Funding HyNet North West

Government is currently actively working on appropriate policy mechanisms to fund the hydrogen and CCUS infrastructure associated with HyNet North West and other low carbon cluster projects. It is likely that separate mechanisms will be used to fund the CCUS infrastructure, the hydrogen distribution network and the hydrogen production and use infrastructure.

Many companies in the hydrogen / CCUS sector, including Progressive Energy and Cadent, have been actively involved in working with Government to help develop a suitable policy framework. Through a group called the CCUS Advisory Group (CAG), business models for all aspects of the CCUS value chain have been developed. These formed the basis for a Government consultation on CCUS, which closed in October 2019, whilst a further consultation on funding mechanisms for hydrogen production (and use) will be launched in spring 2020.

It is expected that Government will make further announcements on policy in spring 2020. These will build upon a Conservative Party Manifesto pledge during the 2019 General Election to allocate £800M of capital funding to CCUS projects.

Key fact

Funding options are explored further in an independent report from Frontier Economics.

A cost-effective programme

The costs of HyNet North West are lower than alternative large scale hydrogen decarbonisation projects, but HyNet North West delivers similar CO2 savings.

This is due to:

  • The concentration of industry in a relatively small geography. This creates consistent demand, avoiding the need for hydrogen storage.
  • Hydrogen blending for homes and businesses means existing domestic appliances do not have to be replaced.
  • Close geographical proximity and timing of depletion of offshore gas fields for CO2 storage and the potential to use existing pipeline assets.

HyNet North West is a ‘low’ regrets project as the UK explores the pathways to reduce carbon emissions by 2050. This is because it is cost-effective without further extension beyond the initial project scope. It is also low cost for the decarbonisation of heat compared with alternatives, such as electrification.

HyNet North West Project Partners

HyNet North West is being delivered by a consortium of partners, each of which will lead a different part of the project.
Progressive Energy is leading the development of the low carbon hydrogen production plant and the CO2 pipeline and Cadent is leading development of the hydrogen pipeline.