hydrogen - which BP will be producing here at the UK’s largest production facility - faced a challenge as it is not as clean as green hydrogen and still produces some carbon emissions which has prompted criticism from environmental campaigners.

But the Government has made it clear it wants to develop both – and other – methods of producing hydrogen, with green and blue hydrogen production not expected to compete with each other for available subsidy payments.

Tees Valley Mayor Ben Houchen told The Northern Echo: “The Tees Valley is already leading the way in clean energy technology. The Net Zero Teesside (NZT) Power Plant is set to create the UK’s first decarbonised industrial cluster and, alongside this, BP is creating the UK’s largest blue hydrogen production facility in our region.

“As these technologies emerge, a mixed approach is the right approach and that is why BP is also looking to explore the potential for green hydrogen right here too. We’re spearheading the clean energy revolution, driving the UK’s ambitions to become net zero by 2050, and this strategy underlines the value in everything we’re doing.”

Another key player, Northern Powergrid, said there had to be collaboration.

Simon Jesson, a System Planning Engineer with the company, told us: “Our modelling tells us that our electricity network must work hand-in-hand with hydrogen replacing fossil fuels where electricity is less viable. 

"We are pleased to see the Government set out a clear strategy on hydrogen. With a growing hydrogen industry in our region, we are looking forward to working to deliver net zero fuels and green jobs on our doorstep.

“Just as wind and solar power have shown from decades past, government support can help new green technologies mature, our models show hydrogen may have a crucial role to play in decarbonising our region and a clear strategy and investment from the government represents a key milestone.”

Hydrogen could account for 20-35% of the UK’s energy consumption by 2050, playing a key role in cutting carbon by providing a clean alternative to oil and gas in sectors such as energy-intensive industries, power, shipping and HGV lorries, the Government said.

But as ministers unveiled the first hydrogen strategy, there were calls for it to focus on the greener version of the fuel, made using renewables, rather than relying on production from natural gas which creates carbon emissions.

With hydrogen currently significantly more expensive than existing fuels to produce, subsidies are being proposed to bridge the gap between fossil fuels and the clean alternative to incentivise its production and use.

A consultation on the proposals to fund the difference between what producers can sell their hydrogen for and what it will cost them to manufacture it is being published alongside the hydrogen strategy.

The move, similar to the contracts which have driven down the cost of offshore wind in the past few years, aims to support the Government’s plan to deliver five gigawatts (GW) of hydrogen production in the UK by 2030.

The costs of the subsidies are not yet clear and how they would be paid for – from the Treasury through general taxation or consumer levies – has not yet been decided.

Business and Energy Secretary Kwasi Kwarteng said: “This marks the start of the UK’s hydrogen revolution.

“This home-grown clean energy source has the potential to transform the way we power our lives.

“With the potential to provide a third of the UK’s energy in the future, our strategy positions the UK as first in the global race to ramp up hydrogen technology and seize the thousands of jobs and private investment that come with it.”

Hydrogen is a versatile fuel that can be used in fuel cells or combusted in a boiler, turbine or vehicle engine to generate heat or electricity, and can be transported and stored.

Using it as a fuel produces only water as a by-product, but it has to be manufactured either from natural gas or using electricity, such as from renewable power, to produce it from water.