Britain's gas industry navigates transition with focus on hydrogen and decarbonisation in 2025

Britain’s energy system is being defined by an uneasy but productive intersection of legacy networks and emergent low‑carbon technologies, National Gas said in its year‑end review, as the company frames 2025 as a pivotal moment for both security and transition.

National Gas emphasises that gas remains central to keeping homes warm, industry running and power flowing, even as its role is evolving. Its Winter Review 2024/25 highlighted a marked increase in gas use for power generation , driven by higher and more volatile peak electricity demand as the grid decarbonises , and the company says it expects three additional power stations to connect to the National Transmission System in the near term. Industry data cited by National Gas show that when wind speeds and solar output were low in October, gas supplied about 60% of Britain’s power, and summer demand for gas‑fired generation rose by nearly 10% year‑on‑year.

Those operational realities have been met with regulatory and financial backing. Ofgem’s latest price control settlement, National Gas notes, delivers nearly a 50% uplift in allowed revenues for the next five years and will underpin what the company describes as “historic” levels of investment to keep the network resilient and responsive. The regulatory decision follows messages from government documents that stress the continuing importance of gas for energy security while encouraging integration of low‑carbon gases. According to the UK government’s Midstream Gas System Update, natural gas will continue to support heating and hard‑to‑decarbonise industry while low‑carbon gases such as hydrogen and biomethane are phased in.

The year also brought tangible progress on the low‑carbon side. National Gas points to the Scottish Cluster carbon capture and storage project, where the government committed £200 million in the June Spending Review to support onshore CO₂ pipelines that will carry emissions to offshore storage. The company argues the cluster is vital for protecting jobs and heavy industry, and says further clarity on funding would accelerate delivery.

Hydrogen moved from concept to demonstration in 2025. In October, Centrica and National Gas completed a blending trial that injected a 2% mix of green hydrogen into the National Transmission System and used the blend to generate electricity at Centrica’s Brigg power station in North Lincolnshire. The Guardian reported the trial as the UK’s first successful hydrogen blending into the gas grid, and Centrica’s own statement called the Brigg test a “breakthrough” for integrating hydrogen into existing infrastructure. National Gas welcomed the government’s consultation on hydrogen blending and has urged a higher blending ceiling , advocating up to 5% rather than the 2% proposed , arguing that an early positive decision would de‑risk investment and help unlock a hydrogen economy.

Ofgem’s parallel support for hydrogen was also visible: the regulator has allocated £164 million to three projects described by National Gas as forming the backbone of a future core hydrogen network linking clusters in Scotland and the North East, with more than half of the proposed network now funded to advance to detailed design.

Biomethane, too, made quieter but significant strides. National Gas reports a record number of connection enquiries and highlights the government’s extension of a subsidy scheme to 2030 as a constructive signal. The company says biomethane has “significant potential” to decarbonise gas supplies and that it is working to streamline connection processes to speed uptake.

Those industry developments sit within broader government strategy. The Clean Flexibility Roadmap sets out ambitions for low‑carbon dispatchable capacity and the decarbonisation of thermal generation through conversion to hydrogen firing or CCUS retrofits, while the British Energy Security Strategy targets growth in hydrogen production , including a stated ambition to enable blending of hydrogen into the gas grid and to scale electrolytic and CCUS‑enabled hydrogen through business model rounds. These documents frame a policy agenda designed to balance near‑term security with longer‑term decarbonisation.

Yet National Gas and government assessments both flag challenges. National Gas’ Winter Outlook warns of tightening margins, falling domestic production and growing reliance on liquefied natural gas imports , trends echoed in the Network and System Operator’s first Gas Supply Security Assessment. Those pressures, the company argues, heighten the importance of decisive policy choices in 2026, including outcomes from the Gas System in Transition consultation and forthcoming decisions on the Hydrogen Transport and Storage Business Model and industrial decarbonisation measures.

For industry stakeholders focused on industrial decarbonisation, the message is twofold: Britain’s existing gas infrastructure will remain a backbone of energy security for the foreseeable future, but its utility depends on rapid, coordinated policy and investment to integrate hydrogen, biomethane and CCS at scale. National Gas presents the coming year as a test of whether government, industry and regulators can convert demonstrations and funding pledges into deployed networks and commercial models that both protect supply resilience and accelerate emissions reductions.