Strategic Policy Position for Hydrogen

Our vision for the future of industry and energy generation is one in which sustainable industries are retained in Wales and continue to generate high-quality jobs and careers and other benefits for the communities in which they operate. 

We want industry and energy generators to substantially reduce their reliance on fossil fuels and the generation of greenhouse gases, and have credible plans to transition towards net-zero. 

The Climate Change Committee considers all credible pathways through which Wales can reach net-zero emissions involve a targeted but important role for hydrogen. Hydrogen has the potential to sustainably decarbonise many parts of the economy across industry and transport where electrification is not feasible or cost-effective. Hydrogen can also provide energy storage and dispatchable electricity generation, which is crucial during periods of variable renewable energy output.

Welsh Government recognises the importance of hydrogen to reaching net-zero, but also the significant economic opportunities the technology can deliver for industry, business and citizens in Wales. Hydrogen projects will create jobs and careers during construction, operation and maintenance, as well as safeguarding jobs in other sectors and providing wider supply chain opportunities. 

This policy is intended to serve as a high-level strategic policy, outlining clear support for hydrogen production and utilisation, where the hydrogen complies with the Low Carbon Hydrogen Standard, and contributes to wider well-being objectives and a just transition. The policy has been designed to align with UK Government hydrogen business models and support mechanisms, making clear the importance of hydrogen infrastructure for Welsh decarbonisation and prosperity, and to ensure that the needs of Welsh industry are met in full. 

The Welsh Government is committed to ensuring hydrogen is deployed safely and effectively, making the best use of the technology to deliver decarbonisation and economic benefit for Wales. 

To achieve this vision, it is the policy of the Welsh Government to encourage the development and deployment of hydrogen infrastructure: 

The LCHS sets a maximum threshold for the amount of greenhouse gas emissions allowed in the production process for hydrogen to be considered ‘low carbon hydrogen’. Compliance with the LCHS is intended to help ensure new hydrogen production makes a direct contribution to carbon reduction targets and sets a clear metric against which all hydrogen production can be evaluated. 

By focusing on production emission intensity rather than mandating specific technologies, the LCHS gives developers maximum flexibility to design innovative solutions tailored to sector and site-specific challenges. Eligible production pathways include electrolysis, fossil gas reforming with carbon capture and storage, biogenic gas reforming, biomass gasification, and gas splitting that produces solid carbon. In all cases, a range of sector specific legislation and policies will also be applicable. 

UK Government will review the LCHS regularly to ensure it remains fit for purpose and reflects a growing understanding of how new technologies work in practice, including how hydrogen production interacts with the broader energy system and wider standards. Welsh Government will work with the UK Government to inform the evolution of the standard. 

Wales is rich in renewable energy resources which provides a tremendous opportunity for low carbon hydrogen production. Low carbon hydrogen will play an essential and targeted role in the low carbon energy system of the future and the transition away from fossil fuels. Hydrogen should be deployed where it will have the greatest impact in terms of decarbonisation and growing a sustainable economy. 

Where required by existing consenting, legislative and policy requirements, developers should provide evidence of a measurable and sustained contribution to decarbonisation and net-zero through switching to efficient, low carbon hydrogen technologies.

It is the established policy of the Welsh Government to substantially reduce the reliance on fossil fuels across the Welsh economy, and to encourage energy efficiency, energy reduction and renewable energy. The targeted deployment of hydrogen can contribute to these policy objectives by providing a fuel-switching option to address sources of emissions that are less suited for electrification.   

Aligned with advice provided by the Climate Change Committee, this policy also recognises that hydrogen produced from fossil fuels, combined with carbon capture and storage, can produce a low-carbon fuel and satisfy the Low Carbon Hydrogen Standard. 

In the context of this policy, unsustainable levels of fossil fuel use means use that delays or makes decarbonisation harder, contradicts our carbon budgets and net zero pathway, increases emissions without mitigation, or adds to global supply of fossil fuel. 

This hydrogen strategic policy should be considered in-combination with all other energy, decarbonisation and sector specific policy and legislation that is applicable to hydrogen developments.

Hydrogen is an enabler to grow sustainable industries in Wales, to avoid de-industrialisation, and to deliver high quality careers and well-being benefits.

Effective deployment of hydrogen has the potential to create and safeguard sustainable industries and high-quality jobs, and other benefits for the communities in which they operate. The transition to a low-carbon economy also has wider benefits of enhanced places to live and work, with cleaner air and water and improved health outcomes.

Developers should look to maximise the benefits and opportunities for citizens across Wales and thereby build trust and acceptance amongst stakeholders for hydrogen technology and their projects.

Developers, in accordance with existing consenting requirement, should demonstrate how hydrogen contributes to a sustainable economy and delivers a just and fair transition away from fossil fuels.

Both the Welsh Government and UK Government recognise the strategic importance of hydrogen and have accepted the Climate Change Committee’s view that hydrogen is necessary to meet and sustain net-zero. Hydrogen infrastructure development applications will be subject to the planning consent regime and an evolving support framework, designed to safeguard the environment and citizens, and deliver statutory decarbonisation and well-being obligations.

This policy supplements the Welsh Government’s land use policy as set out principally in Planning Policy Wales, and in particular helps to clarify hydrogen’s place on the energy hierarchy for planning. In line with the planning framework, the responsibility for demonstrating that hydrogen contributes to long-term decarbonisation, and builds a stronger, greener economy, rests with the developer. Additional guidance on evidence requirements will be produced to aid developers and consenting decision makers.

This policy will also inform other devolved functions relative to hydrogen development where policy considerations are appropriate. Therefore, this hydrogen strategic policy should not be viewed in isolation, but together with the full breadth of policy and legislation that will drive hydrogen deployments towards genuine net decarbonisation gains.