Christopher Aird

This Practice Note provides an overview of the Low Carbon Hydrogen Agreement (LCHA), which forms the key pillar in the UK’s Hydrogen Production Business Model (HPBM) subsidy regime for low carbon hydrogen production projects. It sets out what the LCHA is; its purpose; structure; key aspects; eligibility criteria; the key parties involved; key payment streams; other key terms; commercial considerations for low carbon hydrogen producers and project finance lenders; the legal basis for the scheme; whether LCHA revenue support can be combined with other forms of hydrogen, CCUS and/or other government support; and how the scheme is funded.

This Practice Note summarises the key revenue support and other funding mechanisms under development by the UK government for low carbon hydrogen projects in the UK. It covers the Business Models for eligible hydrogen production (HPBM), transport (HTBM), storage (HSBM) and hydrogen to power (H2P) projects (H2PBM), and the processes through which funding is awarded via these models. It also explains the role of the Low Carbon Hydrogen Standard (LCHS), the Net Zero Hydrogen Fund (NZHF) and Hydrogen Allocation Rounds (HARs) under the HPBM. The Practice Note also briefly considers some of the key UK government funding schemes for new, low carbon technologies which include, but do not exclusively relate to, low carbon hydrogen such as the Net Zero Innovation Portfolio (NZIP) and the Green Industries Growth Accelerator (GIGA) fund.