Future Hydrogen Economy

Debate between Edward Leigh and Andy Carter

Tuesday 14th June 2022 Westminster Hall

[Andy Carter (Warrington South) (Con)]

It is a pleasure to take part in this debate. I thank my hon. Friend the Member for Redcar (Jacob Young) for securing it. It is always a pleasure to follow the hon. Member for Strangford (Jim Shannon) and to speak in the same debate as my hon. Friend the Member for City of Chester (Christian Matheson). I always worry when I speak after him that he may well have said everything I want to say. I will talk specifically about HyNet and will expand on some of the points that he has already raised.

HyNet was a momentous moment for the region. Securing track 1 status was a very strong signal for businesses in Warrington and the wider Cheshire/Mersey/Dee network area that we are serious about levelling up, serious about creating and securing well-paid jobs and about making our environment a greener place to live and work. The Minister knows that, because he came to Warrington when we launched the HyNet project and saw the transition work at the UK’s largest can recycling plant at Novelis in Latchford, which is going to transfer over to hydrogen fuel.

For the past two years, I have been pressing his colleagues and the Secretary of State to proceed with the plans so that we can get maximum benefit to the region and the country. HyNet will give a massive boost to the supply chain and will work with younger people and apprentices to upskill and make the energy sector a more attractive industry to work in. In fact, one of my local colleges that I visited yesterday spoke to me about the opportunity to create more T-levels in the green sector. The Department for Business, Energy and Industrial Strategy and the Department for Education should work together on that to join up skills for the future.

As the Minister will know, we are now in phase two of the process, focusing on the individual projects that will realise the ambitions of both the Government and HyNet. In order for the ambitious targets to be met, careful consideration of the correct level of allocations is required.

Our net zero target and the private sector’s environmental commitment have led to significant demand from industry to invest in green transition. That is really good news, but the current caps on the support contracts under the industrial decarbonisation and hydrogen revenue support scheme fall substantially short of the level of demand from industry and below that required to achieve net zero. Without a significant increase in those caps, there is a danger that hydrogen deployment will not deliver the initial scale required to gain the momentum that this fledging sector needs, potentially losing the global lead we have already made in the UK in the hydrogen economy.

The current target of about 6 million tonnes per annum for industrial carbon capture by 2030 is part of the overall target of 20 million to 30 million tonnes per annum. However, it is narrowed down to about 3 million tonnes per annum for the initial allocation under the industrial decarbonisation scheme, and that is an inadequate target to kick-start a new industry. If we split that evenly between HyNet and the East Coast Cluster, it would potentially only allow for one or two of HyNet’s flagship projects to be delivered, resulting in organisations being unable to decarbonise their industrial processes. We need to go bigger.

If the Government are to achieve their stated target, they should be proceeding with about 6 million tonnes per annum in total industrial capture in the first clusters by 2027. That is the lowest cost approach to achieving the 20 million to 30 million tonnes per annum target by 2030. At the same time, the Government should be looking towards a road map for future allocations to give confidence to other projects to proceed into further development.

In addition, to get a functioning hydrogen market, with hydrogen producers connected to hydrogen users, we need business models that are consistent with hydrogen production targets. That means that 2025 will be too late for these business models to be put in place, resulting in the 10 GW target that the hon. Member for City of Chester mentioned being missed.

The message to the Government is really clear: the private sector that is investing in this area wants to proceed and is keen to expand the operation, but it would like Government support to do that. Will the Minister confirm that his Department has done a proper assessment of the impact that the current plans may have on companies reliant on HyNet hydrogen production and infrastructure to decarbonise? Does it leave them facing increased risks and uncertainty from the impact of carbon cost and market share?

I recognise the importance of moving towards decarbonisation and I know that the Government are committed to ensuring that we have the tools in place to achieve net zero by 2050, but it is ambitious projects such as HyNet, bringing together businesses, creating jobs and bringing investment, that pave the way for achieving our target. It is critical that we listen to the needs of those working in the sector to make sure we get this right. I urge the Minister to take heed of the challenges HyNet is currently facing and to seek to resolve them as soon as possible.

[Sir Edward Leigh (in the Chair)]

We have time for five minutes for the SNP spokesman, five minutes for the Opposition spokesman and 10 minutes for the Minister. I call Stephen Flynn.