The ongoing conflict between the US and Iran and the disruption to oil and liquefied natural gas flows through the Strait of Hormuz have reinforced the importance of energy security and independence. Against this backdrop of heightened geopolitical uncertainty, reports suggest that Prime Minister-in-waiting Andy Burnham may be more open to new North Sea oil and gas developments. This could include a potential expansion of the Rosebank oil field (the UK’s largest undeveloped oil field) and the Jackdaw gas field (one of the largest undeveloped gas fields in the North Sea), while also accelerating the deployment of advanced clean energy technologies.
Increasingly recognised as a key part of the UK’s future energy mix, hydrogen (the most abundant element in the universe, accounting for around 75% of matter) is highly versatile, enabling its use in electricity generation, fuel cells, industrial heat and as feedstock for the production of low-carbon fuels such as sustainable aviation fuel. As policymakers seek both energy security and decarbonisation, hydrogen offers a credible alternative to diminishing fossil fuel resources.
Expanding the hydrogen industry is about more than achieving climate goals; it represents a significant economic opportunity. It can create high-value jobs across engineering, manufacturing and energy, while providing a pathway for workers in the oil and gas, chemicals and heavy engineering sectors to transition into low-carbon industries. Hydrogen projects can also drive regional growth by attracting investment into ’industrial heartlands’ and helping to regenerate communities historically reliant on carbon-intensive industries. Looking ahead, the opportunity is substantial, with the global hydrogen market projected to exceed $1 trillion by 2050 according to analysis carried out by Deloitte.
The UK is well positioned to capitalise on this opportunity. It benefits from a strong industrial base, established energy infrastructure and expertise developed through decades of oil and gas activity. Major industrial clusters in the North West, South Wales, the Solent, Grangemouth and the North East provide an immediate and scalable market for hydrogen, particularly for high-temperature industrial processes where electrification is not yet commercially viable. Recognising this potential, the government has sought to attract investment across the hydrogen value chain through measures including the Hydrogen Production Business Model and Hydrogen Allocation Rounds (HARs). It has also committed more than £500 million towards hydrogen infrastructure, including plans for the UK’s first regional hydrogen network by 2031 to support the production, storage and transportation of low-carbon hydrogen.
However, impending policy decisions are creating uncertainty for project developers and investors. HAR1 supported 11 projects (such as Bradford Low Carbon Hydrogen in Yorkshire) and HAR2 shortlisted a further 27 further projects (such as Green Hydrogen 5 in Wales). However, progress has been slower than anticipated, with only a limited number of HAR1 projects advancing towards Final Investment Decisions. Progress on HAR2 has also been limited, as shortlisted projects remain in the Department for Energy Security and Net Zero’s due diligence and cost assurance process, with developers still lacking clarity on when that process will conclude. At the same time, the revised Hydrogen Strategy, originally expected in autumn 2025, remains delayed.
The combination of these delays and a lack of policy clarity have created uncertainty for developers and investors. Many project developers continue to commit substantial resources towards land, planning, engineering, grid connections and supply chain engagement while awaiting clearer signals from government. If this uncertainty persists, it risks slowing project deployment, discouraging participation in future allocation rounds and weakening the UK’s attractiveness as a destination for hydrogen investment.
With a new Prime Minister and potentially a new energy secretary, important questions remain: Will the long-awaited Hydrogen Strategy face further delays while ministers review priorities? Will it provide a clear vision for where hydrogen can deliver the greatest economic, technical, environmental and societal value? The UK has a significant opportunity to become a leader in the global hydrogen economy, but realising that potential will require clear, timely and credible policy signals from government.
If you would like to discuss GK’s public affairs offering and how policy developments may impact investment in emerging energy technologies, please contact Brett Morton at brett.morton@gkstrategy.com .