Hydrogen will play a crucial role in decarbonising power and some heavy industry. However, hydrogen is a poor option for domestic heating and would substantially increase consumer bills relative to other heating technologies. Promptly ruling out further public spending on domestic hydrogen heating will be critical to secure affordable energy bills, and to enable effective long-term transition planning for networks and workers.

Further delay risks billions of pounds of unnecessary gas network investment and expansion – increasing consumer bills and further inflating the liabilities associated with disconnection and decommissioning. It also undermines efforts to give workers a say in their future and plan a transition which guarantees good quality, unionised jobs for decades to come.

The UK must act quickly to put the public interest before those of gas network shareholders. Government has promised to consult in 2025. To keep bills down for consumers, government should follow this consultation with a clear decision by the end of 2025 – providing clarity before the start of the next gas network price control.

To secure affordable energy bills, now and in the long term, the UK should:

  • Rule out further public subsidy for domestic hydrogen heating.
  • Prevent unnecessary gas network spending to stop further energy bill rises.
  • Limit future decommissioning costs by halting gas network expansion.
  • Develop a long-term transition plan for gas networks and gas workers.
  • Ensure all consumers can access other low-carbon heating solutions.

The Weakening Case For Hydrogen Heating

The case for hydrogen heating has weakened since E3G’s previous hydrogen factsheet in 2021. In particular, hydrogen production costs have proven to be towards the upper end of predictions, increasing the impact hydrogen would have on consumer bills.

Hydrogen heating also faces fierce competition. A range of other more affordable low-carbon heating technologies are already available to consumers. These options include a variety of heat pumps and other electric heating solutions, as well as heat networks and biomass boilers.

The primary challenges for domestic hydrogen heating remain:

  1. Affordability: Hydrogen heating would increase energy bills – likely more than doubling heating bills, while other low-carbon heating options offer substantially better value for money (see Table 1).
  2. Energy security: Widespread hydrogen heating would leave the UK highly reliant on gas imports. This would undermine the benefits of achieving the Clean Power mission and leave the UK vulnerable to future gas price spikes.
  3. Safety: Hydrogen is leakier and more explosive than methane. The proposed mitigations for these risks are impractical and disruptive for consumers, such as cutting 4 × 4 inch holes in consumers’ walls.

Overall, there is very little to recommend the use of hydrogen for domestic heating. This is reflected by clear consensus among independent experts: over 50 independent studies have now concluded there is no public policy case for hydrogen in domestic heating. In October 2023, the National Infrastructure Commission reached the same conclusion, following exhaustive analysis as part of the second National Infrastructure Assessment.

Hydrogen is expensive

Strike prices for electrolytic, low-carbon hydrogen are currently £241/MWh – over three times the price of carbon-intensive fossil-derived hydrogen (~£70/MWh) and nearly three times the latest strike price for offshore wind (£81/MWh). The high cost of low-carbon hydrogen is driving further loss of confidence in hydrogen’s role beyond core applications in chemical feedstocks, seasonal energy storage, transport fuels and high-temperature industry.

The retail cost paid by consumers is likely to be even greater. Estimates from the UK Fife “H100” trial suggest hydrogen heating would more than triple bills relative to heat pumps, as shown in Table 1. Even under the government’s more optimistic 2021 production cost estimates, hydrogen heating would still likely more than double consumer bills.

For hydrogen heating to be adopted by consumers, it would need to receive significant, indefinite subsidy to bring running costs into line with other heating options. The gap between hydrogen costs in the H100 trial and heat pump running costs is at least 17.5 pence per kWh of heat output. A subsidy at this level for all households on the gas grid would cost nearly £40bn every year (£1,800 per household).

Hydrogen for domestic heating is incompatible with energy independence

Meeting the UK’s low-carbon hydrogen needs will be challenging and expensive even without competing demands for heating. Modelling by the National Energy System Operator suggests hydrogen demand will reach 138 TWh per year even without usage for heating. Producing this hydrogen from renewable sources would require nearly 150 TWh of renewable electricity. This is more than the UK’s entire current renewable electricity output (136 TWh in 2023). Using hydrogen for heating would more than double this requirement again, as shown in Figure 1.

A graph of a graph with red lines AI-generated content may be incorrect.

Figure 1: Using hydrogen for heat could more than double UK’s 2050 hydrogen needs

If the UK is not able to meet demand for hydrogen using renewable sources alone, it will need to rely either on hydrogen imports, or hydrogen derived from fossil gas (which would also need to be imported). Other forms of low-carbon heating are more efficient uses of the UK’s renewable energy resources, and ruling out hydrogen heat could allow the UK to become a net energy exporter.

Using hydrogen in homes is less safe than the alternatives

Hydrogen faces inherent safety challenges relative to methane. Hydrogen leaks more readily, is more explosive, and is harder to detect. These challenges may not be insurmountable, but the solutions proposed to date introduce alternative issues and concerns for end-users. Safety assessments conducted for UK hydrogen heating trials recommended any room containing hydrogen gas pipework should include a non-closable vent of 10,000 mm2 or more (4 × 4 inches), as well as a range of other measures including the provision of hydrogen detection alarms.

Alternative heating technologies such as heat networks and heat pumps are much safer and already widely used. Moving away from gas offers an opportunity to reduce the frequency of gas explosions and save lives.

Two of the three attempted UK hydrogen heating trials have now collapsed because of safety concerns, local opposition and a lack of sufficient hydrogen production. Inability to deliver even relatively small, highly subsidised trials highlights how challenging it would be to roll out hydrogen boilers more widely.

The Cost of Delaying the Inevitable

The 2021 Heat & Buildings Strategy acknowledged that a strategic decision on the role of hydrogen for domestic heating is needed to ensure “efficient,

effective and affordable mass decarbonisation”. Despite this, the decision was kicked into the long grass, with no commitment to act until 2026. Statements by previous government ministers indicated a clear view on the right outcome – but no political will to face up to opposing vested interests.

The new government has now promised to consult in 2025. This is a positive step – so long as it is promptly followed by a clear decision before 2026. Further delay risks higher bills for consumers, undermining efforts to deliver a just transition for workers, and harming investment in UK manufacturing.

Uncertainty risks increasing energy bills even further

Maintaining gas distribution networks currently costs UK consumers over £4.5bn per year. Planning ahead is key to ensuring consumers get a good deal. Gas network infrastructure has a regulatory lifetime of up to 45 years – so network planners need to consider what the energy system will need in 2050 and beyond.

Network planners consider the highest plausible scenario for future gas demand and ensure network investment is sufficient to meet this demand. However, lack of a clear direction on hydrogen heating undermines this planning, potentially driving up energy bills for consumers. Overestimating future gas demand means spending more than we need to – and increasing energy bills as a result.

Until hydrogen heating is ruled out by government, networks will argue that widespread hydrogen heat constitutes a “plausible” future demand scenario and use this to push for additional spending on a more expensive network. Indeed, some have already done so in their business plans for the next price control, with networks to hydrogen. This wasteful gold plating would benefit gas network shareholders at the expense of consumers. Cadent’s business plan also notes “significant costs” associated with hydrogen repurposing were already incurred during the current 2021 – 2026 price control.

Analysis for the UK government estimates it will cost at least £22bn to repurpose distribution networks for hydrogen, and notes this estimate is subject to “considerable uncertainty” which could see costs increase substantially. Without a prompt decision on hydrogen heat, the UK risks sleepwalking into increasingly expensive and unnecessary investments. This unneeded spending could be avoided by a prompt decision to take hydrogen heating off the table.

Indecision also undermines forward planning for gas network decommissioning and disconnections. Steps can be taken now to minimise these future costs and ensure they are recovered fairly – but only if a decision is taken ahead of time. Actions which could minimise future costs include: limiting further network expansion, spreading cost recovery over a longer time period, identifying innovative alternative uses for gas network assets, or establishing where assets can be safely left in place. However, as long as gas networks can argue hydrogen may play a role in domestic heating, they cannot be relied upon to adequately plan for network decommissioning.

Kicking the can down the road will lead to consumers paying billions more to manage these costs, when earlier action would have led to lower bills. Other countries with substantial gas networks have already taken steps to prevent further expansion – for example the Netherlands ended connections for new buildings in 2018. The UK has so far failed to introduce similar measures, on the basis of claims that networks could be used for hydrogen in future.

The energy regulator will issue final determinations on the gas distribution network price control for 2026 – 2031 in the final quarter of 2025. A clear government decision ahead of this point would enable the regulator to take a firm line with networks and keep bills lower for consumers.

A proactive plan is essential to protect jobs and support workers

Lack of planning also risks threatening the job security and conditions of workers in gas networks. But with a properly planned, union-led approach, the transition could be managed – and could even deliver beneficial outcomes for workers.

Gas networks will not decline significantly in size until the late 2030s or early 2040s. Many who currently work in the sector will retire or move to other employment naturally over this timescale. But this will not be the case for all – and until a strategic decision on heat is made, new workers joining the sector risk being misled as to its long-term future.

The first step in ensuring a fair and just transition is being honest with workers and giving them time to plan their own future. Burying heads in the sand may provide reassurance for now but will lead to worse outcomes when the rug is eventually pulled by economic reality. Instead, workers and unions must have a say in setting out a vision for how workers can be supported to transition into sustainable long-term roles – starting now.

The government must also act to ensure new opportunities created as part of the Clean Power mission are unionised and deliver better conditions. The development of an Energy Skills Passport is a welcome first step. However, energy communities need a clearer transition and opportunities plan, backed by assurances that ensure no worker will be left behind.

This vision is achievable. Even without a role for hydrogen in domestic heating, there will still be substantial economic opportunities in the wider hydrogen economy. And the transition to a low-carbon economy is set to create thousands of new, high-quality jobs Government must ensure these are in the right place, at the right time, to ensure existing gas workers are well-placed to benefit.

Uncertainty harms investment in growth sectors

In May 2024, the Public Accounts Committee concluded that indecision on the role of hydrogen for heating is undermining investment in other low-carbon in home upgrades themselves, but also in the new low-carbon manufacturing jobs supported by this demand. The UK low-carbon heating market could potentially be worth over £7 billion per year by 2028 – but faces a number of barriers to achieving this potential.

It is critical that the new government puts an end to this uncertainty as soon as possible. Otherwise, the UK risks missing out on manufacturing investment in heat pumps as investors instead look overseas to more predictable markets.

What does a strategic decision need to address?

Allowing markets to run their course would eventually de facto rule out hydrogen heat. But while there is no need for a formal “ban” on hydrogen boilers, the government does need to act to ensure prudent use of public money.

The strategic decision on hydrogen must set out the parameters for where the line is drawn: which infrastructure investment might credibly be needed, and which is excessive? Does the government have an appetite to bet public money on the unlikely prospect of a change in the evidence? Or is now the time to curb further public spending on an increasingly unlikely (and unnecessary) prospect?

An effective strategic decision will need to set out:

  • Whether hydrogen for domestic heating usage should be eligible for subsidy via the Hydrogen Production Business Model.
  • Whether hydrogen infrastructure required solely for domestic heating usage should be eligible for subsidy via the Hydrogen Transport and Storage Business Model.
  • Key assumptions to be used for future strategic spatial and network planning.
  • Whether consumers should delay purchasing other low-carbon heating systems to “wait for hydrogen”, and whether this should be viewed as a reliable decarbonisation strategy.

The government should additionally commission the development of a long-term transition plan for the gas network. This plan should set out how to ensure a socially just and fair transition – considering the impact of gas network costs on energy consumers now and in the future, as well as how the gas workforce will be supported and protected.

An alternative vision for UK hydrogen

While hydrogen is unlikely to play a role in domestic heating, this does not mean it will not play a critical role in delivering decarbonisation. Hydrogen will be critical to supporting a reliable clean power system and transforming the UK’s fortunes producing low-emissions materials such as steel. But hydrogen’s high cost and limited availability means its use will need to be carefully prioritised. This figure sets out where hydrogen is likely to play a role – and where it is not.

Source: E3G assessment based on review of available evidence, including: IRENA, Policies for green hydrogen (webpage); Liebreich Associates, 2023, Hydrogen Ladder Version 5.0; Rosenow, J., 2024, A meta-review of 54 studies on hydrogen heating; E3G, 2025, The UK’s clean power mission: Delivering the prize

Recommendations

Failure to promptly rule out hydrogen for heating risks driving up consumer energy bills and undermines effective planning for key national infrastructure. To protect energy consumers and keep energy bills low, both now and in the longer term, government should:

  • Rule out further public subsidy for hydrogen heating. Hydrogen heating should be added to the list of “non-qualifying offtakers” for the Hydrogen Production Business Model.
  • Prevent unnecessary gas network spending to stop further energy bill rises. The Hydrogen Transport Business Model should only support the hydrogen infrastructure required for industrial and power users, and should not support infrastructure which relies on the use of hydrogen for heating to be viable. Future strategic spatial and network planning should assume hydrogen heating usage will be minimal.
  • Limit future decommissioning costs by halting gas network expansion. The government should place an immediate moratorium on new gas network connections and require gas networks to plan ahead for decommissioning.
  • Develop a long-term transition plan for gas networks and gas workers. This plan should set out how network decommissioning costs will be both minimised and funded, and how workers will be supported and protected through the transition. The plan should be developed jointly by government, Ofgem, networks and trade unions representing gas workers. Adherence to this long-term transition plan should be a condition of future RIIO price controls.
  • Ensure all consumers can access other low-carbon heating technologies.

The Warm Homes Plan should set out a clear strategy to ensure all households can access other low-carbon heating. This should include actions to help manage upfront costs, such as grants and low-interest finance.

  • Prioritise hydrogen for strategically important end-uses, backing up a clean power system and providing security for key industrial processes such as steel, cement, ceramics and chemicals.

This briefing has been sourced from the official website of E3G and can be accessed here