UK Low Carbon Hydrogen Agreement (LCHA): structure, eligibility, payment mechanisms, lender considerations and legal basis, with funding via HM Treasury and the Gas Shipper Obligation
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Low Carbon Hydrogen Agreement (LCHA)
For fuller analysis of how regulation, consenting and incentivisation shape the net zero energy transition in England and Wales, see: Collinson and Hockman on Energy Law: Regulating, Consenting and Incentivising the Energy Transition. That textbook offers extensive treatment of topics addressed in this Practice Note. This Practice Note sets out a synopsis of the Low Carbon Hydrogen Agreement (LCHA), the principal support mechanism within the UK for subsidising low carbon hydrogen production schemes. It assumes project finance will be pursued and therefore addresses matters of interest to project finance lenders alongside hydrogen producers and wider stakeholders. It contains a thorough examination of the LCHA’s framework and objectives, eligibility conditions, the principal counterparties, and the payment architecture—covering the Difference Amount, the Price Discovery Incentive and the Sliding Scale Top-Up Amount. It also considers the headline terms and commercial issues for low carbon hydrogen producers and project finance lenders, the statutory footing for the programme, and the scope to stack LCHA revenue support with other hydrogen, carbon capture usage and storage (CCUS) measures and/or additional government assistance. All such elements mirror the issues explored throughout this guidance...
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Web page updated on 22/05/2026
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