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Hydrogen and the Law

The hydrogen revolution poses many legal questions. Some of the key areas for consideration include:

Regulation

How will the production, storage, transmission and distribution of hydrogen be regulated?

Some existing legislation, such as the Gas Act 1986, which applies to gases including those wholly or partly consisting of hydrogen, may still require adaptation to be fit for purpose. The use of onshore salt caverns as storage for hydrogen would need to be monitored for structural integrity and this would require amended legislation as the Energy Act 2008 does not currently include hydrogen as a regulated ‘gas’ for storage purposes. Offshore storage facilities which would likely by regulated by amended forms of offshore oil & gas legislation.

Funding

What are the procedures for tendering for Government funding and contracts? What are the rules for securing government funding for this new technology? What flexibility is there in negotiating government contracts?

The UK Government has announced that a consultation for hydrogen business revenue models for hydrogen production projects will begin in Q2 2021. It is likely that initial hydrogen production projects will receive support from the UK Government in the form of bilaterally negotiated contracts. Such projects will be eligible for funding from the Net Zero Hydrogen Production Fund There are a plethora of government funding sources for other hydrogen related projects, such as industrial & transport fuel switching related funds. Those switching related funds specifically designed for hydrogen include the: Hydrogen Supply Competition, Hy4Heat Competition and Hydrogen for Transport Programme. There are also various subsidy and incentive models which could be applied to the hydrogen market, such as the: Contracts for Difference, Renewable Heat Incentive and Renewable Transport Fuel Obligation schemes.

Corporate, finance and commercial

Where complex and ground-breaking projects require equity and debt funding, how will they be structured? How will pricing models for CO2 offtake develop for blue hydrogen projects?

In order to attract private sector investment, hydrogen production projects will have to be structured in accordance with the norms expected for bankable and investable transactions in the energy and infrastructure sector. Long established principles for project development and finance transactions in such sectors will likely be adopted for hydrogen, covering government support, regulatory matters, commercial contracts, joint ventures, financing and corporate governance. Feedstock and offtake agreements for green and blue hydrogen projects will need to be arranged, with substantial natural gas or renewable power supply arrangement made, for instance via corporate PPAs and VPPAs. Consideration for water supply for electrolysis, potentially via associated desalination projects in countries where water supply is constrained, and CO2 offtake arrangements.

Planning

What are the planning requirements?

Appropriate planning licences and approvals needs to be obtained for the construction of production and storage facilities, as well as access to extensive pipeline networks, including for the repurposing of existing infrastructure. How efficiently hydrogen projects are able to obtain Development Consent Orders via the Nationally Significant Infrastructure Projects process, as well as gaining Local Planning Approval via the Planning Act 2008 and Town & Country Planning Act 1990, will be of significant importance to the costs of such a project.

 

Documentation

Télécharger Clyde___Co_-_Hydrogen_and_The_Law.pdf  (PDF • 900 Ko)

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