Scotland’s Role in the UK Hydrogen Transition: Insights from the State of the Hydrogen Nation Report

The Hydrogen Energy Association’s State of the Hydrogen Nation Report reinforces how pivotal Scotland could be in helping to shape the UK’s hydrogen economy. The report highlights Government support for the industry and details barriers to growth.

Scotland’s position as the UK’s leading hydrogen destination

The report places Scotland at the top of the UK’s list for hydrogen investment attractiveness over the next three years due to:

• support for the industry from the Scottish Government;
• an abundance of natural resources in Scotland;
• curtailment hotspots offering platforms for hydrogen production; and
• an established supply chain built on decades of expertise in oil and gas and major infrastructure delivery.

Together, these factors create a strong and competitive environment for hydrogen production, storage, and industrial offtake.

Investment appetite is strong and Scotland stands to benefit

84% of the 142 organisations that contributed to the report expect hydrogen investment to increase over the coming year. Although confidence has softened due to slower progress on funding rounds and enabling infrastructure, hydrogen remains a strategic priority for many developers.

Demand creation remains the missing piece

The biggest barrier highlighted in the report is not production capacity, but demand.

• 81% of organisations noted difficulties in securing agreements with offtakers due to weak demand‑side signals and price uncertainty.

For Scotland, this presents both a challenge and an opportunity. Industrial sectors such as manufacturing, chemicals and transport are well-placed to become early adopters if credible demand‑side mechanisms are introduced, helping to give offtakers confidence to commit and help anchor projects at an early stage.

A major opportunity for Scottish jobs and skills

Hydrogen could play a significant role in supporting employment across Scotland’s energy regions:

• Around 3,800 UK jobs are expected by 2030 under current policy.
• Under an improved policy environment, this could rise to 17,000 jobs.

Scotland’s engineering heritage and existing energy workforce mean these jobs could naturally cluster around regions already leading on clean energy. The report also highlights the importance of structured pathways to help workers transition from oil and gas into hydrogen via the Clean Energy Jobs Plan and the development of the Hydrogen and Carbon Capture Skills Accelerator.

Infrastructure and supply‑chain challenges remain

78% of the 142 organisations that contributed to the report recognise they face challenges in developing storage and distribution infrastructure, driven by high capital costs, uncertain utilisation, and delays linked to financing, standards and permitting. Notwithstanding that, a clear majority of organisations still expect to progress storage and distribution projects over the next year.

What industry needs next 

The sector is calling for:

• faster policy delivery and allocation rounds;
• credible demand‑side mechanisms;
• accelerated skills investment;
• regional hydrogen hubs, especially in curtailment areas; and
• clearer planning and permitting pathways.

Scotland’s existing commitment and focus on hydrogen mean that it is already moving in this direction. With its renewable resources, long-standing skills expertise and advancing industrial base, Scotland has the fundamentals needed to grow the hydrogen industry and play a defining role in delivering jobs, investment, and long‑term growth.

If you would like any further information, or advice related to any of the information in this article, then please contact Lauren Winters or your usual Burges Salmon contact. 

This article was written by Lauren Winters and Kirsten Sims.