Innovation Centre for Energy Transition: Peterborough

George Howarth Excerpts

Tuesday 14th May 2024 Westminster Hall

[Paul Bristow]

The hon. Gentleman must have had a sneak glance at my speech, because that is exactly what I am going to say.

We must do that while creating new high-skilled and well-paid job opportunities in Peterborough. The ambition is to create a new research institute called the global innovation centre for energy transition, through which to attract large global energy production companies, including Shell, BP and the Abu Dhabi National Oil Company, and a consortium of domestic industrial high energy users. Foundation industries, such as steel, glass and concrete producers, will develop the new technologies needed for the safe transmission, distribution and use of hydrogen in industrial and domestic applications. The ecosystem created will also focus on related technologies for the storage of hydrogen and carbon dioxide, as well as the production of sustainable aviation fuels.

Global energy and technology companies are ready to partner with the UK Government to invest in the establishment of the centre and fund a 10-year programme of research and development worth £150 million. These firms will pool resources, knowledge and investment at sufficient scale, as well as scientific expertise, to generate the enabling technologies to produce new products and systems that will allow the new market to form and grow.

Excitingly, the R&D programme will create opportunities for local businesses and supply chains to link into the research institute’s global network, attracting R&D investment into the east of England from large knowledge-intensive businesses in Europe, the US and the Gulf states. That in turn will increase demand for higher level skills, improving access to better quality jobs, and increasing aspirations and wages for local residents. That is important to the UK and to Peterborough.

First, there is the obvious case for transitioning towards more sustainable, greener energy sources. Hydrogen can form an important part of our future energy mix in the UK, but the UK’s natural gas network is currently unsuitable for the transportation of hydrogen, which can permeate and cause failure in steel pipes—a phenomenon known as hydrogen embrittlement. New transmission networks will need to be developed from new materials. Those include protective inner coatings or non-metallic network materials to safely store, transport and distribute hydrogen. The UK Government plan to assemble sufficient evidence by September 2024 to enable a decision to be made in 2025 on whether to upgrade the national grid distribution network. The global innovation centre for energy transition can be operational in 2026 and ready to develop the solutions to enable the transformation.

Many of the foundation industries’ process equipment for the production of glass, steel and concrete, although having shown the ability to use hydrogen cost-effectively in pilot trials, is at risk of component failure and may present serious safety risks. Significant research is needed to develop safe materials, equipment and operating procedures to allow the transition of those industrial processes from natural gas to hydrogen. There are no other plans in the UK to attract research and development activity in this emerging sector.

Global firms are looking at addressing specific aspects of the broader challenge. Those disparate efforts will create a patchwork of solutions. By attracting a critical mass of the key players to integrate their R&D programmes in the UK, there is an opportunity to lock those firms into a joint endeavour for decades to come. That in turn provides the UK with the opportunity to find ways of convening its science base as a partnership with, for instance, the Henry Royce Institute and the high value manufacturing catapult to create a solutions network bespoke to the challenges around the transmission, storage and use of hydrogen and CO₂.

In a stepwise manner, we can use the opportunity to integrate R&D in the UK, expanding the network of UK institutes that can create an anchoring effect, which makes it difficult for the energy companies to disengage and disintegrate their R&D efforts in this specific field. The ultimate benefit of attracting and integrating global R&D efforts is the opportunity to link intellectual property into UK supply chains for myriad technical applications, including design, manufacturing and services.

The second reason for developing the technology and why it should be done in Peterborough relates to the opportunity to develop a high-value industry that can provide opportunities for high-skilled workers and help to level up the regional economy. The business structure of Peterborough has transitioned over the last few decades from industries based in engineering and manufacturing to lower value services in retail, wholesale, transport and storage, accommodation and food services. Employment has remained relatively high, but average wages are 9% lower than the national average.

Peterborough was on a trend towards the classic low-wage, low-skill equilibrium, but in recent years it has emerged as an increasingly innovative economy. It is now among the 15 cities with the highest number of business start-ups and patents in the UK. The move towards more knowledge-intensive industries can also be observed when looking at the make-up of its industrial structure, with five high-performing business sectors, including advanced engineering and manufacturing, agri-tech, food and drink, digital and creative, energy and environment, and financial services.

Making further progress is not without its challenges. Peterborough has for a long time been an education cold spot, with low levels of participation in higher education and low skill levels among the working-age population. It has limited wage and productivity growth, at 6% below the national average. Skills of level 4 and above are lower than in the wider region, but are now improving quickly. We are turning a corner. The new university has helped to turn the situation around and will accelerate the trend, providing the necessary skill base for existing firms and new science and tech businesses that can be attracted into the city by a new research centre.

Although there are signs that industry formation is improving, with new start-ups in knowledge-intensive industries, the local ecosystem is fragmented and lacks strong links to higher education and research institutions. The proposed R&D facility will provide the demand-side driver for innovation and growth. It will accelerate the positive progress we are making with recent investment and levelling-up projects in our city.

The future for Peterborough will benefit from a new rail upgrade with faster links into London and across the east of England to Cambridge and other neighbouring cities and towns, and the development of the city centre around the new station quarter will provide new, affordable, grade A commercial premises that will help to attract new businesses into Peterborough. The regeneration of the station quarter, combined with an R&D facility for green energy at the university campus, will create better links to London and Cambridge, enabling greater spill-out effects.

The immediate benefits of a new research facility and R&D programme stem from rapidly establishing an innovative ecosystem that generates increasing demand for high-skilled workers in Peterborough and the fens. They include the creation of 100 direct jobs in R&D and 200 indirect jobs in related science, technology, engineering and maths activity. The R&D programme will also create 500 indirect and induced jobs through the participation of 150 local firms in global supply chains, as well as new business start-ups and spinouts.

There will be a substantial positive economic impact on Peterborough city and the surrounding region. Investment in the R&D programme will generate a positive impact in new opportunities for graduate-level employment, encouraging both participation in higher education and, more important, the local retention of graduates. As we become a more skilled working city, it is important to retain our graduates. The R&D centre will allow us to do just that.

However, the wider benefits will also accrue to the UK as a whole. The global market for these new technologies is huge. The forecast value of global hydrogen transmission and distribution pipe networks is estimated to be £427 billion by 2050. By anchoring the underpinning knowledge for these solutions into the UK via the global innovation centre, we significantly increase the chances for British firms—those regionally around Peterborough, and those connected through hubs in Middlesbrough and Port Talbot—to be integrated into future supply chains.

Having the technology developed here also gives the UK first-mover advantage for the global roll-out of new technologies. The proposal to build a new research institute on the university campus in Peterborough presents a huge opportunity for the regional and national economy. To achieve it, we will need to build on existing expertise and import key elements of the Greater Cambridge innovation ecosystem into Peterborough, creating inherent connectivity between the two cities, which will help to rebalance growth across the region.

We will also need to encourage more residents into higher education, enabling access to higher-value jobs. Currently, the proportion of the working-age population with high-level qualifications at level 4 and above is 36.3%. That is below the regional average of 39.6% and the national average of 43.6%. However, that position is also improving, and the gap has narrowed by more than half since 2018. If Peterborough matched the national average for skills, an extra 9,130 people would have an NVQ level 4 qualification or above.

The establishment of the new university in Peterborough has provided an essential component for an innovation ecosystem, investing in human capital to improve higher-level skills to meet local economic needs, as well as providing vital interactions between businesses and higher education. A new research institute is now needed to build on these developments and to raise demand for higher-skilled jobs in the local economy by attracting global firms and connecting research and industry via a bespoke facility and an R&D programme that can translate research into practice in the local economy. That would provide a strong future energy sector focus to what is currently a fragmented innovation ecosystem, and it would harness regional, national and global opportunities in this emerging sector.

The proposals for a global innovation centre for energy transition at Peterborough have the potential to leverage significant economic benefits for Peterborough and the whole UK. The investment proposals are expected to generate approximately £160 million of private sector investment over 10 years from 2025, against a public investment of £30 million. That would provide a benefit-cost ratio of 3.3, which represents exceptionally good value for money.

We need an urgent meeting with Ministers to realise this opportunity for the UK and for my city. It involves several Departments, spanning trade, energy and levelling up. I hope that the Minister can say today that she is willing to take part in this effort, help me convene such a meeting and get the project moving. I am proud of the progress we are making in Peterborough. As I stated earlier—

[Sir George Howarth (in the Chair)]

Order. Could I gently remind the hon. Gentleman that he needs to leave time for the Minister to respond?

[Paul Bristow]

I am on my final sentence, Sir George, I promise.

As I stated earlier, the promise that I made to my constituents was to create a higher-skilled, higher-wage economy. This is part of my vision for Peterborough, and we are making great tracks in achieving it. The innovation centre is part of that, and it will only accelerate the fantastic progress that we are already making.