Brits face higher energy bills to fund plans for hydrogen to produce up to a third of the UK’s energy by 2050.
Boris Johnson today unveiled his Hydrogen Strategy, which aims to support 9,000 UK jobs and £4billion worth of investment in the green economy by 2030.
But subsidies appear likely to be paid to hydrogen producers - as the green fuel costs far more than its rivals to produce.
A government consultation says the costs could be "passed onto consumers through energy bills" more widely.
And a government strategy today admits the price of low-carbon hydrogen “cannot be directly passed on” to its customers alone.
Instead, the plan says “funding must come from elsewhere to make hydrogen production and use commercially viable.
“Deciding how this is paid for and who bears the cost is a key question that must be addressed.”
The costs of the subsidies are not yet clear, nor is the way they would be paid for - through general taxation or consumer levies. Further details are due later this year.
Energy minister Anne-Marie Trevelyan insisted the cost to individual households was likely to be “very small”, telling the Times: “The key point is that if you look at offshore wind, [the subsidies] provide long-term security for industry to be able to invest and then the prices come down.
“At an individual level [the cost] will be very small. If you look at wind energy it’s in that sort of scale.”
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, including on a large scale.
Using it as a fuel produces only water as a by-product, but with little natural stores of hydrogen available, it has to be manufactured either from natural gas or using electricity, such as from renewable power, to produce it from water.
A number of projects to produce hydrogen are already under development in the UK, while offshore wind supplies, gas infrastructure and large-scale storage options mean the fuel could play a significant role here, the strategy says.
The government will invest £240m in setting up the technology with the aim of it going to the first homes or businesses by 2025.
But the Hydrogen Strategy warns: “Low carbon hydrogen is currently more expensive than counterfactual fuels.”
It adds: “The complex nature of the hydrogen market means that the impacts of a chosen funding mechanism must be considered across a range of different end use sectors and consumers, including their ability to absorb these costs, and the impact that additional costs would have on demand.”
Hydrogen could account for 20-35% of the UK’s energy consumption by 2050, the strategy says, playing a key role in cutting carbon by providing a clean alternative to oil and gas.
Business & Energy Secretary Kwasi Kwarteng said hydrogen has “the potential to transform the way we power our lives and will be essential to tackling climate change and reaching Net Zero”.
But 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.
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.
Alan Whitehead, Labour ’s Shadow Minister for Energy and the Green New Deal said: “That is what we will judge the Government on because too many of the Tories’ warm words and targets on climate change have not been followed up with practical steps.
"It is regrettable that the Conservatives have failed to match the investment shown by other countries and key decisions have been delayed, such as mandating that all boilers must be hydrogen-ready.”
Matthew Fell, CBI Chief Policy Director suggested the proposals lack “detail” on hydrogen production and application.
Andy Prendergast, GMB National Secretary fears the programme is “not ambitious enough” as it leaves the UK with a skills and investment gap.
“The programme will be insufficient for hydrogen development to become a cornerstone of both our energy policy and the transition to net zero.
"It’s also a mistake to highlight the so-called ‘success’ of the UK’s offshore wind industry.”
