The Nuclear Industry Association (NIA) welcomes the chance to respond to the APPG on Hydrogen’s inquiry into the role of hydrogen in powering industry. The NIA is the trade association and representative body for the civil nuclear industry in the UK. We represent more than 200 companies operating across all aspects of the nuclear fuel cycle. This includes the current and prospective operators of nuclear power stations, the international designers and vendors of nuclear power stations, and those engaged in decommissioning, waste management and nuclear liabilities management.

Today, the UK depends on fossil fuels for more than three-quarters of its energy. Over the next thirty years, we must transition to a net zero economy. The challenge is immense. The Climate Change Committee has estimated that we need to generate four times as much clean power by 2050, as well as 225 TWh of low-carbon hydrogen to complete our decarbonisation. Faced with this task, we will need to deploy every low-carbon technology at our disposal to produce clean hydrogen, especially “green hydrogen” from zero-carbon sources. Nuclear, as a proven zero carbon generator, should be a key part of the clean hydrogen mix.

Our ambition is for nuclear to produce 75 TWh of hydrogen by 2050, approximately one-third of the total requirement, which equates to 12-13 GW of dedicated nuclear capacity. This vision is predicated on the successful establishment of a nuclear financing mechanism to deliver extra capacity, and we are encouraged that the Government is actively considering several options to reduce the cost of capital.

The UK nuclear industry already has existing supply chain capability that can help facilitate the development of these hydrogen capabilities in the UK, including nuclear research facilities which have transferable skills that could be used for hydrogen chemistry and materials research.

Nuclear-hydrogen production would support the Government’s ambition to ‘level-up’ regions of the UK facing economic challenges. In the UK alone, the development of a hydrogen market could contribute up to £18 billion in Gross Value Added (GVA) annually and, as stated in the Ten Point Plan, could add 100,000 jobs to the economy. The nuclear industry currently directly supports 60,000 jobs across the UK, disproportionately outside London and the South East.

Hydrogen production using nuclear power would add tens of thousands of high-skilled, well-paid jobs to this total. The South West of England is already home to many leading companies that are developing hydrogen solutions, while the North West Nuclear Arc, a cluster which spans the North West of England and North Wales, has great potential for integrating hydrogen and nuclear.

Work is already being done to develop nuclear-hydrogen which the Government and the APPG on Hydrogen should support:

Cost is the principal barrier to green hydrogen, rather than technical capability. To reduce costs, we recommend that:

  • A grant and subsidy scheme be set up to encourage research and development to help reduce the costs of electrolysers. This could be part of a broader scheme to offer capital grants to zero-carbon generators to install electrolysers.
  • A new funding model is introduced to reduce the cost of capital associated with nuclear projects, reducing the price of electricity they produce. This could be achieved from either direct government financing or another financing model, such as a Regulated Asset Base (RAB).
  • The anomaly whereby nuclear-produced hydrogen, unlike renewable-powered hydrogen, does not qualify for Renewable Transport Fuel Obligation (RTFO) support should be removed.
  • Government should work with Ofgem to explore the scope for a new scheme to replace payments to zero-carbon generators for constraining generation gradually with support for hydrogen production. For reference, constraint payments to variable renewables reached nearly £450 million in 2019.
  • An ambitious carbon pricing system is established that reflects the full externalities of emissions and the UK’s net zero target.
  • Nuclear-hydrogen production in a range of forms is eligible for inclusion in the recently announced Net Zero Hydrogen Production fund.
  • An AMR development timeline is set out, including demonstration of hydrogen production technology, involving five-year R&D funding settlements to provide stability.

Further recommendations we pose to the APPG are:

  • The following parameters for hydrogen deployment in the Hydrogen Strategy would help facilitate nuclear-hydrogen solutions and other clean hydrogen solutions:
    • Classification of hydrogen created from nuclear power as green hydrogen, because it is emissions-free and would have a very low lifecycle carbon footprint.
    • Identification of green hydrogen, produced directly from zero-carbon generators, as the preferred option where possible.
    • Transition from grey hydrogen as practical.
  • To ensure collaboration between the nuclear industry and Government, the latter should include direct nuclear industry representation on the Hydrogen Advisory Council, in line with previous commitments, to ensure that green hydrogen from nuclear is incorporated into the overall vision of a hydrogen economy.
  • A definitive analysis of systemic infrastructure challenges would be extremely useful to determine the maximum possible extent of electrification, and the area in which hydrogen should be used instead.