Green hydrogen, red tape? Time for delivery in the hydrogen sector.

The UK hydrogen sector, like so much of the UK economy at the moment, finds itself at a crossroads.   

Attending Hydrogen UK's annual conference in Birmingham last week, the prevailing mood amongst developers, policymakers and investors, was one of cautious optimism - all while remaining painfully aware of the need for the pace of delivery to pick up. 

The UK continues to offer one of the most comprehensive headline policy environments for hydrogen globally and can combine this with the UK’s significant structural advantages. As an island nation with abundant renewable resources (wind, solar, and critically for hydrogen, water), the UK is well positioned to produce green hydrogen at scale. Co-location opportunities with renewable generation further strengthen the investment case. From revenue support mechanisms and allocation rounds to long-term strategic signalling, government has laid much of the groundwork needed to unlock investment.  

However, recent evidence is a reminder that capital is mobile and patience finite, and these structural advantages must be matched by certainty and speed of delivery. 

Despite encouraging rhetoric from DESNZ, delays to confirming funding streams and award of contracts under Hydrogen Allocation Round 2 (HAR2) have begun to take their toll. Projects representing around 40MW of capacity from the HAR2 shortlist have already been cancelled, largely due to prolonged uncertainty and the inability of off-takers to commit without long-term clarity. 

With the launch of HAR3 expected later this year, the sector will be watching closely. Sticking to stated timelines will be critical not just for the viability of individual projects, but for maintaining the UK’s credibility as a competitive destination for hydrogen investment. 

One of the clearest messages from speakers in Birmingham was that the framing has changed since the previous Hydrogen Strategy was published in 2021. The question is no longer whether hydrogen has a role, but what role in our energy and transport mix that should take, as well as how strongly those arguments are being made within Whitehall.  

Delegates heard that DESNZ is actively encouraging industry to continue engaging, particularly by submitting robust, project-level evidence. This is essential in helping departments make the case to HM Treasury and secure the long-term support frameworks the sector needs. The argument for hydrogen is still being won, and industry has a central role in shaping it, but crowding in investment also relies depends on pace, certainty, and innovation in public policy.   

Instead of being positioned as a system-wide alternative to electrification, hydrogen is increasingly being understood as a solution for specific, challenging applications. Heavy industry, high-temperature processes, and segments of transport such as construction are where hydrogen’s value is most clearly seen. We have already seen work on the research and development of hydrogen-powered construction vehicles here in the UK from JCB. 

 Even at the conference itself, delegates were transported from Birmingham International via a hydrogen shuttle bus: an important demonstration, but also a reminder of shifting realities. With rapid advancements in electric vehicles, widespread hydrogen adoption in public transport appears less likely than once anticipated.   

The future, instead, may lie in “bundling niches”: aggregating demand across industrial clusters and specialised use-cases to create viable, scalable markets.  

Transport and storage infrastructure remains one of the most critical enablers of the hydrogen economy. Encouragingly, there are signs of progress so far in 2026, from consultations on new pipeline infrastructure such as the proposed H2East corridor linking the Humber to the East Midlands, to ongoing developments in initiatives like HyNet, located in the North West of England and North Wales, which aims to create the world's first low-carbon industrial cluster. 

These developments will be essential in bridging the gap between hydrogen production and end-users, unlocking both demand and investor confidence. 

The UK hydrogen sector is not short of potential, but as it moves from ambition to delivery, the ability to shape the conversation within Whitehall and beyond will be as important as the projects themselves. Government and industry have a clear opportunity but only if they work together and move decisively before the capital moves elsewhere.