Blog : environment bill

Parliamentary update – September 2020 | Sophie Lethier

Parliamentary update – September 2020 | Sophie Lethier

In our Parliamentary Officer Sophie Lethier’s new monthly update, she gives the inside track on Westminster. This month she gives an update on the APPG on Sustainable Finance, for which UK100 is the secretariat, including how it will examine the link between pensions and climate change, the Green Shares Bill, and climate-related legislation working its way through parliament.

The APPG on Sustainable Finance, led by UK100, has had an extremely successful first few months since its launch in spring 2020. It was established to support MPs to better understand how the finance sector can contribute to the government’s target of Net Zero emissions by 2050. The APPG hosts regular meetings and events, including quarterly, party-specific parliamentary briefings. We held the first of these in June with Dr Rhian-Mari Thomas, Chief Executive of the Green Finance Institute, and Polly Billington on the role of public finance in the ‘green recovery’ to the Covid-19 crisis. They recommended the establishment of a Net Zero development bank.

We’re now looking forward to hosting our next briefing for MPs in October which will examine the link between pensions and climate change. You can read the House of Commons Library’s research briefing on the Pensions Schemes Bill 2019-21, which will have its second reading in the Commons on Wednesday 7 October. 

This bill started in the House of Lords earlier this year. Peers agreed a series of government amendments empowering the Department for Work and Pensions to issue new regulations, requiring pension schemes to disclose their exposure to climate change and their strategy to address it. While these amendments altered the bill to better enable pension schemes to address the financial risks of climate change, more work is needed to ensure schemes are aligned with the interests of savers. We hope to see APPG members call for strong measures in the Commons.

Labour MP for Cardiff North and Shadow International Development Minister Anna McMorrin’s proposed private member’s bill, the Green Shares Bill, has now been withdrawn following a lack of government support. The bill aimed to enable cooperatives to raise funds for green projects. In response to the proposed bill, Economic Secretary to the Treasury John Glen MP said that the cooperatives were not supervised by the Financial Conduct Authority and therefore investors lacked scrutiny and protection.

We are still expecting the Energy White Paper to be published in the autumn, as well as the Treasury’s Net Zero Review, and the return of the Commons committee stage of the Environment Bill. It has been announced that the public committee for the Environment Bill will report back on 1 December. This will leave little time for it to pass through the House prior to the end of the transition period.

Sophie Lethier, UK100 Parliamentary Officer

Local leadership: exploring decisions on hydrogen, by Hywel Lloyd

Local leadership: exploring decisions on hydrogen, by Hywel Lloyd

Hydrogen is the fuel of the future.  Like all futures it hasn’t quite arrived; yet it’s clearly an opportunity. 

A number of countries across the globe have set out, or are setting out plans and strategies to invest in Hydrogen for their economic recovery, for example Germany and Japan.  In the UK while the Energy White Paper and associated strategy for low carbon heat have yet to emerge, a variety of agencies and organisations are energy planning, looking to plot a positive energy future for their places, and communities.

As part of the work of UK100 we have a presence in some of the processes of the regulator Ofgem, and are working at representing UK100’s collective interest with organisations such as National Grid, for example in their Hydrogen Gas Market Plan (GMaP) program of work.

Given many localities are looking to understand their hydrogen options, here’s our latest take on the wider sense of what’s the future for hydrogen – and what that might mean for a local leader.

The first thing to say is that hydrogen is not a silver bullet, yet it’s certainly one of the things that will insure we can fuel our future energy needs.  The advantages of hydrogen include its multiple uses, for domestic and industry heat, powering vehicles, electricity production and long term energy storage. 

While it will be easier to maximise those benefits if we can reduce our demand through greater productivity and efficiency in our use of energy, we set energy efficiency to one side for now as it is in the domain of hydrogen supply where it gets more interesting for places and communities.

Many can see a potential opportunity in hydrogen, which could even give a first mover advantage to a community or location, helping secure some of the early economic benefits of the hydrogen economy.

So a first reference point would be to appreciate the basic technologies for the two main methods of production:

  • Reformation (SMR), a chemical process that uses a natural gas and steam reaction to create ‘blue’ hydrogen and other by-products.  Importantly one of those by-products is carbon dioxide so this approach really does need something like carbon capture and storage to make it an opportunity in the future, most likely to work where there is a ready opportunity for carbon capture

So that would suggest near the gas fields of the North Sea or other locations where there are geological stores for carbon dioxide, such as salt caverns.  This geographical constraint could affect as much as half the country.

  • Alternatively we have the process of electrolysis.  Electricity breaks down water to produce hydrogen and oxygen (so no GHG emissions), electrolysers effectively just need water and electricity.  With 100% renewable electricity, that would produce renewable, or ‘green’ hydrogen.

Some see ‘green’ hydrogen as the nirvana of the future of heat. We should note the caveats that hydrogen doesn’t have as much calorific value as the natural gas currently used for cooking and heating, and some of the engineering in those devices would need to be changed. Domestic appliances can take up to 20% hydrogen fuel blend, so anything above that would need them to be replaced with appliances ready for hydrogen.

Clearly electrolysis has far fewer constraints on deployment compared to SMR, so the question there then becomes much more about the value of the hydrogen, or the availability of renewable electricity.

The balance of costs of these two elements of the process are a key question on where best to put your electrolysis, which in turn suggest a key criteria will be what do you need the hydrogen for?  

And it is probably true to say it is easier and cheaper to transport renewable electricity than it is to transport hydrogen.  Clearly hydrogen can be a part of the gas mix for the heating of homes and cooking by way of the gas grid; it can equally be used to support transport and power hydrogen fuel cells which some propose as a good solution for HGVs.  This could be site specific or via the gas grid; thirdly you could use it to create electricity (which might sound odd because we may have used electricity to create it yet we can taking surplus renewables at one point, storing their energy value in hydrogen and then releasing it as electricity when there is a greater demand for electricity).

So, where does that leave a local leader?

For some you will already have made or been engaged in a hydrogen opportunity, particularly where your place has the geology to support a SMR/ CCUS type approach, and ideally with central government support given the capital costs and innovative nature of some elements of the approach.

For most of the rest of us the question is more nuanced – do we lead, what’s our opportunity, or should we let the energy system do its thing and concentrate on a different opportunity?

For electrolysis hydrogen, potential options include connection to renewable generation to ‘use-up’ surplus electricity, for example adjacent to a wind farm, or connected to solar on a capped land-fill site; that hydrogen could then be fuel for a bin or bus fleet, it could be injected to the local gas grid; it could be stored for later use when ‘additional’ electricity is needed.  Other examples include using hydrogen fuel cells in buildings to reduce emissions (in place of a boiler) or as part of a local micro energy network at an end of the pipe location.  Other opportunities are being created daily.

As with many ‘new’ opportunities for a local authority it is key that the political and senior leadership is clear about the purpose behind the opportunity.  Clarity of purpose helps everyone involved make better decisions, knowing what is, and equally what is not, important.  For hydrogen that purpose could be climate led, helping reduce emissions and improving air quality; it could be about local jobs and businesses, helping manage local energy prices, costs of transition or create new businesses; equally it could be part of an approach to bring new revenues directly to the authority.

While any one of these is fine, the political purpose is different; and the necessary deployment of political capital will also differ.  Without political capital hydrogen isn’t really a priority, because budgets, staffing, resourcing and other decisions (e.g. planning) won’t all be deployed to help secure pro-hydrogen outcomes – and those tools along with local goodwill, business engagement and the like are all going to be required at this early stage of hydrogen deployment, because hydrogen is not yet the lowest cost energy option.   

In perhaps 10 years time much of the landscape will be different, hydrogen will be in some people’s gas supply; tens if not hundreds of hydrogen refuelling stations will be scattered across the country; surplus renewable electricity will be making hydrogen in a variety of locations.  If hydrogen isn’t a priority for you and your area it will arrive eventually.  

 

We will be working with a range of stakeholders to progressively flush out opportunities by location so do drop us a line if you are interested in hydrogen for your place. 

 

Hywel Lloyd, UK100 Board Member, Hywel.lloyd@uk100.org