Potential for a Hydrogen Village

George Freeman Excerpts

Tuesday 24th May 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)]

It is a pleasure to serve under your chairmanship, Ms Bardell. I thank the hon. Member for Ellesmere Port and Neston (Justin Madders) and congratulate him on securing this debate. I thank my hon. Friend the Member for Redcar (Jacob Young) for making some powerful points. We are on the cusp of an exciting opportunity for the hydrogen economy, and the pilot is about making sure that we get the infrastructure right to roll it out across the country.

I will start by framing our hydrogen commitments within the broader context of clean energy, and then deal with the specific points that have been made. I am responding today on behalf of the Minister for Energy, but also as the Minister for science, research and innovation. We see the hydrogen revolution in the heating of homes and the powering of vehicles—in particular heavy goods vehicles, trains and planes—as a fundamental part of our clean energy revolution. That is why, as Minister in charge of our science, research and innovation budget, I am strongly supporting the net zero transition and innovation. I say that as a former Minister of State in the Department for Transport, where, in addition to the electric vehicle revolution, we have now stepped up fast to support hydrogen roll-out in the transport sector.

That is all part of our green industrial revolution plan—the 10-point plan set out by the Prime Minster. The key commitment is to double our ambition of low-carbon hydrogen production to 10 GW by 2030. Further work is required to understand the feasibility, costs and convenience of transporting 100% hydrogen in the gas grid and using hydrogen for heating and cooking. That is what this trial is about. We want to establish the costs, logistics and practical issues as quickly as possible, so that we can then deal with them in a wider roll-out. We are working closely with industry, regulators and other stakeholders to deliver a range of research, development and testing projects for hydrogen heating.

Last year, I was pleased to see that HyNet North West, in north-west England and north Wales, which I know the hon. Member for Ellesmere Port and Neston has long championed, was selected to progress within track 1 of the industrial decarbonisation cluster sequencing process. That puts the region at the forefront of the industrial “SuperPlaces” we are supporting in this revolution. In the Government’s 10-point plan for a green industrial revolution, we set out the goal of supporting industry to deliver a neighbourhood trial by 2023, a village-scale trial by 2025 and a potential hydrogen-heated town before the end of the decade. Fundamental to our approach is the development of hydrogen hubs: centres of expertise that drive forward and accelerate the adoption of hydrogen as an energy source. The plans for a hydrogen neighbourhood trial are already under way, as colleagues know. That trial in Fife will supply hydrogen to around 300 homes, with hydrogen distributed through pipes laid parallel to the existing gas network. The trial of hydrogen for heat on a large village scale will be the first of its kind globally. It is a groundbreaking project.

It is an exciting time for the hydrogen village trial. Ofgem recently published its decision to take forward two proposals to the next stage of development. As my colleagues will know, Whitby in the Ellesmere Port area was one of the potential locations, alongside Redcar. The village trial will be led by the gas distribution network and will convert 1,000 to 2,000 properties to hydrogen instead of natural gas. Unlike the neighbourhood trial, it will involve the complete conversion of existing gas network infrastructure in the local area, repurposing it 100% for hydrogen.

We believe the hydrogen heating trials will encourage local employment opportunities and investment, along with the culture change that is required, as was mentioned by both the hon. Member for Ellesmere Port and Neston and my hon. Friend the Member for Redcar. The trials represent another opportunity for us to build back better with investment in green jobs and new technologies, while reducing the cost of energy for consumers. I understand that the hon. Member for Ellesmere Port and Neston is closely engaged with the proposal in his constituency, which is all to the good and hugely welcome. It is important that we support the proposals at this stage, because they have the potential to both generate the diverse, quality evidence that we need and drive that culture change.

Ofgem and the Department for Business, Energy and Industrial Strategy will assess final proposals for the networks in spring 2023 and make a decision on where the trial will be located. Without prejudice to my ministerial colleagues’ decisions next year, the points the hon. Member for Ellesmere Port and Neston and my hon. Friend the Member for Redcar have both made today about scale are well made and on the record, and I will pass them on.

We are working closely with Cadent and Northern Gas Networks, the gas distribution network operators responsible for the short-listed projects, to develop their detailed plans for the trial. Strong community engagement is key and I hugely welcome the comments of the hon. Member for Ellesmere Port and Neston in that regard. The gas distribution network operators are working with local consumers to encourage as many people as possible to participate in the trial. It is important for me to say that nobody would be forced to use hydrogen and nobody would be required to pay extra. I think those two messages will help drive public adoption.

I want to touch on consumer protection, because it is key. Our first duty must be to the safety of consumers, so before any community trial can go ahead, the Health and Safety Executive will need to be satisfied that it is safe. As with natural gas, measures will be needed to ensure that hydrogen is stored, distributed and used safely. As part of our world-leading research into the subject, we have gathered evidence on the safety of using hydrogen in homes. The BEIS-funded Hy4Heat programme has shown that the use of 100% hydrogen can be made as safe as natural gas when used for heating and cooking in the types of houses that were studied. However, research is one thing; practical roll-out in the real world is the key. That is why the pilot is so important.

I reassure hon. Friends and Members here, as well as those listening, that we are 100% committed to safety and that we want to make sure that protecting the rights and interests of consumers is at the heart of the trial. It is the first of its kind in the UK. We are therefore committed to a framework of additional consumer protections, which we set out in our consultation last year, including transparency of information, fair treatment and quality of service. We hope that they will enhance the existing protections in energy and consumer legislation, which already apply to consumers and will apply for the trial. We are clear that nobody taking part in the trial will be required to pay any extra.

With regard to multiple hydrogen trials, colleagues can see the logic of our next step, which is the village and neighbourhood trials. That combination, alongside the wider programme of research and testing that we are running, is designed to provide the Government with the necessary evidence to take big strategic decisions on heating within a matter of two or three years. I know the ambition that colleagues have shared today to go further and faster is shared by the Secretary of State, the Minister for Energy, Clean Growth and Climate Change, and the Prime Minister. It is not lack of political will that is holding us back; we simply need to make sure that we have the practical realities of roll-out and conversion of the gas network clear.

Colleagues have raised the issue of blue versus green hydrogen. I want to make it clear that our hydrogen strategy sets out the Government’s twin-track approach to supporting both electrolytic green and carbon capture-enabled blue hydrogen production. We see blue and green hydrogen as complementary and not as an either/or choice. Our new UK standard for low-carbon hydrogen production will ensure that the technologies we support—green, blue and other potential production routes—make a real contribution to our decarbonisation goals.

We are on track to make a decision on blending in 2023. We are exploring whether to enable the blending of up to 20% of hydrogen by volume into GB gas networks, and we are on track to make the policy decision next year, subject to the outcomes of the ongoing economic and safety assessments, and wider strategic considerations about the energy market. If the decision to proceed with blending is positive, we will look to start the legislative and regulatory process to enable blending, as well as the process to make any physical changes that are required to gas networks. Given the timelines on that work, officials do not anticipate blending on a commercial scale to commence before 2025.

We are looking to publish the hydrogen-ready boiler consultation as soon as possible—“in due course” is the official phrase. I cannot speak for my ministerial colleague, but I know that is very high in his in-tray. The consultation will consider the case for requiring newly installed domestic-scale gas boilers to be hydrogen ready, which would be a step change. The consultation will also include proposals to improve in-home boiler performance, building on the existing boiler efficiency standards of boiler-plus in England.

On manufacturers’ commitments to make hydrogen-ready boilers in the UK and sell them at the same cost, we absolutely welcome the commitment to maintain gas boiler prices at current levels in the case of a widespread roll-out of hydrogen-ready boilers. We look forward to working with manufacturers to ensure that that is possible at scale, because it is fundamental to adoption.

On the trade union debate about whether it is possible to achieve a large-scale workforce shift from boilers to heat pumps, we absolutely think it is possible. I was grateful to hear the hon. Member for Ellesmere Port and Neston, with his strong union background, make it clear that his unions are supportive of that. It is important that we send a signal that this is not a massive challenge, but a part of the upskilling of our broader workforce and economy. Existing heating engineers can train reasonably simply to install heat pumps in one week or less, and thousands of new heating engineers have already seized the opportunity to learn those skills.

I reiterate my thanks to the hon. Member for Ellesmere Port and Neston and my hon. Friend the Member for Redcar for raising the issues today. I hope they can see how committed the Government are to making sure we protect consumers and get the practical logistics right. They would be the first on their feet if we rushed into something that had not been properly thought through. We want to make sure that the trials lay the foundation for a wider nationwide roll-out. The aim is not to have one or two world-class trials; the aim is to prove what we need to do to roll out hydrogen at an industrial scale across the country as part of our net zero targets.

As was outlined in our consultation last year, we are including legislative measures to facilitate the trials in the landmark energy security Bill. I very much look forward to working with colleagues here. More importantly, the Energy Minister looks forward to working with colleagues across the House as the Bill goes through Parliament. This is an exciting time not just for the UK hydrogen economy, but for the communities that are in the vanguard, and we are keen to make sure that that public support continues to grow.

Question put and agreed to.