Boosting low-carbon hydrogen production
Government support for clean energy across the UK
Will low-carbon hydrogen power the UK’s industrial future?
We’re making steady progress along the road to net zero. But some energy-related challenges are bigger than others.
Literally bigger. Like powering machinery too heavy to be electrified, used in industries like public transport, shipping and manufacturing.
Offering a cleaner alternative to the fossil fuels industry has relied on for centuries, low-carbon hydrogen (LCH) has emerged as an important fuel. But the path to a hydrogen-powered future isn’t without challenges.
Crucially, LCH is more expensive to make than traditional fossil fuels. To help kickstart the hydrogen industry, the government is boosting commercial production through its Hydrogen Allocation Rounds, which Deloitte is proud to support.
Minister for Industry, Sarah Jones, said: “This government is rolling hydrogen out at scale for the first time, with ten of the first projects now shovel-ready to start powering businesses with clean, homegrown energy from Teesside to Devon.”
“Hydrogen will help us cut industrial emissions and support Britain’s industrial renewal by creating thousands of jobs in our industrial heartlands as part of the Plan for Change.
Powering Bradford buses and Scottish whiskey
Bradford Low Carbon Hydrogen (BLCH) is a new flagship plant in the heart of Bradford’s city centre. Set to become one of the UK’s largest LCH production sites, it will play a major role in decarbonising its community, by providing cleaner energy for transport and industry.
With production due to begin in 2027, planning is underway for the site to generate a daily 12.5 tonnes of hydrogen – enough to power 800 Bradford buses.
BLCH is one of 11 facilities that, together, have been allocated over £2 billion in government funding from the first Hydrogen Allocation Round (known in the sector as HAR1) and £90 million in capital grant support through the Net Zero Hydrogen Fund.
Another, Whitelee Green Hydrogen in Scotland, will produce hydrogen to power the Inchdairnie Whiskey distillery.
“Facilities like these are showing the real impact LCH will have on everyday life, cutting emissions while attracting investment and generating jobs and clean energy on site to power local towns and cities,” says Tom Cope, a partner at Deloitte.
Progress so far is showing just how transformative hydrogen can be, attracting over £400 million of private sector investment in towns and cities, such as Milford Haven in Wales and High Marnham in Nottinghamshire, and creating over 700 jobs in construction and operations.
“Facilities like these are showing the real impact LCH will have on everyday life, cutting emissions while attracting investment and generating jobs and clean energy on site to power local towns and cities.”
Tom Cope, Partner, Deloitte
From fossil fuels to low-carbon hydrogen
With a further wave of 27 projects shortlisted in April 2025 (as part of HAR2), the potential impact of LCH is expanding.
It all makes for a growing and fascinating new industry for would-be investors who want be part of the government’s mission to make the UK a clean-energy superpower, reinvigorating the UK’s industrial heartlands as part of its Plan for Change.
Set to create thousands of jobs for apprentices, graduates and technically trained professionals like engineers and construction workers, the funding provides a brilliant example of the impact collaborations between the public and private sectors can make.
As DESNZ’s lead financial advisor across its hydrogen portfolio, a team from Deloitte has worked closely with its experts since 2023 to help develop and perform financial and commercial deliverability assessments on the first-of-a-kind projects applying for funding through HAR1.
Continuing this support for HAR2, we’re working together with DESNZ teams to perform financial due diligence and support commercial processes.
“Activity in the UK hydrogen economy is gathering pace and has the potential to attract £1 billion of private sector investment into the UK in the next four years,” Tom continues.
“When you consider the impact a fraction of that has had already, it’s an exciting prospect.”
A sustainable future
While developing fuel production methods, the trailblazing LCH facilities already underway are providing valuable learning for the next round of projects that will receive funding – and for the UK’s burgeoning hydrogen economy more broadly.
“As the UK continues to invest in and develop its LCH capabilities, one important element of the support provided by government is the potential to receive support across a 15-year period, to help make LCH projects commercially viable in comparison to high-carbon alternatives,” adds Elysia Merza, a director at Deloitte.
Ten of the 11 projects from HAR1 have now signed Low Carbon Hydrogen Agreements, which means they will continue into the future, and the remaining project is expected to sign their agreement in the coming months.
“Using our expertise in areas like financial and commercial analysis, we are supporting DESNZ to enable projects with the potential to transform energy production in the UK.”
