Baroness Sheehan
To ask His Majesty’s Government what assessment they have made of the implications of their decision to cancel the pilot plan for a ‘hydrogen town’.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
It is me again, I am afraid.
We have decided not to progress work on a hydrogen town pilot until after a decision in 2026 on any potential role for hydrogen in heating. The Government carefully considered the implications of this decision and the alternative options. Heat pumps and heat networks will be the primary means of decarbonisation for the foreseeable future.
Baroness Sheehan (LD)
I start by congratulating the Minister on injecting a modicum of common sense into the myth that hydrogen could ever be a meaningful player in home heating. My Question was prompted by a conversation with the CEO of a heat battery company, who is having to postpone a decision to build a new factory until the Government can give a clear signal that the 2026 deadline for the hydrogen strategy review has gone. Will the Minister take this opportunity to give him that clarity, so that he and others can add to the 9% green growth seen last year in an otherwise stagnant economy?
Lord Callanan (Con)
I would be very interested in speaking to the noble Baroness’s contact in heat batteries; I have also met a number of heat battery manufacturers. For those who have not come across it, it is a great growth industry in the UK and a fantastic technology. There is one particularly good company up in Scotland that I visited recently. I am not sure what extra clarification we could provide that would help her contact. We have said—indeed, I said it in my Answer—that heat pumps, heat networks and electrification will be by far the vast majority of the decarbonisation of home heating in the UK. If hydrogen plays any role at all, it will be only a very tiny one.
Lord Naseby (Con)
My noble friend just stated that hydrogen is going to play a very minor role. How is it that, on the continent, hydrogen is playing an increasing role in the domestic markets there? Is he not aware that British Gas has done extensive testing, with varying mixes of hydrogen, and that so far all has gone well with those tests? Why now are His Majesty’s Government kicking hydrogen into the long grass and telling the British consumer that it is basically heat pumps or maybe electrification?
Lord Callanan (Con)
I hesitate to disagree with the noble Lord, but I think I will on this occasion. I would be interested to know where on the continent hydrogen is being rolled out, as he referred to. I am aware of one or two experimental schemes, but no widescale rollout. There is no question that it could work technically—indeed, two homes have been built in Gateshead as an experiment by Northern Gas Networks that currently are heated by hydrogen boilers and hydrogen hobs. Technically, it can work, although there are safety implications that we need to look at. The question we need to be answering is whether this is an efficient use of the country’s energy resources.
Viscount Stansgate (Lab)
My Lords, the Minister says that hydrogen might play only a minor role, but does he accept that, in the future, this country is possibly going to need a strategic reserve of energy to take account of the times when the wind does not blow and the sun does not shine, and that hydrogen might play an important part in the long-duration energy storage that we are going to need in this country? It could be a vital part of the country’s strategic energy future.
Lord Callanan (Con)
The noble Viscount is absolutely right. I am a huge advocate of hydrogen precisely because of its role in long-term energy storage in the circumstances that he outlined—when the wind does not blow and the sun does not shine. We were debating whether it has a viable use in home heating. I submit that electrification and heat pumps are a much more efficient way of heating homes.
Lord Howell of Guildford (Con)
My Lords, my noble friend seems to have to answer every question on these matters these days, and he has another one coming. My understanding is that green hydrogen can be manufactured—all you need is a wind turbine or two—and stored quite near consumer markets in cities and towns, and that it is very effective for trucks and big mobile users but not much use for domestic heating because you cannot get it through the distribution system. Is that a correct assessment? If so, does it put the hydrogen issue in perspective and remind us that we will need a lot more nuclear, and will have to rely on gas as well, to get anywhere near net zero?
Lord Callanan (Con)
There was a lot in that question. I agree that there are great potential uses of hydrogen in long-term energy storage, as the noble Viscount just mentioned, and in the decarbonisation of some aspects of rail transport and heavy goods vehicles—particularly for non-road mobile machinery, where there are no real electrification options, and we have a number of successful manufacturers in this country. The original premise of the noble Lord’s question is what the best method of home heating is. All the evidence and reports show that, even if it were technically possible to pipe hydrogen into domestic homes, electrification is a much more efficient option.
Baroness Northover (LD)
My Lords, the Minister is being very clear, perhaps clearer than his department has been. However, the fact that there is an assessment in 2026 still rather muddles things. His message—which is surely right—that a national hydrogen network is simply not the answer instead of gas boilers and that we need to encourage the take-up of heat pumps, on which we are massively behind most countries in Europe, needs to be clearly put over. At the same time, as the noble Viscount, the Royal Society and others have said, the Government should also be taking action on long-duration energy storage, but they seem not to be.
Lord Callanan (Con)
I am sorry to disagree with the noble Baroness, but we are taking action. We let the first 11 hydrogen electrolytic allocation contracts in what is called the HAR1 round last year. The HAR2 round for further electrolytic allocation is happening this year. We have produced business models for the transmission and storage of hydrogen. I disagree with her that there is no place for a hydrogen distribution network in the UK. There absolutely is a case for that —not for home heating but for industrial uses and some of the uses that the noble Lord mentioned. I disagree with her on the fundamentals of this. We are putting these things in place and we are one of the leading nations in Europe on the production and distribution of hydrogen.
Baroness Blake of Leeds (Lab)
My Lords, the Government’s previous announcement on the cancellation of the hydrogen village trial in Redcar stated that it was delayed because
“the main source of hydrogen supply will not be available”.
With stakeholders and residents raising real concerns about the Government’s plans, for the sake of clarity, will the Minister inform the House why the decision was taken to postpone the hydrogen town pilot until after 2026?
Lord Callanan (Con)
It was not postponed—it was cancelled. I visited Redcar and met many of the residents and businesses in the town who were concerned. The noble Baroness is right that one of the principal reasons why the trial did not proceed was that the source of green hydrogen, which would have been produced locally to the trial, for various commercial reasons did not go ahead. We also have to take into account public opinion. We always said that this would depend on public acceptability, and it was increasingly obvious that many people—though not all—in the trial area were not prepared for the trial to go ahead.
Baroness Goldie (Con)
My Lords, I have listened with great care to the responses from my noble friend the Minister. What are the implications of these responses for future grid hydrogen blending trials?
Lord Callanan (Con)
We have said that blending into the network can still go ahead. It is possible to put hydrogen into the existing gas mains at up to about 20% concentration. We have said that this can go ahead, because it provides an offtake of last resort for the electrolytic hydrogen producers, so that they have a market for it. Existing appliances will work perfectly satisfactorily, and this is a useful first step in rolling out hydrogen production and distribution across the country for all of the commercial and industrial uses that I mentioned.
Lord Whitty (Lab)
My Lords, in previous Questions the Minister and the Government have indicated that all strategic decisions on the use of hydrogen will be taken in 2026. Clearly, the decision on home heating has already been taken. Does the Minister intend to bring forward decisions on the strategic use of hydrogen in industrial and transport applications? If not, are we going to wait another couple of years and have things dribbled out, rather than take a strategic approach to the use of hydrogen, which the Government previously implied would be there in 2026?
Lord Callanan (Con)
I am sorry if I have given the noble Lord the wrong impression. We have already taken strategic decisions on the use of hydrogen. We are supporting the production of both electrolytic green and CCUS-enabled blue hydrogen. We are already rolling out the business models for the delivery of commercial-scale use of hydrogen, and we are one of the leading nations in Europe on doing that. The decision in 2026 would be on whether hydrogen has a role in domestic heating. The noble Lord is getting the issues confused.