The engineering company Melrose is to invest in a hydrogen maker amid surging interest in the gas as Britain seeks to slash its reliance on fossil fuels.
Melrose will join a £25m fundraising round by HiiRoc, a Hull-based company aiming to produce hydrogen from methane in a more environmentally friendly way than current methods allow.
Hydrogen is viewed as vital in the fight against global warming as it does not emit carbon when it burns, and is expected to be used instead of natural gas to heat millions of homes in the next decade.
There are two methods of making the element at scale – by splitting water molecules, creating what is known as green hydrogen because the process generates no carbon emissions if manufacturers are powered by renewable energy; and by breaking up methane, a fossil fuel, creating “blue hydrogen”. The latter process still emits carbon gas if done using current methods.
HiiRoc is pioneering a new approach to methane cracking which creates solid carbon instead of CO2 emissions and therefore does not contribute to global warming. The company says this is cheaper than manufacturing green hydrogen.
The investment is unusual for Melrose, which made its name as a turnaround company by buying up struggling manufacturers, improving performance and slashing costs, then selling them on. It is the first time the company has taken a stake in a business rather than acquiring it outright.
Melrose’s last major deal was the £8bn takeover of engineering company GKN in 2018. This business has developed a system to store highly combustible hydrogen safely, solving another problem in the supply chain.
Two other investors are also taking part in the HiiRoc fundraising.