A major new industry report released in parliament reveals how Britain’s hydrogen sector is keen to invest, expand and create thousands of jobs, but is increasingly frustrated by slow and uncertain policy implementation.
While confidence in the long-term role of hydrogen remains strong, businesses warn that weak demand signals pose the biggest threat to the overall progress of the UK hydrogen economy.
The findings come from the State of the Hydrogen Nation, a wide-ranging study published by the Hydrogen Energy Association (HEA). The report is based on insights from 142 organizations operating across the hydrogen value chain and provides the most detailed snapshot yet of sentiment, investment plans and barriers facing UK hydrogen.
Dr Emma Guthrie, Chief Executive of HEA, explains: “This report shows the sector is committed, capable and ready to deliver, but is increasingly constrained by uncertainty around demand, policy design and delivery schedules.
“The question is no longer whether hydrogen has a role in the UK’s energy system, but how quickly we can move from ambition to deployment. With clearer signals and faster delivery, the UK could unlock thousands of skilled jobs, attract investment and secure a world-leading position.”
“In short, cooperation and concerted action are essential at pace to create the right conditions to enable investment, create high-skilled jobs and support the UK’s net zero and energy security objectives.
“The HEA, along with its members and partners, stands ready to work with ministers, officials, MPs and the wider UK hydrogen industry to make that happen.”
A broad and representative snapshot of hydrogen in the UK
Respondents to the survey span all regions of the UK, covering all home countries and a diverse mix of start-ups, SMEs and global companies with a stake in UK hydrogen.
Participants will work across production, infrastructure, transport, manufacturing, end-use and finance, providing a holistic view of how the sector is developing on the ground.
This research was supported by a coalition of hydrogen, clean energy, and end-user community industry associations.
The contribution from Hydrogen Scotland and Hydrogen Ireland highlights the growing importance of regional clusters, where local infrastructure and demand can develop in parallel, in building a resilient and competitive UK hydrogen environment.
Confidence wanes, but belief in hydrogen continues
Although overall confidence has fallen slightly compared to last year, the report makes clear that this is not caused by doubts about hydrogen itself. Instead, companies are citing frustration with delays in policy decisions, funding rounds, and delivery schedules.
The UK’s hydrogen regulatory framework continues to be seen as reliable and investable, with many organizations praising its fundamental design. However, uncertainty about how and when policies will be implemented is starting to weigh on investment decisions.
Almost half of respondents said the government’s commitment to hydrogen in the UK appeared weaker than a year ago, citing stop-start processes and a lack of clear signals.
Despite this, investment appetite remains strong. More than 84% of organizations expect UK hydrogen investment to increase or remain stable over the next 12 months, suggesting capital is sitting on the sidelines until there is more clarity rather than walking away.
Demand emerges as a significant bottleneck
The report identifies demand creation as the most pressing challenge facing hydrogen in the UK. Although supply chains and production capacity are gradually taking shape, many projects are struggling to reach final investment decisions due to a lack of confidence in prospective customers.
Companies seeking off-takers report widespread difficulties in securing long-term contracts, while potential end users highlight the complexity of integrating hydrogen into existing operations.
Concerns about infrastructure availability, cost competitiveness, and contract structure are compounded by a perceived lack of durable demand-side policy support.
Without stronger and more predictable signals about where hydrogen will be used, particularly in industry, transport and electricity, the report warns that uptake could stall even where production support mechanisms already exist.
Job prospects depend on faster policy delivery
One of the report’s clearest messages is the scale of job opportunities at stake. Respondents estimate that under current conditions, the UK’s hydrogen sector could support around 3,800 jobs by 2030.
However, under an improved policy environment characterized by faster decisions, clearer demand signals and better coordination, that figure could rise to around 17,000 jobs.
This quadruple increase spans engineering, construction, manufacturing, infrastructure development and long-term operations, strengthening the UK’s hydrogen potential as the foundation of the future clean energy economy.
Global competition intensifies
Internationally, the UK remains ranked as one of the most attractive destinations for hydrogen investment, second only to Germany in terms of companies surveyed. But there are growing concerns that rival countries are accelerating the transition from ambition to implementation.
Germany, in particular, is seen moving policy commitments into projects more quickly, raising concerns that capital, technology and supply chains will leave the UK if progress does not accelerate.
A pivotal moment for UK hydrogen
The report concludes that UK hydrogen policy has reached a critical juncture. Coordination is essential as responsibility for delivery is spread across multiple government departments, regulators and public bodies.
Aligning production incentives, demand mechanisms, infrastructure planning and carbon pricing will be key to unlocking investment and restoring confidence.
The message from HEA is clear as the industry is ready to act. The foundations for UK hydrogen are in place, but whether the opportunity is fully realized will depend on pace and consistency.
Source link
