Exclusive:Why Scotland could soon be toasting a new export even more valuable than whisky

Our food, drink, products and services are prized all over the globe, creating a booming £40 billion market for Scottish companies.

We have successfully turned our heritage into a multi-billion-pound industry – and today we have an opportunity to do the same again with the natural resources we have in abundance.

Scotland is uniquely placed to take advantage of the emerging international market for hydrogen, a sector which the Scottish Government believes can eventually employ over 300,000 people.

The global hydrogen industry has seen a seven-fold increase in investment since 2020, with more than 430 projects given the green light and reaching final investment decision (FID) this year alone.

Producing hydrogen is energy-intensive, but Scotland has an edge thanks to the vast wind and tidal energy resources harnessed along our coasts.

Moreover, our depleted oilfields offer unrivalled carbon storage capacity, enabling us to also use the natural gas captured to produce hydrogen at scale.

By 2030, Scotland aims to produce 5GW of hydrogen capacity, which is enough to power 1.5 million homes. The goal is to scale up to 25GW by 2045, with a significant portion destined for export to countries like Germany and the Netherlands.

But this isn’t just about the future, opportunities are already here, ready to be seized.

Our business, D2Zero, was formed in January through the combination of five well established companies, and following the recent acquisition of two more, we are among Scotland’s fastest growing.

We employ over 4,000 people who are grounded in the realities of the energy transition, with dual focus on decarbonising traditional energy sources, whilst accelerating the transition to renewable energy.

Legacy skills from oil and gas are helping us deliver on four key areas: emissions reduction, clean hydrogen, power efficiency and resilience management, and carbon capture and storage. And we are going after the hydrogen opportunity.

Our portfolio company Hydrasun, where the Scottish Government chose to launch its hydrogen export plan this week, already designs, makes, and installs hydrogen systems for both transport and industrial applications across the UK, Europe, and Scandinavia.

Notably, Hydrasun has recently been selected to support the design and build of the Aberdeen Hydrogen Hub Technology Package, a joint venture between BP and Aberdeen City Council.

We’re going to be working closely with BP and the council to develop the supply chain and skills and training pathways, to position Aberdeen as a hydrogen leader and a model for how scalable green hydrogen solutions can play a critical role in delivering net zero for cities and regions.

Another of our portfolio companies, Fuel Cell Systems, is leading the way in the hydrogen refuelling market, building packaged solutions to fuel any hydrogen powered vehicle be it planes, trains or automobiles.

At D2Zero, our strapline is short and simple - “together it’s possible”. It’s a message which I hope resonates with politicians both sides of the border, as it will require a strong partnership between government and industry to unlock Scotland’s hydrogen potential.

There are significant hurdles to overcome. Green hydrogen must become cost-competitive with fossil fuels and other low-carbon alternatives, which will require advances in renewable energy, electrolysis technology, and economies of scale.

We need to see significant investment in production facilities, storage options. and transportation infrastructure. And success also hinges on policy support, international partnerships, sustained demand growth in Europe and regulatory alignment. Industries which do not yet use hydrogen must gain confidence through project success and to unlock future demand.

However, progress is being made. Chancellor Rachel Reeves recently confirmed around £2 billion of funding for 11 green hydrogen projects across England, Scotland and Wales in the Autumn Budget.

The 11 projects comprising 125MW of capacity were first announced by the previous Conservative government’s first hydrogen allocation round (HAR1) in December 2023.

The results of HAR2 are expected to be announced in the coming weeks with the government set to award up to 875MW in capacity, providing fresh impetus to the industry.

There are also exciting developments on the continent, where a network of hydrogen pipelines connecting 28 European countries could soon facilitate the large-scale transport of hydrogen across borders.

While there is still a lot of work to do before our hydrogen industry can measure up to Scotland’s whisky exports, with the right support, we could be looking at an industry contributing up to £25 billion annually to Scotland's economy by 2045.

I’ll drink to that.

Bob Drummond is Chief Executive Officer at D2Zero, the decarbonisation and clean energy solutions group which is currently one of the fastest growing companies in Scotland.

The firm’s purchase of Kelton, long-standing flow measurement specialists, announced in October means Aberdeen-headquartered D2Zero now has more than 4,200 staff and £500m in annual revenues.

D2Zero is backed by SCF Partners and has spent its first year focused on deals which position the firm as able to both service and decarbonise the existing offshore industry as well as accelerating the green energy transition.