THE UK government is set to reject investment in a clean energy source identified by the US, Japan and China as a major alternative to fossil fuels and with potentially important spin-off benefits to Scotland. 
The revelation will further damage the government’s green credentials in a year in which Tony Blair has sought to assert Britain’s commitment to halting global warming.

A report commissioned by the Department of Trade and Industry (DTI), and seen by the Sunday Herald, recommends that Britain leave significant research and development in hydrogen and fuel cell technology to countries such as the US, Japan and China, which are ploughing billions of dollars into creating a “hydrogen economy” – a global market estimated to be worth £24 billion by 2011.

“You don’t need a seat at the table for everything. Global markets will ensure that good products are developed,” the draft report states.

The UK’s attitude to hydrogen and fuel cells contrasts with that of the US, where President Bush has pledged over $2bn (£1.1bn) for hydrogen fuel development, in a bid to reverse America’s growing dependence on foreign oil. 

Hydrogen can be produced by electrolysis, sending an electric current through water, which splits it into hydrogen and oxygen. It can be used, like a battery, to store energy, for use in heating and transport applications. Fuel cells offer a much cleaner alternative to the internal combustion engine.

The DTI report, produced by energy consultants E4tech in December, is sceptical about using renewable energy sources such as wind and wave power to produce hydrogen, and favours using fossil fuels or nuclear energy, which it says are more “cost effective”. 

It also shuns hydrogen as a fuel for “stationary uses” – heat and power – though it agrees that transport is an area with huge potential.

The report sets out the government’s twin aims of reducing carbon dioxide (CO2) emissions and improving energy security – the ability to produce the energy required to keep the economy running stable. 

It states: “For stationary power and heating applications it is unlikely that hydrogen fuel will provide competitive CO2 reductions by 2030”.

The report argues that the production of grid electricity is “the most CO2-effective use of limited renewable resources”, and adds that “it is not currently possible to assess whether hydrogen could enable the exploitation of remote renewables”. 

This latter assertion has met with strong opposition among the country’s fledgling hydrogen and fuel cell businesses, which argue that the report ignores the potential for applying the new technology in rural communities with an abundance of renewable energy potential, notably the Western Isles, the Northern Isles and parts of the Highlands.

David McGrath, managing director of Aberdeen-based fuel cell company siGEN, reacted angrily to the report’s recommendations. He says it suffers from “fundamental errors that will block any developments north of the Border”.

“The issue for us is that their approach to this whole thing is from a Westminster perspective and it really does very little for Scotland or Wales. 

Two British demonstration projects are studying the conversion of renewable energy into hydrogen for fuel cells. Rupert Gammon, technical advisor to the West Beacon Farm Project, in Leicestershire, accused the government of “short-sightedness” in the report. He said that a renewable energy system and hydrogen and fuel cell technologies had to be developed in parallel.

“People are saying let’s build fuel cell cars, but it’s where the hydrogen comes from which is absolutely central to what makes it green or non-green.

“The whole lot has got to come from sustainable sources and the only way to do that is through renewables and possibly nuclear. Hydrogen is the only thing that anybody has come up with that actually ties these together.”

Sandy Macaulay is manager of the Pure project on Unst, a community-owned renewable energy project using hydrogen technology to provide the energy for an industrial estate. 

He said: “Hydrogen from renewables, which is what we have seen as a niche for Shetland and the UK in general, is not going to solve the world’s energy problems. But it’s do-able , it adds to the diversity of our energy supply. ” 

Alistair Carmichael, MP for Orkney and Shetland, also criticised the report saying it was too “London-centric”. 

A spokeswoman for the DTI said the government was committed to tackling climate change and pointed out that hydrogen and fuel cells were still at the research stage. The government response is to be published by the end of the month.

The Scottish Executive has meanwhile established a sub-group of the Forum for Renewable Energy Development in Scotland (Freds) looking specifically at hydrogen and fuel cells. It is to produce a separate report on the potential for the technology in Scotland.