Policy

Hydrogen gas blending could hike up customer bills by 20% and barely save any emissions: think-tank

E3G warns that blending could ‘greenwash fossil gas’ and derail heat decarbonisation

A gas boiler.
A gas boiler.Photo: Corgi Homeplan

Blending hydrogen into the gas network could “greenwash” polluting fossil gas and raise customer heating bills by up to 20% — while only saving a negligible amount of carbon emissions, a UK think-tank has warned today (Thursday).

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In a briefing aimed squarely at the UK government, policy strategists E3G warned that adding 20% H2 to the country’s network would save a maximum of 7% of carbon emissions, but in reality the savings would likely be a lot less.
Hydrogen has a lower energy density by volume than fossil gas, which means that consumers would have to use more of the H2-gas blend to produce the same amount of heat, pushing up costs and limiting emissions reduction.
And the 7% emissions savings could only be achieved if every single H2 molecule used in the blend was green hydrogen made with renewable electricity.
In practice this is unlikely, as the UK is pursuing a multi-pronged, “cluster” approach to domestic hydrogen production that strongly incentivises blue H2 made with fossil gas and carbon capture and storage (CCS).

Moreover, the government is also keen to produce hydrogen “electrolytically” using grid electricity, which is currently only a maximum of around 50% renewable, depending on wind and solar conditions.

E3G, which was one of 23 signatories to an anti-blending letter sent to energy minister Grant Schapps earlier this year, stressed in today’s briefing that blending would be accompanied by a significant — and presently difficult to quantify — increase in heating costs.

Costs for a 20% blend could rise by just 7% if hydrogen is priced at around double that of fossil gas, but could be as much as three- to four-times as expensive as the gas it is replacing, pushing costs up even further.

Using H2 produced from grid electricity could push up costs by 20% by 2035, it concluded.
This is slightly more optimistic than previous studies from Agora Energiewende, which in 2021 calculated a 33% cost increase by 2030 for a 20% H2 blend, and the Fraunhofer Institute, which in January 2022 calculated a 23.8% Europe-wide increase.

However, the differential could be explained by the fact that both of those reports were published before the war in Ukraine, which caused a prolonged spike in gas prices.

In addition, costs could be increased by the introduction of a so-called hydrogen levy onto gas bills to support subsidies for UK H2 production, a proposal currently moving through Parliament as part of the government’s Energy Bill.

The proposal was stripped from the Bill during its reading in the UK’s upper house, the House of Lords, but was reintroduced by ministers in the lower chamber, the House of Commons.

The rules would give ministers power to set the levy from 2025, but so far they have not disclosed how much it would add to bills.

“Precisely how much household bills will increase depends on policy choices — including the level of the blend, government policy to support production, storage and transport, and billing mechanisms,” E3G said.

London is due to make a decision on whether to support hydrogen blending this year.

However, it has come under pressure from its “hydrogen champion” Jane Toogood, who in March published a report urging the government to speed up the process and introduce H2 into the gas mix as soon as 2025 to stimulate industrial demand, despite the UK energy department warning last year that blending would play only a “limited and temporary role” in the country’s gas grid.

But blending will not strategically stimulate demand for hydrogen, the E3G said.

Instead, it could risk the UK’s entire decarbonisation goals by locking-in unsuspecting customers to polluting fossil-fuel boilers.

“Blending could risk greenwash if the public are told ‘gas has gone green’, when hydrogen-ready boilers will burn fossil fuels for decades,” the think-tank said in its briefing. “This could delay investment into genuinely zero carbon heating and curtail strategic decisions about the future of the gas grid, including its repurposing or decommissioning.”

UK regulators have already raised the alarm about some gas boiler manufacturers promoting their “hydrogen-blend” and “hydrogen-ready” products with “misleading information”.
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hydrogen blendingHeatingUKEuropeBlue H2
Published 8 June 2023, 14:17Updated 8 June 2023, 14:18