Mathew Carr

Bond yields drop after UK budget; data centres, banks face higher taxes in UK + ITM / hydrogen (2)

Banks to pay extra 3 percentage points on a surcharge; data centres to face new measures…national living wage up…

Labour largely pushes back welfare reform to 2027

Bond yields fall, so the bond traders like it:

–budget was delivered from 12:30pm London time

……

…based on hints given by Healey just now: hydrogen to get a boost

Not investment advice

Gemini on hydrogen in the budget unchecked:

Yes, there is explicit evidence in UK budget and public spending decisions confirming significant funding for electrolytic (green) hydrogen.

Key measures and policy mechanisms include:

Key Evidence & Funding Commitments

  • £2 Billion Commitment for HAR1 (2024 Autumn Budget):
    The Treasury formally confirmed £2 billion in public funding across 15-year contracts for 11 initial commercial-scale electrolytic hydrogen projects. Known as Hydrogen Allocation Round 1 (HAR1), these represent some of the world’s first commercial-scale green hydrogen facilities (such as Bradford Low Carbon Hydrogen, Cromarty Hydrogen, and Barrow Green Hydrogen).
  • £500 Million Infrastructure & Regional Networks (2025 Spending Review):
    The government allocated £500 million specifically to establish the UK’s first regional hydrogen transport and storage networks. This package connects electrolytic producers directly with industrial end-users, power stations, and salt cavern storage hubs to address off-taker supply chain bottlenecks.
  • Ongoing Annual Allocation Rounds (HAR2–HAR4):
    Through the Hydrogen Business Model (HBM) and Net Zero Hydrogen Fund (NZHF), the government has set a target of allocating up to 6 GW of total capacity specifically to electrolytic production by 2030.

    • HAR2: Allocating up to 875 MW.
    • HAR3 & HAR4: Providing up to 1.5 GW in combined production capacity.
  • Taxation & Climate Change Levy Exemptions:
    Following budget announcements, the government launched formal policy consultations aimed at providing exemptions from the Climate Change Levy (CCL) for power used specifically in electrolytic hydrogen generation. This reduces input power costs, which account for the majority of green hydrogen production expenses.

Strategic Focus

These budget allocations align directly with the Clean Power 2030 Action Plan. By incentivizing electrolysers to run on off-peak renewable electricity, the government aims to lower green hydrogen production costs—moving from initial HAR1 levels (~£241/MWh) toward commercial competitiveness (<£100/MWh) while providing long-duration energy storage for the electricity grid.

Leave a Reply