EXCLUSIVE: In a letter to Chancellor Rishi Sunak, Siemens Energy, Engie, National Grid, and Ryse Hydrogen call for the government to emulate its successful approach to offshore wind development and set an official cost reduction target for green hydrogen
Ten of the UK's largest gas networks and energy supply chain companies have written to the government to set out how it can supercharge the hydrogen economy as it sets out its Covid-19 recovery strategy in the months to come.
In a letter sent to Chancellor Rishi Sunak this week, the firms argued that policies and regulatory frameworks that boost the UK's hydrogen sector should play a key role in the government's forthcoming economic recovery plans.
The transition to net zero, they argued, will be "significantly cheaper for consumers" if early investment is made in both green hydrogen, which is produced with renewable energy, and blue hydrogen, which is produced with natural gas but accompanied by carbon capture and storage technology.
"There are shovel-ready projects ready to be unleashed across the low carbon energy value chain if policy direction and an investable regulatory framework can provide clear signals for those deploying green capital," the signatories wrote.
The projects, they added "present an opportunity to create jobs in all regions in the UK, supporting the ‘levelling up' agenda, with thousands of new apprenticeships and new industries created where the UK can lead the world".
The signatories, which include National Grid, the Energy Networks Association, Siemens Energy, Engie, and Ryse Hydrogen, said that they intend to invest £900m in establishing the world's first ‘zero carbon gas grid' in the UK.
Official plans for a major investment programme would be unveiled either before or during the COP26 climate conference, they said.
Among the series of recommendations put forward to the Chancellor, the business leaders said the government should decide which of the UK's proposed carbon capture, usage and storage (CCUS) hubs it intends to back as part of its manifesto promise.
They also called on the government to emulate what it had done in the offshore wind sector and set an official cost reduction target for green hydrogen, ideally in cooperation with other hydrogen-leading countries, such as Japan, Australia, Germany, and the Netherlands. Such a target, they said, would be a "huge step forward" for the fledgling sector as it would spur "competitive private sector processes to support achievement of that target".
The companies also recommended that the government pull "regulatory levers" that could decarbonise the heat sector with a minimal impact on public purse strings. These levers could include the mandating of hydrogen-ready boilers to align with the Future Homes Standard by 2025, and the introduction of a Low Carbon Obligation (LCO) that would turbocharge investment in heat pumps, biomethane, hydrogen, and hybrid systems.
"Clear policy direction" is required, they argued, to give energy regulator Ofgem the chance to change the gas safety rules to allow green gases into existing gas networks. They also called for the government to release funding that would enable a "full-scale transition" to hydrogen networks for cities and regions, such as Aberdeen, Leeds and Manchester, that have been early adopters of the technology.
The companies also urged the government to place more emphasis on the role hydrogen can play in zero emission buses, trains, and HGVs in forthcoming transport policy documents.
The move is the latest in a flurry of submissions to the Treasury calling on the government to make clean technologies and climate action a central plank of its economic stimulus package.
Ministers have signalled they are keen to deliver a green recovery and hydrogen has been mentioned as a potential beneficiary of increased government spending in several recent reports. However, the government remains tight lipped on precisely which sectors it intends to support ahead of an anticipated announcement on its promised recovery package next month.
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