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DEZNZ, Hydrogen Production Business Model subsidy scheme

  • This report evaluated the assessment of compliance that the Net Zero Hydrogen Fund, a suite of measures (split into four distinct strands but this report focused on strand 3 which provides funding to electrolytic hydrogen production projects) designed to support at-scale development of low carbon hydrogen production valuing up to £240 million.
  • Our key takeaways from the Subsidy Advice Unit (SAU) report are:
    • Overall this assessment was well received and only had two instances in which it could have been strengthened:
    • When undertaking assessments the potential competitive impacts of the subsidy must be considered and meaningfully discussed, including any systematic reviews and methodical discussions on market distortions which may occur as a result of the subsidy being granted.
    • When undertaking the balancing exercise at Step 4, the effects on international trade and investment must be thoroughly considered. Here it was unclear, for example, whether projects that have received funding will be permitted to export the hydrogen they produce and there was also uncertainty of the impact on volumes produced.

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