Executive Summary

The Prime Minister’s Ten Point Plan for a Green Industrial Revolution sets out that, working with industry, the UK is aiming for 5GW of low carbon hydrogen production capacity by 2030. In support of this ambition, we are introducing supportive policies intended to de-risk investment and incentivise the roll out of new low carbon hydrogen production facilities. Crucial to this will be ensuring that the hydrogen being produced is sufficiently low carbon to contribute to our carbon budget targets and net zero commitments.

Working with industry, academia, and regulators, BEIS is therefore assessing and comparing options for a UK low carbon hydrogen standard that defines low carbon hydrogen, including:

• Setting out the methodology for calculating greenhouse gas (GHG) emissions (e.g., the Life Cycle Assessment system boundary and assumptions for delivery conditions of the hydrogen produced); and
• Setting out the maximum acceptable levels of greenhouse gas emissions associated with low carbon hydrogen.

Our current intention, to be further informed by responses to this consultation, is that low carbon hydrogen producers seeking BEIS funding, through the Net Zero Hydrogen Fund, and/or the Hydrogen Business Model would be required to comply with the resulting standard in order to secure support. We intend that any future changes to the standard would not apply retrospectively to contracts already awarded through the Hydrogen Business Model. We are considering whether the standard could also be developed into a certification scheme to support the deployment of low carbon hydrogen across the economy and support future international trade in low carbon hydrogen.

When looking at the methodological choices that could be made when designing a low carbon hydrogen standard, we have generally provided options throughout the consultation and discussed the advantages and disadvantages we consider they would bring. Responses to this consultation, together with the E4tech and Ludwig-Bölkow-Systemtechnik GmbH (LBST) research and further internal analysis, is intended to help in development of a standard.

For many of the factors related to the scope and GHG calculation requirements, the choice of option is clear from a technical or policy perspective, or the analysis shows that one approach is strongly preferred. However, there are some decisions where there remain a number of options that may be appropriate for a UK standard. A low carbon hydrogen standard needs to include several elements which ensure credibility, transparency, and ease of use. The key elements being consulted are set out below.

• The scope of the standard, including its use and coverage across different production methods and geographic location.

In line with our approach to growing the UK hydrogen economy, as set out in our Hydrogen Strategy, we expect to support a variety of different production methods to deliver the level of hydrogen needed to meet net zero. We are therefore minded to adopt a single label of ‘low carbon’ that can be applicable to all production methods that meet the GHG threshold.

We expect the standard to include consideration of GHG emissions. Whilst other environmental impacts have not been considered through this work (e.g., water consumption, air quality), we are not excluding the potential for further work on these areas through other routes or policy mechanisms.

• The system boundary of the standard, chain of custody, purity and pressure, embodied emissions, and global warming potential factors.

Whether the standard should be applied at the point of hydrogen production or at the point of use, setting the ‘system boundary’ interacts with the choice of the system used to assess compliance of the hydrogen produced through the value chain (‘chain of custody’), requirements for hydrogen purity and pressure, and the geographical boundary of the scheme. Our minded to position is setting the system boundary at the point of production, which would cover raw materials acquisition, upstream emissions, and hydrogen production emissions.

We propose excluding embodied emissions (such as construction and decommissioning emissions) from the scope of a UK low carbon hydrogen standard as this is not currently accounted for in the UK’s carbon budgets accounting or other comparable global standards / schemes. However, should the UK or global context change, this could be reviewed and updated accordingly.

It is our intention that a UK low carbon hydrogen standard will use Global Warming Potential (GWP) factors that are in line with wider UK Government policy on GHG accounting. When calculating overall GHG emissions, the standard could also include a GWP factor to account for any hydrogen losses incurred when the hydrogen passes through the supply chain (known as fugitive losses).

• Consideration of different primary energy inputs and feedstock emissions

We need to consider options for how to treat energy inputs, such as the use of electricity as a primary energy input for electrolysers. We are mindful of the need to conduct further analysis to assess any potential impacts that decisions around the use of electricity as primary input energy for hydrogen production could have on the wider energy system, including the availability of low carbon electricity and the changing impact of grid electrolysis over time. We may therefore consider additional criteria to mitigate any negative impacts or unintended consequences. We will use this analysis as part of our considerations for how the standard will be applied and will set out more detail on our findings in the Government Response to this consultation. We would welcome any evidence from stakeholders that could contribute to this work.

If the hydrogen production method has mixed inputs (e.g., high, and low carbon inputs), the standard will need to define whether the outputs are treated as one consignment or whether the operator can separate this into several different consignments (with different GHG intensity levels). A decision on this element will need to be made alongside considerations on the Net Zero Hydrogen Fund and Hydrogen Business Model, as this would impact on the eligibility of projects.

How waste fossil feedstocks, such as the non-biogenic fraction of municipal solid waste, would be accounted for under a UK low carbon hydrogen standard is highly dependent on the trade-offs between reporting effort, accuracy, and potential for change over time. We invite stakeholders’ views and evidence on whether waste feedstocks should be considered with counterfactuals under the standard.

• Further GHG methodology / calculation considerations

For many of the factors related to the scope and GHG calculation requirements, the choice of option is clear from a technical or policy perspective, or the analysis shows that one approach is strongly preferred. In these areas we have set out ‘minded to’ positions in this consultation, whilst inviting stakeholder views. This includes using units of gCO2e/MJ LHV when measuring GHG emissions intensity and defining an emissions threshold on an absolute basis.

Areas that need further consideration from a technical perspective include the method adopted for allocating emissions to by-product hydrogen: the allocation of upstream and process GHG emissions between hydrogen and other products is usually done on an energy basis. For by-product hydrogen though, this approach may significantly over-allocate emissions to hydrogen when other significant co-products do not have an energy content, as is the case for processes such as chlor-alkali. We invite views and evidence on what allocation method should be used for by-product hydrogen to inform our thinking.

We will also need to consider how negative emissions from hydrogen production should be treated in a standard. If the standard allows for reporting of negative emissions (through the inclusion of GHG credits for biogenic CCUS), there is a risk that less efficient biohydrogen chains could deliver more negative emissions than efficient ones. We will need to consider how to ensure inefficient production chains are not incentivised through this process.

• A threshold for GHG emissions.

In setting a GHG emissions threshold, we will need to strike a balance between the need to encourage growth by supporting market development and cross-border investment, while managing value for money risks and ensuring that the standard makes a direct contribution to our carbon reductions targets. We are consulting on what level, and type, of emissions standard would best achieve this: including whether it is right to set this as an absolute level (rather than relative to a counterfactual fuel), what threshold would be appropriate, and whether this threshold should tighten over time.

• Delivery and administration of a UK low carbon hydrogen standard

This section discusses at a high level the options and requirements for assurance, communication and claims, and governance.

There is a trade-off between the level of rigour and credibility versus the burden placed upon economic operators implementing the standard, and the number of participants. Options are discussed for the type and frequency of reporting and verification.

Options for governance of the standard are also set out: whether the standard should be delivered and administered by BEIS, or by an independent industry-led or multi-stakeholder organisation.

This consultation will close on 25 October 2021, after which responses will be analysed and it is expected that the government response will be published in early 2022.

Following the government response, we will work with industry and across government to finalise design elements of carbon hydrogen standard.