Green Hydrogen in Scotland: Is Now the Right Time for Landowners?
Scotland's abundant renewable energy resources have positioned the country as a potential leader in green hydrogen production. With ambitious net-zero targets and strong winds sweeping across the Highlands and Islands, landowners are increasingly being approached by developers proposing hydrogen production facilities—and increasingly, green ammonia plants that convert hydrogen into a more easily transported chemical.
But after a wave of global project cancellations in 2024-2025, is now genuinely a good time to commit your land to a hydrogen or ammonia project? This guide provides an objective assessment of the opportunities and risks facing Scottish landowners considering hydrogen and ammonia partnerships in late 2025.
Green hydrogen is produced by using renewable electricity to split water into hydrogen and oxygen through a process called electrolysis. Unlike "grey" hydrogen produced from natural gas, green hydrogen generates no direct carbon emissions. It's being promoted as essential for decarbonising heavy industry, shipping, aviation fuel production, and other sectors where direct electrification isn't practical.
The challenge is economic viability. Green hydrogen currently costs **$3.50-6.00/kg** (approximately £2.75-4.75/kg) to produce, compared to £1.20-2.00/kg for fossil fuel-based hydrogen.
Green ammonia is produced by combining green hydrogen with nitrogen extracted from the air. This additional step adds cost but solves several critical problems that have hampered pure hydrogen projects:
- **Easier Transport & Storage**: Ammonia is far easier and cheaper to store and transport than hydrogen.
- **Existing Infrastructure**: Global shipping routes and storage for ammonia already exist.
- **Multiple Revenue Streams**: Can be used as shipping fuel, fertiliser, or converted back to hydrogen.
Many of the hydrogen projects most likely to succeed in Scotland may actually be ammonia plants.
Why Pure Hydrogen Projects Are Failing
- **High Production Costs:** Current costs of $4-$12/kg are far from the $1/kg target.
- **Weak Demand:** New offtake agreements slowed from 2.4m tonnes in 2023 to 1.7m in 2024.
- **Uncertain Buyers:** Approx. 2.5m tons of production capacity that reached investment decision remains without contracts.
- **Infrastructure Costs:** Building dedicated pipelines and storage adds enormous expense.
Why Ammonia Projects Show More Promise
- **Addresses Key Markets:** Directly serves the shipping fuel market and established fertiliser markets.
- **Firm Demand:** Existing uses (refining, chemicals) and new fuel uses account for almost all firm offtake agreements to date.
- **Market Correction:** Industry leaders see this as a necessary correction, with a shift to projects with clear business cases - often involving ammonia.
- **Continued Investment:** Global investment is set to surge by 70% in 2025 to almost $8 billion.