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Is the UK dropping the ball again?
On 30th of March 2023, the UK government published it’s proposals for the U.K.’s transition to net zero. This came in the form of three documents – Powering up Britain, Energy Security Plan and the Net Zero Growth Plan, the latter being the government’s response to the net zero review by MP, Chris Skidmore following its Net Zero Strategy being deemed unlawful. Altogether nearly 3000 pages!
Now, I cannot claim that I have read every page of this updated Net Zero Strategy, but I have done enough to at least form a first impression, and if anything, that first impression is one of disappointment. What was heralded as “Green Day” should have perhaps been called “Green Bud Day” – it is a move in the right direction, shows promise for the future, but does not really move the country into the full green leaf of decarbonisation.
Reading the summaries of this tome, the first impression is that the government has done a good job of recycling what it already had in place, and despite the volume of words, the revised strategy contains only a few new commitments or proposals. This comes at a time when the government has already confirmed that it is not going to meet its 6th carbon budget – a legally binding commitment. Being thankful for small mercies, however, it is good to see that the government does recognise the important role that infrastructure plays in meeting net zero and achieving energy security, but to my mind, the policy frameworks are not clear and the support mechanisms for emerging technologies falls far short of what is required.
If the UK is to properly decarbonise and maximise the economic benefit of doing so, it must ensure that investment is made within this country and does not move off elsewhere. Decarbonising requires high capital outlays and above average level of risk for its investors. This being the case, with uncertain policies and absence of mechanisms to bridge the additional risk, investors will not have the required confidence to make the investment. This applies not only to large infrastructure projects such as carbon capture and storage with offshore caverns to store the carbon dioxide, but also to more niche applications such as that offered by Powerhouse. As has been exemplified by recent announcements, we are being approached by multiple developers across the world, and the question for us is should we devote our efforts here in the UK, where we struggle to implement even a modest contribution to decarbonising, or should we concentrate our efforts abroad, where we appear to be welcomed with open arms?
I have worked in many countries around the world, but still, consider that home is best. As long as I am influencing what we do, Powerhouse will continue to pursue projects in the UK to the best of its ability. In favour of the new strategy, there does seem to be a substantial sum on offer for research and technology development and there is no doubting of the government’s wish to develop UK skills in innovation and new technology. Let’s hope that the rounds of competitive grant applications are consistent and appropriate to provide support to innovative proposals and not just pre-selected preconceptions. We also need set timelines and understandable actions to allow businesses to plan their futures.
So how does this new strategy impact Powerhouse Energy Group? The Net Zero Growth Plan is the official response to the independent review of the Net Zero strategy. The document states that the Government will “partly or fully” act upon 23 of the 25 recommendations. This includes establishing a roadmap and industry taskforce for solar and establishing Great British Nuclear, but also commits to outlining a clear approach to the rebalancing of gas against electricity by the end of this year. Powerhouse stands with a foot in both gas and electricity and can make a positive contribution to this shift.
Carbon capture is a major feature of the government’s Energy Security Plan and is fundamental to how the net zero transition is to be delivered. This claims that decarbonising the power sector, whilst meeting an increase in electrical demand of up to 60% in the next decade could bring forward £275 -£375 billions of investments from both private and public sectors. In the announcement the government revealed the first projects eligible for funding within the carbon capture “Clusters”. The Protos plastics to hydrogen project sits within the HyNet cluster of the north-west England, which now stands to be a focus for decarbonisation in the UK. Whilst we will not be a beneficiary of the immediate allocation, Powerhouse must now engage with the cluster and take advantage of this major development.
A mainstay of Powerhouse’s future business is the use of hydrogen as a transport fuel. The Growth Plan refers to a number of commitments made in the Transport Decarbonisation Plan and includes some new commitments. Transport emissions in 2021 accounted for 25% of the U.K.’s total carbon footprint. An objective of the Growth Plan is to reduce this by up to 73% by 2037. This bodes well for the future and hopefully will lead to increasing demand for hydrogen within the transport sector, which currently is relatively limited. It is also good to see that a zero-emission road freight demonstration based on hydrogen fuel cells will be developed by March 2025. Also of note is that the Growth Plan proposes to replace 50 TWh of fossil fuel currently used in industry by low emission alternatives. This will give further outlets and increase demand for Powerhouse products.
Lastly, with waste being the feedstock for the Powerhouse Technology system, the UK Emissions Trading Scheme (UK ETS) is likely to have a major impact on the way waste is disposed of by the large energy recovery plants. To date, waste-burning energy recovery plants have not been within any ETS. This is likely to change, and these plants will be taxed on their CO2 emissions. Whilst carbon capture utilisation and storage will be the main response to this, it is expensive and takes time to implement. Powerhouse can offer a win – win solution for the waste energy recovery plants that will both allow them to process more waste and at the same time reduce their carbon emissions. This presents Powerhouse with an opportunity that to date has not been open to us.
So as ever, its some good and some not so good. I have been in this energy game for the whole of my working career. It has always been the case that these islands needed energy security but have seen successive governments drop successive balls. I fear this is yet another one. I will leave the final word to the Green Alliance:
“The best way to provide energy security, create jobs and tackle climate change is through massive investment in existing green technology. If the US has set the bar with the Inflation Reduction Act, then the UK is falling far short, and still largely focusing on short-term fixes.
Chris Venables, Head of Politics, Green Alliance.
Keith Riley
Acting Chief Executive
Powerhouse Energy Group Plc