Economy set for £26bn-a-year boost from hydrogen boom
Report reveals production and export ambition
Scotland stands on the brink of a new North Sea energy boom, profiting not from oil – but from hydrogen.
The Sunday Post can reveal that the country is set to make billions of pounds a year exporting clean, green fuel made from our most abundant resources: wind and rain.
An official report due to be published soon outlines how vast amounts of hydrogen will be produced from water, using eco-friendly electricity generated by wind turbines.
The gas will then be sold to Europe to meet an ever-growing demand for sustainable energy – for industry, transport and heating homes.
The report by the Net Zero Technology Centre (NZTC) suggests hydrogen exports could be worth up to £26 billion a year.
Central to the plan is a new £2.7bn pipeline carrying the gas 600 miles over the North Sea from Scotland to Germany.
As the world struggles to find ways of generating energy without polluting the planet, hydrogen is one of the most important fuels of the future because it burns cleanly.
Unlike coal, oil and natural gas which give off harmful carbon emissions when burnt, the by-product of burning hydrogen is nothing more harmful than hydrogen dioxide – better known as water.
Darren Gee, Net Zero Technology Transition Programme Manager at NZTC, explained: “Hydrogen creates a tremendous opportunity for Scotland to become a major producer and exporter of green hydrogen and play a central role in Europe’s decarbonisation strategy.
“Scotland, and the UK at large, has what it takes to deliver competitive green hydrogen, create jobs and contribute to the transition to a low-carbon energy system.
“Here at NZTC, we’re working to turn this ambition into reality. This isn’t a question of if, but when.”
Until recently, Scotland’s green energy ambitions have largely focused on wind power, with turbines now generating more electricity every year than the country actually uses.
However, output depends on how fast the wind is blowing. And electricity generated by turbines can be difficult either to transmit to the national grid or to store.
One solution is to use surplus wind power to run electrolysers – machines which convert water into its constituent elements: oxygen and hydrogen.
The hydrogen can then be stored, transported for use as a fuel or sold to other countries.
The Scottish Government has previously pledged to make Scotland a net exporter of green energy by 2045 and is due to publish a formal Hydrogen Sector Export Plan later this year.
However the NZTC – a notfor-profit organisation based in Aberdeen and funded by industry plus the UK and Scottish governments – is due to publish a report in the coming weeks called Enabling Green Hydrogen Exports: Matching Scottish Production To German Demand.
The report maps out how Scotland is placed to make billions of pounds a year exporting hydrogen to Germany, stating the aim is “to maximise the economic benefits from Scotland’s export potential, initiating delivery of hydrogen to centres of demand in mainland Europe by the mid-2020s.”
It adds: “Scotland’s extensive wind resource creates significant potential for electrolyser-based hydrogen production at a large scale, enabling the provision of surplus hydrogen to fulfil demand in continental Europe.
“Demand for green hydrogen is growing, particularly in Northern European markets, with Germany currently presenting the largest share of demand in Europe.”
Large-scale energy production or use is measured in terawatt hours (TWh).
One TWh is equivalent to using a trillion watts of electricity for an hour – enough to fully power around 70,000 homes for a year.
The report estimates 126TWh of renewable hydrogen a year could be produced in Scotland by 2045 – with around 94TWh exported.
Meanwhile, it predicts increasing demand for green hydrogen in Germany as the country turns away from fossil fuels, with an import market of up to 46TWh by 2030 and up to 422TWh by 2045.
The boost to Scotland’s economy is estimated as £26bn a year by 2045 with the creation or retention of over 300,000 jobs.
After increasing hydrogen production over the next few years, a pipe network is set to be created between 2030 and 2045 to distribute the gas.
The so-called Hydrogen Backbone would see a 32in diameter pipeline installed from the Flotta oil terminal in Orkney across the North Sea to the German city of Emden.
Additional “spur” pipelines would link hydrogen production centres at Sullom Voe, the Cromarty Firth, and St Fergus gas terminal to the main pipeline.
The NZTC has recently commissioned consultants to examine operational safety, the regulatory framework and the commercial case.
The new report also outlines the case for installing a second, even bigger, pipeline as the market increases.
In 2022/23, the UK Government’s North Sea revenue was £10.57bn. Oil and gas still account for around threequarters of all the UK’s energy needs – across transport, heating, industry and power – but fears over climate change are accelerating the switch from fossil fuels to renewable energy.