HySpeed Green Hydrogen Play Will Lead To Stranded Assets & Fiscal Losses

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Last Updated on: 12th May 2025, 12:38 pm

Project HySpeed has launched into the spotlight as one of the UK’s most ambitious hydrogen initiatives, promising transformative outcomes that aren’t going to be realized. Backed by a connected consortium of UK industrial players — including the Bamford family’s companies such as JCB, Wrightbus, and Ryze Hydrogen, alongside National Gas, Centrica, ITM Power, Johnson Matthey, Tarmac, Heidelberg Materials, and Arup — HySpeed is asserting that it will deliver one gigawatt of green hydrogen production capacity by 2030. It claims it will be investing £6.5 billion, creating over 24,000 jobs, and reducing carbon dioxide emissions by approximately one million tonnes per year.

On the surface, the scale, ambition, and public narrative are compelling, with the consortium members proudly proclaiming that HySpeed represents a key pillar of Britain’s energy security and decarbonization strategy. However, beneath the bold headlines and promising statements lies a more complex and precarious strategic reality.

Project HySpeed is, fundamentally, a defensive response to a growing existential threat faced by its two primary drivers: the Bamford family interests and National Gas. Both have staked substantial financial and strategic commitments on the widespread adoption of hydrogen in the UK, effectively betting their long-term business viability on hydrogen’s large-scale economic success. For the Bamford group — especially JCB, Wrightbus, and Ryze Hydrogen — significant resources have already been poured into hydrogen engines, fuel cell buses, and hydrogen fueling infrastructure. Should hydrogen fail to scale economically, these ventures face the risk of becoming stranded assets, leaving the companies struggling to pivot quickly enough to competing solutions such as battery-electric vehicles or alternative synthetic fuels. They are trying desperately to keep their internal combustion engine intellectual capital from becoming worthless, and equally vainly trying to make hydrogen for transportation worthwhile.

National Gas, for its part, confronts perhaps an even more daunting challenge: the looming obsolescence of its vast gas pipeline infrastructure. As the UK moves rapidly toward electrification and renewable energy, natural gas usage faces inevitable decline. Without a viable alternative for pipeline utilization, National Gas risks massive asset stranding and sharply declining revenues. Gas utilities are facing the utility death spiral much more than electrical utilities, which actually have a strong value proposition in a decarbonized future. Hydrogen thus represents its lifeline, as the only conceivable long-term replacement for declining natural gas flows. But that lifeline depends entirely on hydrogen becoming economically viable, competitive, and widely adopted. Like JCB’s engines, National Gas’ pipeline network is headed for the scrap heap.

The fundamental flaw at the core of Project HySpeed’s strategy is its profound misalignment with economic and technological realities. Green hydrogen, even under optimistic scenarios, remains notably more expensive than competing alternatives. Electrolyzer production costs, energy requirements, and associated infrastructure expenses have stubbornly resisted rapid reduction. While HySpeed proponents optimistically project hydrogen costs falling to around £6 per kilogram by 2030, the current reality is starkly different. Present-day UK green hydrogen prices regularly exceed £9–10 per kilogram, often far higher, and global trends do not strongly support dramatic, sustained price decreases within the project’s aggressive timeline. Even with a manufactured cost of £6, storage, compression, and distribution of hydrogen add very significant cost burdens. That’s a big part of why hydrogen at refueling stations ranges up to £21 per kilogram in the UK, with even gray hydrogen — much cheaper to manufacture than green hydrogen — costing £15 at the pumps. That’s after big subsidies for the hydrogen manufacturers and refueling stations, by the way.

This persistent hydrogen cost premium is further exacerbated by the rapid advances and increasingly competitive economics of alternative decarbonization pathways. Battery electrification, in particular, has surged forward at a remarkable pace. Commercial and heavy transportation — including trucks, buses, and construction equipment — are increasingly shifting towards battery-electric solutions that offer lower operational costs, higher energy efficiency, and faster technological maturity than hydrogen. As this electrification trend accelerates, the market space available for hydrogen-powered equipment shrinks significantly. JCB’s investments in hydrogen combustion engines, for example, now look particularly vulnerable, facing direct competition from electric excavators and construction vehicles already commercially available and proven. Their total cost of ownership calculations ignore that fuel costs dominate, and hydrogen can’t be cheap at points of refueling, so the engine being cheaper than batteries doesn’t matter.

Similarly, in public transport, Wrightbus’s hydrogen bus operations face direct competitive threats from rapidly expanding battery-electric bus deployments. Battery-powered buses already dominate the European and global market, driven by lower total cost of ownership and simpler infrastructure requirements. Further, batteries continue to plummet in price while increasing in energy density and battery-electric buses will always be simpler to manufacture, so the total-cost-of-ownership advantages will only continue to increase.

Like North America’s New Flyer, they are making a bad strategic bet in supporting both hydrogen and battery electric buses. Because they are diverting resources and talent from the battery-electric buses, they are inferior to competitors while also being more expensive. My assessment is that for every hydrogen bus a manufacturer sells they lose three battery-electric sales to more focused competitors. New Flyer has an advantage in the UK with Bamford senior sitting in the House of Lords, but that only goes so far. Similar dynamics killed Quantron, the German truck manufacturer that was trying to do both, and as a result Ikea Austria is saddled with a mixed fleet of delivery vans and no support for them.

The viability of extensive hydrogen refueling networks — central to Ryze Hydrogen’s ambitions — also appears increasingly fragile, as municipalities find battery-electric solutions easier and cheaper to deploy at scale. Hydrogen’s infrastructural complexity — storage, transportation, and fueling station economics — remains a daunting challenge, contrasting unfavorably with the simplicity and falling costs of electric charging infrastructure.

Beyond these direct competitive challenges, HySpeed faces a particularly acute vulnerability to political and policy shifts. The strategy relies almost entirely on sustained government subsidies and supportive policy frameworks. Current UK hydrogen policy, while ambitious in terms of targets and funding initiatives, is increasingly influenced by cautious expert advice, notably from the Climate Change Committee (CCC), which clearly favors targeted, limited roles for hydrogen, largely restricted to niche, hard-to-electrify industrial processes or very specific heavy transportation use-cases. Recent CCC statements explicitly downplay hydrogen’s broader role in transportation, home heating, or widespread energy storage. A future UK government, possibly even the current Labour administration, might follow this advice, drastically narrowing public investment in hydrogen in favor of proven, cost-effective alternatives, i.e. electrification, renewable energy expansion, and efficiency improvements.

Should such a policy pivot materialize, Project HySpeed would find itself directly exposed. Without significant government financial backing, subsidy commitments, and regulatory mandates ensuring hydrogen market creation, the consortium’s hydrogen capacity would struggle to find sufficient demand. Indeed, this market demand risk is critical. Industrial and transportation users must commit substantial capital investments to shift to hydrogen technology, investments they may be reluctant to make if hydrogen costs remain high or uncertain. Steel mills, cement kilns, trucking fleets, and public transportation operators all require stable, predictable hydrogen prices to confidently transition. As HySpeed cannot deliver hydrogen cheaply enough, and as subsidies are withdrawn or diminished due to political, economic, or technological shifts, these potential offtakers will hesitate, delay, or reject the hydrogen transition, fundamentally undermining HySpeed’s business case.

Another deep strategic flaw is HySpeed’s aggressive reliance on complex infrastructure rollouts — new electrolyzer plants, pipeline conversions, hydrogen storage sites, renewable energy procurement — each with significant execution risk. Technical uncertainties remain around converting large sections of the National Gas pipeline network to hydrogen. The infrastructure timeline appears excessively optimistic, glossing over potential delays related to permitting, safety testing, equipment manufacturing, supply chain constraints, and community acceptance. A single major delay or complication, whether regulatory, technological, or financial, could derail the tightly-coupled network of planned hydrogen hubs, cascading into delays or failures across the entire initiative.

The Dutch national hydrogen pipeline project is a clear indicator of how this is going to play out. It was initially estimated at €1.5 billion in 2023, and has experienced significant cost overruns, with recent estimates surpassing €3.8 billion. It’s likely to come in at €5-6 billion if it actually gets built. This escalation is due to overly optimistic assumptions about repurposing existing natural gas infrastructure, technical complexities that were swept under the rug, permitting delays, and inflationary pressures affecting supply chains and labor markets. The project’s financial model, based on regulated tariffs, set an initial transport fee of €0.50 per kilogram of hydrogen to attract industrial users. However, regulators now warn that actual costs could range from €4 to €6 per kilogram without substantial subsidies, potentially rendering green hydrogen commercially unviable. Moreover, the pipeline faces underutilization risks, with initial usage projected at only 20–30% of capacity, raising concerns about the project’s economic sustainability and the burden on taxpayers.

Ultimately, Project HySpeed represents a classic “Big Push” industrial policy gamble. Its proponents aim to overcome market inertia by aggressively scaling hydrogen production and infrastructure in advance of actual, proven market demand. The hope is that this scale will drive down costs, induce market adoption, and secure hydrogen’s future. However, history shows that big-push strategies often collapse under their inherent complexity, cost overruns, unrealistic assumptions, and reliance on sustained political commitment. The fundamental reality remains: hydrogen currently lacks both market competitiveness and clear cost trajectories to become broadly viable. Without massive, indefinite government support — a politically risky and economically questionable prospect — the venture will likely face serious, perhaps insurmountable, difficulties.

Should Project HySpeed falter or fail outright, the fallout would extend beyond its immediate stakeholders. For UK taxpayers, stranded infrastructure, wasted subsidies, and economic inefficiencies loom large. Strategically, a high-profile failure could undermine broader public and investor confidence in the UK’s overall decarbonization strategy. It risks diverting precious resources and attention away from genuinely viable, rapidly maturing pathways — electrification, renewable energy deployment, and efficiency measures — that are already proving their worth economically, technologically, and environmentally.

Investors should steer clear of Project HySpeed, as the initiative’s fundamental economic weaknesses and strategic misalignment pose substantial financial risks. Policymakers, meanwhile, should try to narrow HySpeed’s scope, directing it explicitly toward displacing fossil-based hydrogen in industrial feedstock roles, where green hydrogen is genuinely needed, rather than pursuing broader, economically unsustainable hydrogen applications. This focused approach is essential to safeguarding public resources and advancing the UK’s effective decarbonization goals.