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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
It is a pleasure to serve under your chairship this morning, Dame Siobhain. I thank my hon. Friend the Member for Cannock Chase (Josh Newbury) for securing today’s debate, and I wish him a very happy birthday. He gave a breathless speech, which was fantastic, and I do not know what better celebration he could ask for than being in Westminster Hall this morning. I thought at one point that he was going to tell us he got the heat pump as a birthday present, which would have been a significant contribution to the cause. Nevertheless, I hope he has a brilliant day.
My hon. Friend gave a brilliant speech, and in fact we have had a number of important contributions today, highlighting not only the breadth of experience that we have in this House, which I am always hugely impressed by, but generally our ability, particularly in this part of Parliament, to move outside some of our party political boxes and engage with the wider issue. I think that is hugely helpful.
I will return to some of the specific points raised in the debate, but I want to start where my hon. Friend concluded, with his critical point around rhetoric. We need to base the future of our discussions on the gas network in not only fact but pragmatism and a rational look at how we make the best use of an extraordinarily important resource. He also said something that we so often forget in this place: there is no one silver bullet for these things. There are a number of solutions, all of which will play a part in different ways, and we should not discount any of them. Crucially, as many hon. Members have said, if we get this right, there is the potential for tens of thousands of jobs, long into the future, which is so important.
I also thank everybody else for their contributions today. It was good to hear the shadow Minister, the hon. Member for West Suffolk (Nick Timothy), acknowledge—I think for the first time—that there are some lessons to be learned from the past 14 years, although I suspect he has learned the wrong ones, unfortunately. Nevertheless, I will return to some of his points.
I am grateful for the opportunity to talk about the future of our gas network—a topic that has for too long been overlooked by, in all candour, successive Governments. That is partly because the gas network is incredibly efficient. It works quietly in the background of all of our lives in one way or another, so often we do not talk about it as much as we talk about the electricity system, but it is incredibly important. I agree with Members about the importance of us having a diverse and secure energy supply; the importance of a gas network is not just to gas itself, but to our electricity system, where it currently plays a critical role.
The transition that is already underway is unstoppable, but it is also incredibly important for the future of our country and it needs to involve every community, so I welcome and agree with the comments of my hon. Friend the Member for Hexham (Joe Morris) and others about the importance of all communities and households being part of it. There is huge potential in the transition to improve on where some of our communities are, so that they feel, as he rightly said, not on the edges of society but part of the innovation. We all have work to do on that, so his message is very keenly heard.
Let me discuss some of the context, and then come on to some specific points raised in the debate. This Government have set out to achieve a once-in-a-generation transition in our energy system to ensure that it is fundamentally fit for the future and resilient and tackles, as the hon. Member for South Cambridgeshire (Pippa Heylings) said, the energy trilemma before us: how we bring down bills, deliver on energy security and tackle the climate crisis.
Through the spending review, we will invest £13 billion into our warm homes plan over the next five years, helping to cut household bills by up to £600 through the installation of energy efficiency measures. We have secured development funding for the Acorn and Viking CCUS projects, which I will come back to later, supporting our clean power ambition and creating jobs and growth at the same time. By harnessing clean power from green sources in the UK, we also reduce our dependence on volatile fossil fuels. Geopolitical uncertainty in the world is never far away at the moment, which underlines how important it is that we move as quickly as possible towards that place.
As I have often said, our focus in our energy system is on the electricity system. This is perhaps understandable, given the scale of the transformation necessary there, but it is good to take time today to talk about the future of the gas network. To reiterate, the Government have the future of the gas network right at the heart of our thinking for the future of our energy system.
Gas has been part of this country’s energy story for centuries, from the use of town gas from the late 18th century to the discovery of natural gas in the North sea in the 1960s and the conversion programme. That was an extraordinary feat of transformation in households right across the country over the 1960s and 1970s, which I am far too young to remember. Some hon. Members will be old enough, but I am not naming any individuals.
Dame Siobhain McDonagh (in the Chair)
Don’t look at me or you will find that your speech is very short.
Michael Shanks
I will look over here, Ms McDonagh.
Our North sea gas supply and our gas storage infrastructure mean that we can deliver heat and power across the country whenever it is needed. The fact that we so often do not discuss the resilience of the system underlines how resilient it is and how well it does its work. Even during exceptionally difficult moments, such as the “beast from the east” in 2018 or after Russia’s invasion of Ukraine, the gas system continued to meet the needs of millions of consumers. It safely and reliably provides the energy we need.
As our largest primary fuel, representing more than a third of the UK’s energy consumption, natural gas is central to meeting our electricity demands, but it is also crucial that we look towards the future. The gas network itself—the system of underground pipes that transport gas the length and breadth of the country and meet the demands of millions of consumers daily—is critically important.
Looking to the future, the natural gas system is a key enabler of our net zero transition. It will allow us to phase out coal and reduce emissions faster than any other major economy. As the hon. Member for South Cambridgeshire pointed out—I have the figure in miles and she had it in kilometres; that is the difference between Labour and the Liberal Democrats—there are 175,000 miles of pipework in the network associated with various infrastructure. It is an extraordinary thing, and we must remember the absolute scale of it. I pay tribute to the workers up and down the network who keep it going every single day, in really difficult circumstances at times. Some 26,000 workers are employed in the gas system, which demonstrates the size and scale of the industry.
However, it is important that we are not trapped in nostalgia about the system and that we have a clear-headed view of its future. The role of gas needs to change and has already begun to do so, so it is important that we set out how to get the change right. The Government are clear that making Britain a clean energy superpower is one of our defining missions, and that means that gas will play a smaller and smaller role in our electricity generation. That is the right thing to do. In a broader sense, net zero also requires a wide-ranging transformation of the rest of the economy. The transformation will mean a sea change in how infrastructure, industry, business and our homes work. The power sector, domestic buildings and transportation will all have to undergo significant change, and that will require not one solution but many things.
Part of the solution is the warm homes plan, which is about transforming our homes by making them cleaner and cheaper to run. We are also helping to unlock the potential of electric vehicle infrastructure right across the country. New clean heating solutions mean that fewer homes will rely on gas boilers. Our transition presents an incredible opportunity to build on the skills of the existing gas workforce as we build what comes next. That will lead to thousands of new jobs and training opportunities across the country. As we decarbonise industry, we will also see a growing role for carbon capture and low-carbon gases such as hydrogen and biomethane, which will help ensure that we meet our objective of net zero, while still providing secure, reliable and affordable energy.
One of my hon. Friends asked about the green gas support scheme. I can confirm that it will close for new applications in 2028, but we are looking at the responses to a call for evidence on its future.
It is clear that the gas network will continue to play a critical role in meeting our energy needs out to 2050 and beyond. Even when we achieve our clean power mission, as we will, gas will play an important strategic back-up role, so it will still be important to maintain that system. The Government are clear that gas use will decline overall, and that how we use gas in our system will change. We therefore have to think critically about this nationally important asset. We must repurpose it and make sure that we do not take any options off the table. We will set out our views on the future of the gas system in much more detail very soon.
We have to acknowledge the challenges, as this will not be straightforward. Ensuring that we remain energy independent and that the gas network continues to operate as needed during the transition means that we will have to make some difficult choices, and maintaining investor confidence is absolutely key. We must maintain the current system and drive in the investment that we need for the future. We have been working with Ofgem on its RIIO-3 plans for the price control period from 2026 to 2031, to make sure that investment in industry is fair and affordable. We also recognise that, as the demand for gas declines due to homes and industry increasingly relying on electricity, there will need to be an orderly transition across our energy network. We will continue to work with Ofgem on that.
A number of contributions focused on what the future of the gas network will look like. Given the country’s huge technological expertise and investment, to have such a secure and reliable network, we need to think about how we protect it while considering the different demands that will be placed on it in future—we are looking at all possible options in this space. We are aware of the need for clarity on the future of the gas grid and how these repurposing options fit within that, and we will say more on that in due course.
I will turn to two specific things that have been mentioned today. First, the potential of hydrogen is clearly quite significant both for heating and industrial demand. We are doing a serious amount of work and taking further evidence on how we repurpose our gas networks to enable that. Several Members, including my friend, the hon. Member for Strangford (Jim Shannon)—he is ever present in this Chamber—spoke about working together across the UK on solutions. I will resist being drawn into constitutional arguments, although it is difficult to resist that temptation. The hon. Gentleman made an important point about working together on skills and jobs. Indeed, perfectly timed for his contribution, I am meeting Minister Archibald from the Northern Ireland Executive later today to talk about many of these issues and our co-operation with Northern Ireland.
On the question of blending, a mix of natural gas and hydrogen could be used in gas networks to decarbonise our gas use. The Government are actively looking at the question of blending and considering the appropriate decision points. My hon. Friend the Member for Peterborough (Andrew Pakes)—I think he said his constituency is the King’s Cross of the hydrogen world, which is an interesting analogy—asked about consultation on hydrogen blending. I can say that we will soon be publishing a consultation on transmission blending. On the core network, we agree that many benefits can be achieved from the hydrogen economy, but there are areas on which we require further evidence, as we really want to get this right. We are moving as quickly as possible, but we will need more evidence in some areas.
The Government want to provide strategic clarity on decarbonising home heating to best support our mission. To support that, we are assessing all the latest evidence, and we will consult later this year on the role of hydrogen in home heating. We also plan to bring forward a clear plan for industrial decarbonisation and a renewed industrial decarbonisation strategy, which will set out the strategic direction for our approach with industry.
The Government are enabling the development of the carbon capture, usage and storage sector to create jobs, reduce emissions and put the UK at the forefront of global CCUS. The Government are working on developing the strategic direction of CO2 transport networks. At the spending review, the Government announced that they will be providing development funding to advance the delivery of Viking and Acorn, with a final investment decision taken later in this Parliament.
I am grateful for the typically thoughtful contribution of the hon. Member for Aberdeenshire North and Moray East (Seamus Logan), who I have met a number of times, and we have had fruitful conversations. I was pleased to visit his constituency a few months ago, when I went to St Fergus, one of our most important gas terminals, and I welcome his comments on the Acorn project. We see it as a crucial project, and the funding we committed to it in the spending review will help drive it forward. It represents our commitment after years of dither and delay from the previous Government.
We think there is a role for biomethane in decarbonising all end users in the gas grid. It is already being used in the gas network, and we expect it to play a role in reaching our net zero target. It can be used flexibly, and that flexibility is valuable as it enables us to adapt to the hard-to-predict cost curves and deployment trajectories of existing technologies. Our biomass strategy sets out our ambition through to 2050.
With all repurposing and future use options, we need to determine the extent to which they are feasible, considering a range of factors. They must also be investable, to ensure that the gas industry can attract the necessary investment needed to build sustainable, viable networks. Crucial to that is that they have to provide value for money, providing affordable solutions for consumers who might use them.
To return to the point I started with, we need to be pragmatic on all this. Where repurposing is not viable, long-term consideration will be needed on whether we should decommission unused parts of the gas network and on the appropriate timeline for that. I want to be clear that none of this is straightforward. After successive Governments have not looked at this in the round, we are now grappling with how to deliver a future gas network that takes all the options into account and does not decommission things that we may wish we still had in the future.
There are lots of questions, and the Government do not have all the answers about the future, which is why the calls for evidence are so important. It is complex and challenging and, although we are not rushing, the Government cannot continue to ignore it. We are grappling with some of these big questions and will continue to work with industry and regulators on how best to meet the challenges.
The challenge before us is formidable but, like much of the energy transition we are embarking on, it is not insurmountable. As I frequently say, the point of being in government is to tackle the hard stuff. As with any issue that will outlive any Government, it is important to start the work now.
Our gas network will ensure that we can meet the transition challenges, providing us with the resilience and flexibility needed to deliver a fair, smooth and co-ordinated transition while protecting our energy security and independence in an affordable way. It can also be the foundation of new, innovative energy solutions to repurpose and adapt to future energy needs in a sustainable way.
Our plans announced in last week’s spending review set us on the right path, allowing us to build on those foundations. We need to harness the expertise and the passion within the gas industry, which I have had the huge privilege to learn from over the past 11 months in this job. We will combine that with the Government’s ability and determination to get this right as we broker a consensus on the way forward with a shared vision for the future of our incredibly important gas network.
As the Secretary of State set out at the International Energy Agency summit in London a few weeks ago, we will soon set out in much more detail our views on the future of the gas system. I look forward to continuing to work with the hon. Members present, not least because they have so many helpful suggestions about what the future will look like, and so much expertise to draw on.
Contrary to what the shadow Minister said, this is an area in which there is very little ideology. This is a practical problem that we have to solve as a country, so that the gas network is fit for the future, so that consumers benefit and so that we deliver on our energy security in the long term and have the opportunities for economic growth that the gas network can provide.
I thank my hon. Friend the Member for Cannock Chase again for securing the debate. I wish the rest of his birthday to be just as joyous as this debate, now that he has caught his breath. I thank all hon. Members for their contributions.