Key Takeaways:
- The UK hydrogen sector is eager to invest, expand, and create thousands of jobs, but is frustrated by slow and uncertain policy delivery.
- Confidence in the long-term role of hydrogen remains firm, but weak demand signals pose the biggest threat to progress.
- The UK hydrogen sector could support around 3,800 jobs by 2030, but this could rise to approximately 17,000 jobs with an improved policy environment.
- The UK is still an attractive destination for hydrogen investment, but competitor nations are moving faster from ambition to execution.
- Clearer demand signals, faster policy delivery, and better coordination are essential to unlocking investment and restoring confidence in the UK hydrogen sector.
Introduction to the UK Hydrogen Sector
The UK hydrogen sector is at a critical juncture, with a major new industry report launched in Parliament painting a picture of a sector eager to invest, expand, and create thousands of jobs. The report, titled "The State of the Hydrogen Nation," is published by the Hydrogen Energy Association (HEA) and draws on insights from 142 organisations active across the hydrogen value chain. The report offers a detailed snapshot of sentiment, investment plans, and barriers facing the UK hydrogen sector, and highlights the need for clearer demand signals, faster policy delivery, and better coordination to unlock investment and restore confidence.
The State of the Hydrogen Nation Report
The report shows that confidence in the long-term role of hydrogen remains firm, but weak demand signals pose the biggest threat to progress. The UK’s regulatory framework for hydrogen is viewed as credible and investable, but uncertainty around when and how policies will be implemented is beginning to weigh on investment decisions. Nearly half of respondents say that government commitment to UK hydrogen appears weaker than a year ago, citing stop-start processes and a lack of clear signals. Despite this, appetite to invest remains resilient, with more than 84% of organisations expecting their UK hydrogen investment to either increase or remain stable over the next 12 months.
Challenges Facing the UK Hydrogen Sector
The report identifies demand creation as the single most pressing challenge facing the UK hydrogen sector. While supply chains and production capacity are gradually taking shape, many projects are struggling to reach a final investment decision because they lack confidence in future customers. Businesses seeking offtakers report widespread difficulty securing long-term agreements, while potential end-users highlight the complexity of integrating hydrogen into existing operations. Concerns around infrastructure availability, cost competitiveness, and contract structures are compounded by a perceived lack of durable demand-side policy support. Without stronger and more predictable signals on where hydrogen will be used, the report warns that deployment could stall even where production support mechanisms already exist.
Job Creation and Economic Benefits
One of the starkest messages in the report is the scale of the employment opportunity at stake. Under current conditions, respondents estimate that the UK hydrogen sector could support around 3,800 jobs by 2030. However, under an improved policy environment marked by quicker decisions, clearer demand signals, and better coordination, that figure could rise to approximately 17,000 jobs. This four-fold increase would span engineering, construction, manufacturing, infrastructure development, and long-term operations, reinforcing the UK hydrogen sector’s potential as a cornerstone of a future clean energy economy.
Global Competition and the Need for Action
Internationally, the UK still ranks as one of the most attractive destinations for hydrogen investment, second only to Germany in the eyes of surveyed businesses. Yet, there is growing concern that competitor nations are moving faster from ambition to execution. Germany, in particular, is seen as translating policy commitments into projects at a greater speed, raising fears that capital, skills, and supply chains could be diverted away from the UK if progress does not accelerate. The report concludes that UK hydrogen policy has reached a critical juncture, and that responsibility for delivery is spread across multiple government departments, regulators, and public bodies, making coordination essential.
Conclusion and Call to Action
The report concludes that the foundations for UK hydrogen are in place, but pace and coherence will determine whether the opportunity is fully realised. The message from the HEA is clear: the UK hydrogen sector is ready to act, but needs clearer demand signals, faster policy delivery, and better coordination to unlock investment and restore confidence. With industry ready to invest, the UK government must now provide the necessary support and guidance to enable the sector to reach its full potential and create thousands of jobs. The UK hydrogen sector is at a pivotal moment, and the next few years will be crucial in determining its future success.
