The UK has lost its position as one of the leaders in the global race to develop hydrogen power, the chief executive of Johnson Matthey has warned, as he said the FTSE 100 group could take more business to the US as Washington unleashes funding for green projects.
Liam Condon said businesses would bypass the UK if the country did not introduce more supportive policies, and that an “incredible bureaucratic layer” was holding Europe back from developing the infrastructure needed to support hydrogen power.
“The UK was a frontrunner [in supporting hydrogen power],” said Condon, who since taking over Johnson Matthey in March has set out a plan for the 205-year-old industrial conglomerate to focus on developing sustainable technologies.
“But we’ve now got to keep competitive with US policies, which have clearly moved ahead,” he told the Financial Times. “Otherwise, investment will simply drift off to the US.”
Many countries have looked to hydrogen power as they set decarbonisation targets to meet climate goals. The UK, which is aiming to achieve net zero emissions by the middle of the century, declared its ambition in 2019 to become “a world-leading hydrogen economy”, as it announced £105mn in funding for businesses to develop low-carbon fuels.
But in recent months businesses have turned to the US, where the Senate in August passed the $369bn Inflation Reduction Act to support clean energy programmes, which includes tax credits for hydrogen projects.
Condon said Johnson Matthey, which manufactures fuel cell components and catalysts for generating hydrogen power, is “reviewing additional investments” in the US as it anticipates rising demand in the country, adding that the group remained committed to the UK.
In mainland Europe, however, he said organisational obstacles were holding back progress.
“The money is there, the intent is there . . . but there’s an incredible bureaucratic layer that slows down that money actually getting to the companies,” he said. “It’s unlikely that any single private company can afford to build the infrastructure [to support a net zero economy]. So there needs to be governmental support.”
Johnson Matthey is doubling down on hydrogen following an ill-fated move into manufacturing chemicals for electric car batteries. The group announced an exit from the business this year, months after touting it to investors as pivotal to future growth.
Condon, who joined Johnson Matthey after Robert MacLeod stepped down as CEO in the wake of the fiasco, admitted that previous management had committed a “cardinal sin” by entering the business before securing any customers.
He said the group, which has supplied technology to the hydrogen industry for several years, will now focus on core businesses and areas where it can be a market leader.
Johnson Matthey hoped to generate £300mn from the sale of up to four more subsidiaries, Condon added, including its businesses producing medical device components and measuring instruments.
Pursuing battery materials “turned out to be a bad business decision”, he said. “But the lessons out of that were really important . . . for the new strategy and to put in place principles that would make sure we do not end up there again.”
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