Hydrogen Economy

Lord Callanan Excerpts

Monday 19th July 2021 Lords Chamber

[Baroness Ritchie of Downpatrick]

To ask Her Majesty’s Government what plans they have to create an office of the hydrogen economy in the Department for Business, Energy and Industrial Strategy.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, there are no plans to create an office for the hydrogen economy. We have a governance framework that supports close working across BEIS, other government departments and with external stakeholders as we develop a hydrogen policy. This includes the Hydrogen Advisory Council, chaired by my Secretary of State. The forthcoming hydrogen strategy will set out what is required to build a hydrogen economy fit for 2030, for carbon budget 6 and beyond while maximising the economic benefits.

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, can the Minister confirm that it is the Government’s view that green hydrogen is preferred to blue hydrogen? Does he agree that there needs to be clear messaging and policy confidence and coherence in the sector, hence the need for a dedicated hydrogen office in BEIS; and will he further state when the strategy will be published?

[Lord Callanan (Con)]

I can certainly tell the noble Baroness that the strategy will be published in due course. We need to develop both blue and green hydrogen if we are to meet the ambitious targets that we have set out.

[Baroness Blackwood of North Oxford (Con)]

My Lords, in our current Science and Technology Select Committee inquiry, we have heard evidence that fuel cells are under-invested compared with battery technologies. Not only do fuel cells have the potential to play an important role in the hydrogen strategy for heating, power and heavy transport, we have a number of excellent UK fuel cell researchers and companies. Without the right level of investment at this relatively early stage, however, those technologies will not scale in time to play the necessary role in our energy mix. Will the Minister say whether this imbalance in investment is a strategic decision; and, if not, what steps he intends to redress it?

--- Later in debate ---

[Lord Callanan (Con)]

My noble friend is right to highlight that we have a number of world-leading UK companies in this field. I can tell her that the DfT is working with Innovate UK to invest up to £20 million in feasibility work for possible future hydrogen fuel cell truck demonstration as part of the zero-emission road freight trials. This will support UK industry to design and develop trials of cost-effective, zero-emission heavy goods vehicles, including hydrogen fuel technology.

[Lord Patel (CB) [V]]

My Lords, I agree with the noble Baroness, Lady Blackwood, regarding more research and innovation related to hydrogen and fuel cells. Does the Minister agree that for the UK to be competitive globally in the hydrogen economy, the challenges that need to be addressed are: regulatory uncertainty, including public safety; lack of coherent common technical standards; a skills gap in the workforce; and a lack of developed supply chains? How and when do the Government intend to address those issues?

[Lord Callanan (Con)]

The noble Lord is quite right: it will be a considerable challenge. Meeting our 2030 ambition for 5 gigawatts of low-carbon hydrogen production will indeed require rapid and significant ramp-up. The forthcoming hydrogen strategy will ensure that the necessary regulation, policies and incentive mechanisms are put in place across the 2020s to lay the foundation for the economy that he highlights.

[Lord Whitty (Lab) [V]]

My Lords, in the absence of a hydrogen office or the proposed heat and buildings strategy, and given that so-called hydrogen-ready replacement boilers are already being marketed, is it the Government’s current view that for the majority of host households currently dependent on gas for heating, some form of hydrogen-based gas heating will be the most likely longer-term future; or will other constraints on the production of green hydrogen mean that priority is given to heavy industry and transport, so that hydrogen for heating will probably be available only in the close vicinity of hydrogen-using industrial hubs?

[Lord Callanan (Con)]

The noble Lord makes some good points, but the reality is that we do not yet know what the best make-up for heating will be further into the coming decades. It will likely be a mix of fuel pumps, hydrogen heating and heat networks.

[Lord Oates (LD) [V]]

My Lords, the Minister has told us that the Government are pursuing a twin-track approach between green and blue hydrogen, but they have allocated nearly £200 million to five blue hydrogen projects and none for green, despite the fact that the Government do not anticipate blue hydrogen projects coming onstream until the mid-2020s. What immediate steps do the Government intend to take to develop our green hydrogen industry and ensure we do not squander the competitive edge we currently hold in green hydrogen technology?

[Lord Callanan (Con)]

My Lords, the reality is that we need to develop both. The UK has expertise and assets to support both electrolytic and CCUS-enabled hydrogen production, and by enabling multiple low-carbon production routes, we can drive cost-effective supply volumes through the 2020s—in line with the 2030 strategy that I mentioned earlier of 5 gigawatts of hydrogen to be produced.

[Baroness Bottomley of Nettlestone (Con)]

The Prime Minister said that in our decarbonised future, we will cook breakfast using hydrogen power before getting into our electric car—although perhaps a hydrogen fuel cell bus or train would be preferable. Can my noble friend update us on how soon the Prime Minister’s ambition may be realised of cooking breakfast using hydrogen power? What progress can he report on the first houses to be built with hydrogen boilers and hobs?

[Lord Callanan (Con)]

My noble friend asks her question at an excellent time, because I visited a demonstration hydrogen home last Thursday and, despite some scepticism from the Opposition Benches, I was able to cook an egg using a hydrogen hob, and I confirm that the person who ate it has so far survived satisfactorily.

[Lord Grantchester (Lab) [V]]

Can the Minister confirm whether the promised hydrogen strategy will include support for the steel sector to enable a long-term shared vision to develop between industry and government on the pathway to net zero?

[Lord Callanan (Con)]

The noble Lord makes a good point, in that low-carbon steel production will be one of the areas that we will need to look at. Hydrogen is one of the fuels that could offer us an option in that area, alongside others. All of those matters will be addressed in the hydrogen strategy.

[Lord Birt (CB) [V]]

It is clear that hydrogen is a possible option for decarbonising maritime travel, heavy vehicles and the heating of buildings, but the likely cost of clean hydrogen as a fuel and the scale of investment needed to convert national gas infrastructure and home and building heating systems for hydrogen is not at all clear. Will the Government consider publishing an early assessment on the feasibility and cost of the hydrogen option, to ensure that the lobbying does not run ahead of the reality?

[Lord Callanan (Con)]

I can understand the noble Lord’s scepticism, and he is right: we need to take a hard-headed, practical, cost-effective look at hydrogen production. The costs of producing it are, of course, highly uncertain. They will depend on a variety of factors, which will evolve over time as it is deployed, but in the forthcoming strategy, we will indeed take a detailed look at the cost of producing hydrogen at the moment.

[Lord Hannan of Kingsclere (Con)]

My Lords, I refer to my declaration in the register, specifically as an adviser to JCB. Batteries have their place, but they also have their limits. They cannot power planes, trains, ships or HGVs, and 73% of them are produced by China, which controls the rare earths. We have huge advantages as the leading country in hydrogen technology. Will my noble friend commit to an expeditious publication of a national hydrogen strategy to ensure that we retain our global dominance?

[Lord Callanan (Con)]

My noble friend makes extremely good points. We have a number of world-leading companies in these fields. Indeed, I was able to visit JCB a few weeks ago, and drive a hydrogen digger—also without apparent accident, which is quite amazing. A number of other companies are also developing excellent, innovative products in this field. We have some world-leading companies but, as I said in a previous answer, our hydrogen strategy will indeed be published in due course.

[Baroness Sheehan (LD)]

My Lords, the energy White Paper pledges to establish the UK as a world leader in the deployment of carbon capture and storage and clean hydrogen. This clean hydrogen is, in fact, blue hydrogen, which is a by-product of the fossil fuel industry. Does the Minister believe that CCS, the process that is supposed to render blue hydrogen clean, is proven at scale and, if so, can he name just one example?

[Lord Callanan (Con)]

There are a number of demonstration projects around the world on CCS, but we need to demonstrate it at scale and, as the noble Baroness will be aware, we will shortly be announcing our first CCUS clusters in the UK.

[Lord Ravensdale (CB)]

My Lords, I declare my interests, as in the register. Many industry responses to the recent consultation on the renewable transport fuels obligation suggested that green fuels, such as hydrogen, produced using nuclear energy should be eligible for this scheme to help the UK meet its targets. Can the Minister confirm what further engagements the Government will hold with industry to make a decision on the role of nuclear energy in the RTFO, and when they will make a final decision?

[Lord Callanan (Con)]

We believe that nuclear will have a role in low-carbon hydrogen production in future. The details of the hydrogen business model will be set out in the forthcoming strategy. At this stage, our aim is to remain technology-neutral. As the noble Lord indicated, under the existing RTFO, the hydrogen must be produced from renewable energy to be eligible. Changing that would require primary legislation.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked. We now come to the fourth Oral Question.