The future for hydrogen is brighter than ever. Recent policy changes have not only demonstrated momentum in advancing hydrogen infrastructure, but they have shown a clear commitment from the Government for a hydrogen-powered future.
Hydrogen is no longer just a future possibility – it’s now part of the UK’s core energy strategy. The Government’s latest Hydrogen Update to the Market signals further acceleration in the UK’s low carbon hydrogen plans, embedding the fuel into the UK’s Infrastructure Strategy and broader energy goals.
This growing recognition of hydrogen’s potential is hugely encouraging for regional initiatives like the Hydrogen Valley programme, which can harness this momentum to accelerate delivery and demonstrate the real-world impact of hydrogen.
Hydrogen Allocation Rounds
A key aim of the UK’s hydrogen strategy is to bolster domestic hydrogen production. The government has developed the Hydrogen Production Business Model, also known as the HPBM, to enable this. Through this, the Government assigns revenue support to production projects through Hydrogen Allocation Rounds (HARs). This funding mechanism is designed to support moving low carbon hydrogen production projects through a contract for difference (CFD) style model. It does this by bridging the gap between the cost of hydrogen production and the costs of fossil fuels used in these sectors today.
HAR1 has already delivered a major boost to the sector by supporting 10 projects - providing over £2 billion in revenue support and generating over 700 jobs. Among the beneficiaries are Hydrogen Valley members Carlton Power Limited and GeoPura. In a significant milestone, the Government has now confirmed these projects are moving into construction, with operations expected to commence between 2025 and 2028.
Building on this momentum, HAR2 launched in December 2023 and shortlisted 27 projects nationwide in April 2025, aimed at expanding hydrogen capacity and infrastructure. Several Hydrogen Valley members – including Protium, RWE, Progressive Energy and Tyseley Energy Park – have made the shortlist, highlighting the consortium’s growing influence and impact.
Looking ahead, HAR3 and HAR4 are also on the horizon, with plans for them to come into fruition in 2026 and 2028. Importantly, these rounds aren’t just isolated grants – they form part of a long-term push for building a thriving hydrogen economy.
Investing in Hydrogen Infrastructure
To support the growth of the UK’s hydrogen economy, the Government has also confirmed over £500 million in funding to kick-start development of the UK’s first regional hydrogen transport and storage network, which is expected to be operational by 2031. This network will link hydrogen producers with key end users, laying the foundation for long-term climate resilience and energy security. This marks a significant step forward for the country’s clean energy ambitions – and demonstrates that hydrogen is becoming a serious contender in the drive towards net zero.
This investment sits alongside a wider £5.8 billion commitment through 2030, including support from the National Wealth Fund for major carbon capture projects. Together, these initiatives will create thousands of jobs and support hydrogen growth in regions like Derbyshire and Staffordshire.
This is a promising step forward, ensuring hydrogen is no longer on the sidelines, and securing its place at the centre of the UK’s future energy system.
A hydrogen-powered future
The Government’s latest investment demonstrates a clear commitment to hydrogen, and the growing momentum behind the sector as its potential is realised. In the Hydrogen Update to the Market, the Government positioned hydrogen at the heart of plans to decarbonise heavy industry, transport, and power generation – while creating green jobs and boosting energy security.
The update introduced new business models for hydrogen power, storage, and transport, as well as expanded sector-specific support in hard-to-abate sectors such as maritime and aviation. It also strengthened regulatory frameworks via an updated Low Carbon Hydrogen Standard, which sets a clear maximum threshold for the amount of greenhouse gas emissions permitted in the production process for hydrogen to be classed as ‘low carbon’. This ensures that any government subsidised hydrogen will truly be low carbon and therefore help deliver widespread decarbonisation.
Further, the Government has committed to removing Climate Change Levy (CCL) costs from electricity used in electrolysis to produce hydrogen earlier this year, making hydrogen production more cost-effective and competitive. This is another significant step toward industrial decarbonisation – particularly in regions like the Hydrogen Valley – by lowering barriers for industries to connect to future hydrogen pipelines. By enabling the growth of low-carbon electrolytic hydrogen, these policies will help accelerate the clean energy transition and solidify hydrogen’s role at the core of the UK’s future energy mix.
Looking forward
This momentum in the hydrogen landscape is fantastic news for initiatives like the Hydrogen Valley Programme and the Midlands region. With the Government’s clear commitment to embedding hydrogen into national energy policy, the vision for a thriving hydrogen economy in the region is moving closer to reality - making it easier for industries to connect to future hydrogen pipelines both regionally and nationally. It is, without doubt, an exciting time to be part of the hydrogen sector.
A comprehensive UK Hydrogen Strategy is expected in Autumn 2025, building on the momentum of HARs, infrastructure investments, and sector-specific policies.
Hydrogen is no longer a future possibility but a vital pillar of the UK’s net zero journey. With clear policies, significant funding, and strategic frameworks in place, the UK is paving the way for a hydrogen-powered economy that will drive decarbonisation, spark innovation, and create skilled jobs across the nation.
