UK Energy Secretary Designates Low Carbon Contracts Company as Counterparty for Hydrogen Production




UK Energy Secretary Designates Low Carbon Contracts Company as Counterparty for Hydrogen Production.


On January 2, 2024, the UK’s Secretary of State for Energy Security and Net Zero invoked a provision of the Energy Act 2023, specifically Section 65(1), to designate the Low Carbon Contracts Company Ltd as a counterparty for hydrogen production revenue support contracts. This directive is part of the government’s strategic push to bolster the production of hydrogen as a sustainable, low-carbon energy source.


Transparency and Compliance under the Energy Act


With this decision, the Secretary of State has adhered to the transparency prerequisites of the Act, namely Section 81(3)(a), by publicly disseminating the notice. The Secretary’s move is expected to catalyse the financing and execution of hydrogen production projects, thereby playing a pivotal role in the UK’s roadmap to energy security and net-zero carbon emissions.


Hydrogen: A Key Player in the Energy Transition


Hydrogen is fast emerging as a critical player in the global shift towards renewable energy. In this context, the UK government has launched the Ten Point Plan and the Net Zero Hydrogen Fund (NZHF) to spur investment in energy and low-carbon technologies. Furthermore, the Hydrogen Business Model (HBM) has been put in place to offer continuous revenue support to developers via a Contracts for Difference mechanism. The UK’s goal is to foster 250 MW of green hydrogen production by the end of 2025.


Global Developments in Clean Hydrogen Production


Meanwhile, the US Department of the Treasury and the Internal Revenue Service (IRS) have proposed regulations regarding Section 45V and Section 48 a 15 of the Internal Revenue Code. These stipulations provide guidelines on credits for clean hydrogen production, including the computation of 45V credits. Additionally, China Petroleum & Chemical Corp. has announced that their Kuqa project, touted to be the world’s largest green hydrogen project, will reach full capacity by the fourth quarter of 2025, a delay attributed to technological challenges.



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