UK Hydrogen Economy

Backbench Business – in Westminster Hall at 3:00 pm on 17th December 2020.

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Photo of Alexander Stafford Alexander Stafford Conservative, Rother Valley 3:00 pm, 17th December 2020

I beg to move,

That this House
has considered the UK hydrogen economy.

I refer the House to my entry in the Register of Members’ Financial Interests. Members will be aware that only three weeks ago, I sponsored the UK Parliament’s very first stand-alone debate on hydrogen, which was about hydrogen transport. I believe that it was a great success and I welcome the Minister’s proactive and helpful response. It is incredibly exciting that straight off the back of that debate, I have the opportunity to broaden the scope of the conversation today to encompass the UK’s hydrogen economy. It is right that I should touch on hydrogen transport, but I am keen to emphasise hydrogen’s important role in home heating, the gas network and industry, and its wider economic benefits for the UK.

I have been clear that we need a multifaceted approach to decarbonising our economy and meeting our net zero goal. One technology alone will simply not be enough. Instead, we must move to a model where we use the best renewable fuel or technology for the job at hand. By advocating for our hydrogen future, I am in no way detracting from electric vehicles, biofuels or carbon capture and storage, among other central aspects of the matter. I believe that those must be used in conjunction with hydrogen to ensure that we do not have any gaps or holes in our decarbonisation efforts. Hydrogen, however, presents a unique opportunity for us to corner the market and become a world leader in hydrogen use and production, in a way that we simply do not with electric vehicle batteries or in the wind farm supply chain.

The UK is the perfect place to be a hydrogen power, because of expertise, home-grown companies, North sea assets and our developed infrastructure. Our wind farms provide clean renewable energy to produce hydrogen, and underwater pipelines can in theory ferry that hydrogen to and from the continent. I have reiterated time and again that a strong UK hydrogen industry will create thousands of jobs across the country, cut our carbon emissions dramatically and boost our post-covid and post-Brexit economy.

In my speech on hydrogen transport a few weeks ago, I spoke at length about the flexibility and freedom offered by hydrogen fuel cell electric vehicles, which are practically free of CO2 emissions. Energy is stored as compressed hydrogen fuel in hydrogen vehicles, which means that they can drive up to 700 km without refuelling, and just like a conventional car they take only a few minutes to refuel. The deployment of hydrogen is likely in vehicles that travel long distances or that have high utilisation, such as buses and heavy goods vehicles: those are less suited to electrification, and the consumers demand rapid refuelling.

I am particularly impressed by Wrightbus, which is building 3,000 hydrogen buses in the UK for use across the country by 2024—the equivalent of taking 107,000 cars off the road. I have highlighted that if the 4,000 zero-emission buses announced in February had been hydrogen buses, the economies of scale would have revolutionised the transport sector, helping to achieve cost parity between hydrogen and diesel buses. We need that to happen as soon as possible.

A major step in achieving cost parity would be the reform of the renewable transport fuel obligation. I have written to the Government this week to stress the need to reform the RTFO so that electricity from any renewable resource can be considered eligible. I intend that that increased hydrogen production will encourage more councils to buy hydrogen buses and boost UK manufacturing, and that the resulting stable hydrogen supply will speed up the process of cutting carbon from heavy transport sectors.

Photo of John Spellar John Spellar Labour, Warley

The hon. Gentleman rightly indicates that we should encourage the purchase of British vehicles. Should not the Department for Transport now, particularly as it will be free of supposed EU regulations after 1 January, prescribe that the moneys it provides for more environmentally-friendly vehicles ensure they are built in the UK, and not in China or elsewhere?

Photo of Alexander Stafford Alexander Stafford Conservative, Rother Valley

I agree that we should always buy British and build British where we can. That is why I am excited about hydrogen. It presents so many opportunities for seats such as mine to create jobs and upskill our manufacturing sector.

Photo of John Spellar John Spellar Labour, Warley

Will the hon. Gentleman give way?

Photo of John Spellar John Spellar Labour, Warley

We have a long while. Quite simply, should there not be real pressure, and a commitment from the Minister, that that is what the Department for Transport must—not should—do? It must commit to doing that.

Photo of Alexander Stafford Alexander Stafford Conservative, Rother Valley

I welcome that follow-up. I always say that we should, where we can, buy British and buy the best, but one of the benefits of leaving the European Union is that we can have our pick and choice of the world. I want the best to be built in Britain.

Let us turn back to the RTFO, which I know the Minister is terribly interested to hear about. A reformed RTFO will prevent taxpayers’ money from going to battery manufacturers in the People’s Republic of China. Such a simple amendment could ensure that we incentivise the manufacture of hydrogen buses by British firms, and establish ourselves as a major player in the sector. I am sure that that allays some of the concerns of John Spellar.

Hydrogen holds much promise beyond buses and HGVs, with important developments in the rail, shipping and aviation sectors. Only this week, I met virtually with the team at Hybrid Air Vehicles, a wonderful British company that is looking to revolutionise short-haul regional air travel, direct city-to-city connectivity and air tourism by way of building a practical and economical hydrogen plane. They have a working prototype and, if all goes well, will be the first to be issued Civil Aviation Authority approval post-Brexit.

Hybrid Air Vehicles is not the only British-based company in this space. ZeroAvia, a UK-US enterprise, has secured £12.3 million of UK Government funding for a certifiable 19-seat market-ready aeroplane capable of flying passengers to the UK from 2023, with letters of intent in place already with operators. That HyFlyer project is a great leap in realising the Government’s jet zero ambitions. Only last Saturday, British Airways announced that it was partnering with ZeroAvia to explore how hydrogen can power the future of its fleets. Elsewhere, Aeristech boasts market-leading hydrogen fuel cell compressors, with its 25 kW fuel compressor making it possible to deliver the power output needed for even the heaviest industry vehicles, including in aerospace.

Across the transport sector, the UK is at the forefront of innovation, from large companies to small enterprises. At one end, there is the diminutive but mighty Riversimple Movement, a hydrogen car manufacturer based in Wales, which has ambitions to build up to five small factories around the UK, creating thousands of jobs. We move up to the scale of Johnson Matthey, a British firm that is a global leader in fuel cell development, with its technology ending up in roughly a third of fuel cells globally. If the UK can maintain that advantage, we can steal a march on hydrogen, as China did on batteries.

I have been very active in discussing the hydrogen transport sector, but I am also greatly enthused by hydrogen’s potential across the UK economy. Home heating currently accounts for around 23% of national emissions, with the UK well known for having the oldest and least energy efficient homes in Europe. It has become clear to industry, and to parliamentarians, that decarbonising our gas grid is of the utmost importance if we are to meet our net zero target. Hydrogen in the gas grid will play a key role in reducing the cost of the decarbonisation of heat. Its high energy density enables it to be stored cost-effectively at scale, providing system resilience. Furthermore, hydrogen heating can be implemented at minimal disruption to the consumer, and the UK holds world-class advantages in hydrogen production, distribution and application.

Hydrogen behaves in much the same way as natural gas, and is therefore ideally placed to be utilised in existing gas pipe infrastructure. The UK is different from most European countries in terms of the number of properties connected to the gas grid and the readiness of our distribution network. In fact, 85% of homes in the UK are connected to the gas grid. Therefore, repurposing the gas grid to run off green gases has to be a vital part of the solution as we decarbonise our existing buildings.

Photo of Alexander Stafford Alexander Stafford Conservative, Rother Valley

I will give way very briefly. I know that the right hon. Gentleman is speaking later.

Photo of John Spellar John Spellar Labour, Warley

Is there not a problem at the moment that needs to be resolved, which is that hydrogen makes the metal parts of the gas grid more brittle more rapidly? Also, it is easier for hydrogen to escape from them, which is a constraint that we need to address.

Photo of Alexander Stafford Alexander Stafford Conservative, Rother Valley

Of course, we need to restrain all sorts of leaks in our systems, whether from our gas pipes or our water pipes. I know that there are water pipe leaks as well, and I agree that we will need to upgrade certain elements of pipe. If we want to push at the very start, hydrogen will work very quickly, but of course with all technologies we need to maintain the infrastructure, which I know the Government will do very well.

In the boiler sector, Worcester Bosch and Baxi are leading the way in producing the world’s first hydrogen-ready boilers, which can run off either pure hydrogen gas or natural gas, including natural gas blended with up to 20% hydrogen—a mixture that all boilers can utilise, so we are ready to go with that mix. Hydrogen boilers have a distinct advantage over heat pumps, which are another solution, in that they are many thousands of pounds cheaper, costing about the same as a gas boiler. It is estimated that a hydrogen boiler will cost £2,500, whereas a heat pump for a house will cost between £6,000 and £18,000. That is important in terms of fuel poverty, as the cost of heat pumps is potentially unaffordable for some families.

Furthermore, a hydrogen boiler does not take up much space and takes a matter of hours to install. In contrast, an average of three days is needed to fit a large and unwieldy heat pump. It is also worth bearing in mind that the electricity grid has five times less capacity than gas, and relies on gas in the winter to prop it up, making the gas network the obvious choice for resilience purposes.

If there are subsidies for heat pumps, why are there not considerable subsidies for the production of hydrogen? There should be, as that would also help to bolster more jobs. Earlier today, my hon. Friend Paul Howell raised with me the need to train up more boiler installers so that we have those skills. The Government should be supporting that.

I am pleased to note that the Government have helped initiate a number of projects that have demonstrated the technical and economic viability of hydrogen as a pathway to decarbonising the gas grid. I have been privileged to learn about many of them since my election, although hon. Members will agree that the preference for similar-sounding names is quite the tongue twister. They include the Hy4Heat programme, the HyDeploy project run by ITM Power, Cadent and the Northern Gas Networks, the H21 project led by the Northern Gas Networks, National Grid’s HyNTS Hy Street experiment, and SGN’s H100 Fife project.

The Net Zero Teesside and HyNet large-scale projects are crucial to stimulate the mass production of hydrogen so that we can move from theory to reality when it comes to home heating. Those projects are a firm demonstration of the Government’s interest in and commitment to hydrogen as a technology to help us achieve net zero. They have also provided evidence of the technical and economic viability of hydrogen as a pathway to low-carbon heat, and have helped us address some of the inherent challenges of rolling out technology. In addition, the geographical spread of the projects across the United Kingdom—many are in left-behind areas—shows that hydrogen can play an important part in the Government’s levelling-up agenda.

The success of those projects shows that the distribution, transmission and production of hydrogen must be a priority for the UK. However, the UK is at risk of being overtaken by other countries that have more aggressive and developed approaches to hydrogen. For example, Germany has earmarked €9 billion for the expansion of hydrogen capacity, targeting 5 GW by 2030 and a further 5 GW by 2040. Japan established its hydrogen strategy in 2017, which has given industry the confidence to invest.

To date, the UK has lacked the clear policy framework that exists in Japan, and Government investment has been lower than in countries such as Germany. That is precisely why the Prime Minister’s 10-point plan was so welcome, and why the forthcoming hydrogen strategy must be ambitious, wide-reaching and published as soon as possible.

Having addressed hydrogen transport and home heating, I now turn to hydrogen’s potential for use in industry. That is of great importance to constituencies in the former red wall such as mine, Rother Valley. Traditionally, my area has relied on energy-intensive industrial processes. Sheffield is, of course, famous for steel making. It is vital that we decarbonise our industry and provide our factories with renewable energy that is powerful, in ready supply and affordable. Rother Valley bore the brunt of British coal’s lost competitiveness compared with cheaper foreign imports, and the high cost of energy and the struggling industry has been the narrative ever since. We now have a chance to ensure energy sustainability for generations. In doing so, we will turbocharge our national industries in the post-Brexit world.

In the light of that, I warmly welcome National Grid’s ambitions to build a hydrogen transmission backbone consisting of pipelines connecting major industrial hubs across the UK. Such hubs exist in Humberside, Teesside, south Wales, Grangemouth in Scotland, Merseyside and the Isle of Grain in Kent. The concept is that significant volumes of hydrogen will enable the build-out of 100% hydrogen pipelines to decarbonise early adopters in industry and transport. Cadent is planning a similar idea of piping 100% hydrogen by Pilkington’s glassworks in Ellesmere Port so that the factory can reduce its costs and stay open to save jobs.

Members will know that I am always keen to focus on my region of Yorkshire and the Humber in this House, which is why Zero Carbon Humber is of such relevance to me and to industry in and around my constituency. Humberside is currently the UK’s largest carbon emitting industrial area, but Zero Carbon Humber aims to make it the world’s first net zero carbon industrial cluster. It is a wonderful example of the Government working hand in hand with the private sector to fund an ambitious endeavour. It is a staggering statistic that H2H Saltend in Zero Carbon Humber can produce more than half the Government’s planned 1 GW of hydrogen by 2025, and is one of the few places in the world where hydrogen, carbon capture and offshore wind congregate to create a “super place”. The towns and villages around Zero Carbon Humber offer opportunities for hydrogen neighbourhood heating trials, essential for decarbonising the heat networks I spoke about earlier.

Around my constituency, steelmaking is a huge carbon emitter, but it is also a huge employer, as it is across the UK. On Humberside, hydrogen can be injected into blast furnaces in the steelmaking process, displacing fossil gasses and producing steam as a by-product rather than carbon dioxide, although any CO2 is captured and stored. We need that technology in Rother Valley and South Yorkshire to protect our plants and factories and to give British steel the boost it so badly deserves.

I envisage the Zero Carbon Humber project being recreated in Rother Valley, tying in with my plans for a hydrogen valley in my constituency. My hydrogen valley will create high-skilled jobs for my constituents, attract investment and new industries to the area, and decarbonise the towns and cities of South Yorkshire.

ITM has already acted, building the world’s largest electrolyser factory on the border of my constituency and expressing its desire to build large hydrogen refuelling stations across our nation. In that vein, the Government must encourage the development of net zero industrial clusters across the UK. That is a crucial way to revitalise left-behind areas, protect and create jobs, decarbonise polluting industry and help our manufacturers adapt, to ensure that they not only avoid closure but thrive in our green future.

I have so far addressed the UK’s hydrogen economy by sector, demonstrating that we can use hydrogen to decarbonise transport, the gas network and industry. What are the benefits to the British economy of such a hydrogen economy? The Hydrogen Taskforce believes that hydrogen can add up to £18 billion in gross value added by 2035 and support 75,000 additional jobs in every part of the United Kingdom, many of them in the north of England.

Industry, offshore wind and CO2 storage assets are currently concentrated in the north, meaning that investment in hydrogen production is likely to create and protect more jobs in areas that have been hit hardest by the covid-19 crisis. The existing pipeline of hydrogen production projects has a strong regional spread and will support the Government’s levelling-up agenda. More immediately, the business community has told the Treasury that is has £3 billion of shovel-ready private investment hydrogen projects and is merely awaiting the right policy framework and commitment from the Government.

As the UK looks to bounce back from the covid-19 crisis, investors in hydrogen offer sustainable economic growth opportunities that will kick-start the green recovery. Speeding up hydrogen solutions will allow the UK to build on existing areas of expertise and global leadership. With a value chain that spans production, storage, transmission and distribution, along with downstream appliances, this growing global market can support thousands of jobs in the UK for decades to come.

With the benefits of the UK’s hydrogen economy ringing loudly in their ears, the Government must act decisively and boldly, to steal a march on our competitors and cement Britain’s place as the hydrogen nation. I have already mentioned the absolute necessity of the prompt publication of the forthcoming hydrogen strategy. In addition to that, I have several policy asks of the Minister.

I will first reiterate my policy asks from my hydrogen transport debate, which, unsurprisingly, are still relevant three weeks later. Those were to set ambitious targets for the mass commercialisation of hydrogen technology; to stimulate supply and demand in parallel, focusing initially on regional clusters; and to ensure relevant Government Departments work collaboratively.

However, this debate has a wider scope, so there are additional specific policy asks. Generally, we must ensure that the upcoming hydrogen strategy sets out a clear road map for how the UK will create the renewable hydrogen it needs. We must institute long-term, stable and predictable policy and regulatory frameworks to reassure investors. We must ensure that the Government and Ofgem make decisions quickly and decisively. We must support hydrogen innovation by funding research and development. We should support trials of 100% hydrogen. Government industries should now invest and collaborate to ensure that technology, development and commercialisation take place in tandem.

For transport, we must aim for at least some of the 4,000 zero-emission buses to be hydrogen buses. Most importantly, we must reform the RTFO to allow renewable energy from all sources to be eligible. We must introduce changes to the bus service operators grant to stop discrimination in favour of diesel vehicles, and the Department for Transport must build on the University of Birmingham’s hydrogen train success, by supporting hydrogen train fleet development. Additionally, we must support the opening of 100 hydrogen refuelling stations by 2025, to support the roll-out of hydrogen transport.

For the gas network and home heating, we must support the roll-out of hydrogen-ready boilers for existing homes by 2025 at the latest; outline in detail how the vision for hydrogen towns can be delivered; set out how the gas grid can be repurposed to enable the safe distribution of hydrogen; enable hydrogen to be blended into the gas network; and ensure that the heat and buildings decarbonisation strategy promotes a technology-neutral approach. We must also provide clarity on the business models that underpin hydrogen—for example, carbon capture and storage, pricing and demand mechanisms.

For industry, we need to lay out specific hydrogen production targets, prioritise the reskilling and upskilling of workers, and ensure that there is early decision making on permissions, business models and the role of regulators. I appreciate that this is a substantial policy list, but I hope the Minister will be able to enlighten me about his plans, both verbally during this debate and in writing at a later date.

As I draw to a close, I reiterate that I believe the hydrogen economy will be transformative for the UK. Not only can it decarbonise across all sectors, ensuring that we achieve our net zero target, but it protects industry and retools it for our green future. The hydrogen economy will create skilled jobs in left-behind areas, such as Rother Valley, revitalising parts of the UK that have suffered the grim effects of deindustrialisation.

We have a unique opportunity to corner the hydrogen market, positioning Britain as the world leader in the production and use of hydrogen. That will not only be a shot in the arm domestically as we recover from the coronavirus pandemic, but it will enable UK plc to export our technology and expertise around the world in a post-Brexit age. The hydrogen economy will improve our energy security and resilience, which are critical in light of both the devastating pandemic and hostile Chinese and Russian relations. However, in order to reap these rich rewards, I urge the Government to act now to avoid losing out, as we did with batteries and the wind farm supply chain. We have first-mover advantage, but other countries are waking up; we must be ahead of them.

In a brave new decade with many unknowns, we do know that decarbonising our economy is important for environmental, economic, security and health reasons. Hydrogen can be one part of our energy solution, used in conjunction with other technologies, if we take action now to ensure that the UK’s hydrogen economy works for everyone, and we confirm our place as the hydrogen kingdom.

Photo of Christina Rees Christina Rees Labour/Co-operative, Neath

Mr Stafford, could you please provide specific details of your declaration of interests for the record?

Photo of Alexander Stafford Alexander Stafford Conservative, Rother Valley

Of course. It is in the Register of Members’ Financial Interests. Until my election to this House in the general election in December last year, I worked for Shell, and Shell has worked on hydrogen; I personally did not work on hydrogen there, but I did work for Shell.

Photo of Christina Rees Christina Rees Labour/Co-operative, Neath

Thank you.

I do not think there is any need to impose a formal time limit, but if you each speak for about seven minutes, we should be able to get everyone in comfortably.

Photo of Lisa Cameron Lisa Cameron Shadow SNP Spokesperson (Mental Health) 3:23 pm, 17th December 2020

It is a pleasure to serve under your chairpersonship today, Ms Rees.

I start by thanking Alexander Stafford for securing this debate on an issue that is extremely important to so many areas across the United Kingdom, including my own constituency. Drawing on his own expertise in the sector, he spoke in great detail and outlined many of the issues that will be of the utmost importance for the hydrogen strategy. I thank him for that and for his dedication in raising these issues in what is his second debate in the House of Commons.

To reach the Government’s goal of net zero greenhouse gas emissions by 2050 and to honour the Scottish Government’s commitment to achieve the same goal by 2045, we will need to maximise the use of all potential options for decarbonisation. Until this point, hydrogen has been a massively underused option, but it is one that should be prioritised in Government planning and funding in the future. In particular, we need to be aware of the fact that, while electric cars, wind turbines and solar panels are widely accepted by the public—and their imaginations—right across the United Kingdom, the concept of hydrogen as a potential low-carbon secondary energy source is still alien to most of them. Therefore, I first urge the Minister to consider what steps the Government can take to maximise public understanding of hydrogen as a vital asset in combating climate change.

[Siobhain McDonagh in the Chair]

I welcome the Government’s White Paper, which outlined their aim to increase the UK’s low-carbon hydrogen production capacity to 5 GW by 2030 and committed them to publishing a more detailed report in 2021 focusing on the UK’s hydrogen strategy. I urge them to publish the report without delay. Hydrogen is one of the key concepts of the future that will take us towards our climate goals.

When the Government publish their strategy, the projects and partnerships already implemented across Scottish businesses and by the Scottish Government may be relevant. I am always a keen advocate of learning from and sharing best practice right across the United Kingdom, and I would highlight in particular the Green Hydrogen for Scotland partnership between ScottishPower, BOC and ITM Power, and the Aberdeen hydrogen bus network, which introduced the world’s first hydrogen-powered double-decker bus earlier this year.

I would also highlight the hydrogen heating pilot scheme to be introduced in 300 homes in Fife by the Scottish Government in 2022. That scheme and the idea of using hydrogen for heating homes have been well documented in the past. It is particularly attractive in constituencies such as my own. East Kilbride was a new town developed just after the second world war, and now contains a significant proportion of ageing and dense housing stock where heating pumps may not always be a viable option.

The Government’s White Paper mentions plans for neighbourhood hydrogen heating trials. I press the Government to consider the possibility of new boilers being fitted as hydrogen-ready. Given the industrial age of my constituency and the housing stock I have described, I ask that the Minister consider East Kilbride, Strathaven and Lesmahagow as one of the pilot sites when the Government consider those options.

Hydrogen fuel cell vehicles must also be viewed as a crucial option in securing a transition towards green carbon-neutral transport. However, Government funding for hydrogen refuelling infrastructure and stations must be prioritised and detailed in the report on the hydrogen strategy that is due to be published.

In my constituency, a study undertaken by ScottishPower Energy Networks concluded that if all the fossil fuel-powered vehicles were changed to battery electric vehicles, a significant upgrade of the electricity grid would be required. It was estimated that that would take five years, cost £10 million and involve a new major substation and the laying of nearly 70 km of new cables. Hydrogen may well offer a cheaper alternative to electrifying every vehicle on our roads. It has the potential to be rolled out with significantly less disruption to transport networks in coming years and is ideally suited to many parts of the United Kingdom—particularly many of the rural areas of my constituency and across Scotland. Far more research is needed, and ring-fenced funding must also be allocated, if we are to see hydrogen playing a pivotal role in the transition to renewable and low-carbon energy.

Hydrogen also presents tangible opportunities for sustained future employment in my constituency and across Scotland. For example, TÜV SÜD National Engineering Laboratory, located in East Kilbride, is the UK’s designated institute for flow measurement and is part of the UK’s national measurement system, which is already funded by the Department for Business, Energy and Industrial Strategy. The measurement traceability it provides underpins every fiscal and financial transaction that occurs in the UK for liquid or gaseous fuel, traded on readings from flow meters. I have been out to visit, and although I cannot assure the Minister that I understood absolutely all the scientific information that was imparted to me, I certainly tried my best.

The laboratory has been transitioning jobs from oil and gas to the hydrogen sector already and has been working to establish national facilities that will be world-beating. These will provide measurement traceability that allows hydrogen and carbon dioxide for carbon capture and storage to be traded accurately, which I understand is of the utmost importance. Would the Minister, or another Minister from BEIS, be willing to meet me and representatives from TÜV SÜD to discuss potential Government support for the proposed clean fuels metrology centre? That would provide the measurement capability for the UK that will be essential in the adoption of hydrogen as a fuel and the energy vector going forward.

Photo of Peter Aldous Peter Aldous Conservative, Waveney 3:29 pm, 17th December 2020

It is a pleasure to serve under your chairmanship, Ms McDonagh. I congratulate my hon. Friend Alexander Stafford on securing the debate. While hydrogen is the new kid on the block, and much work needs to be done to advance its use from a technical perspective and to enhance its economic viability, it is becoming increasingly clear that it will be a vital component of the zero-carbon economy.

Hydrogen is highly versatile and can be used in a variety of ways, whether in transport, heat, power generation or energy storage in industry and agriculture. It could also transform local economies all around the UK, bringing new business opportunities and new jobs to areas, many of which have been left behind. There are colleagues taking part in this debate from all around the UK. We are not in competition. The opportunities in our respective constituencies should complement each other. They are part of a jigsaw that covers all four nations, and we need to piece together that jigsaw to benefit all the communities that we represent.

The piece of the jigsaw that I shall concentrate on is Suffolk and Norfolk—including the Waveney constituency —in East Anglia. While we do not possess any significant industrial clusters, there is an opportunity to harness hydrogen across a large geographical area to create a blueprint for how it can be deployed at scale to decarbonise our energy, transport and heating systems and to revolutionise the way in which we do business, thereby bringing prosperity to the region. I shall briefly outline the opportunities available.

There is the opportunity to ensure a smooth transition in the southern North sea oil and gas basin by redeploying infrastructure and expertise built up over five decades to create a leading hydrogen production and carbon capture and storage hub around the Bacton gas terminal in the constituency of my hon. Friend Duncan Baker. From there, we could connect into the planned European hydrogen backbone, as Bacton already hosts two gas interconnectors. Hydrogen exports could provide new and important revenue streams. With a large cluster of offshore wind farms already operational, being developed or planned off the coast of East Anglia, there is the opportunity to integrate hydrogen production and storage to provide a valuable alternative to curtailing power generation at times of surplus when the wind may be blowing too much.

There is also the opportunity to reduce emissions from large emitters such as the gas-fired power station in the constituency of my right hon. Friend Brandon Lewis, which could be adapted to take a blended hydrogen fuel. This week, the Government announced their support for the Sizewell C nuclear power station in the constituency of my right hon. Friend Dr Coffey. Sizewell C has the potential to make huge quantities of green hydrogen using both electricity and heat, which can be used by transport and other industry. Next year, at Sizewell B, EDF plans to install a small hydrogen electrolyser that will fuel clean construction plant, HGVs and buses. The infrastructure for that could be made available to council vehicles and, in due course, other local businesses to run hydrogen-fuelled vehicles.

There is the opportunity to decarbonise portside operations and shipping activities at the east coast ports of Harwich, Felixstowe, Ipswich, Lowestoft, Great Yarmouth and King’s Lynn. From those ports, one would also seek to decarbonise road and rail freight. To turn to the rail network, the east Suffolk line, which runs from Ipswich to Lowestoft, is a vital link for the Waveney area to the rest of the country, but it does need to be improved with faster journey times. For that, we could use hydrogen-powered trains.

Finally, East Anglia is the breadbasket of the UK. I draw attention to my entry in the Register of Members’ Financial Interests due to family farms in Suffolk. There is an exciting opportunity for the region to be an exemplar of low-carbon agriculture, with hydrogen-fuelled tractors and combines, hydrogen-fuelled grain stores and vegetable processing plants, and environmentally friendly poultry rearing and processing facilities.

This is a compelling and exciting vision. What do we need to achieve it? Locally, we need to pull together a wide variety of interests across a large geographical area and many business sectors, so that we can promote the hydrogen economy of the east in a coherent and co-ordinated way. Nationally, Government must provide the framework for the industry to grow. The announcements in the past month are extremely welcome. The Government must now go further.

As we heard, the hydrogen strategy must be published as soon as possible. There must be a public endorsement of hydrogen as a central component in the transition to net zero, supported by a target percentage for hydrogen in the UK’s energy rates. There should be a support programme for the manufacture and deployment of UK fuel cell technologies, which matches world-class technology with investors of scale. There should be a move away from promoting competitions between regions and towards funding for well-managed, joined-up and collaborative initiatives. Finally, there should be clarity on the role of the UK’s regulatory framework with regard to hydrogen.

Hydrogen provides an incredibly exciting future for Waveney, Suffolk, East Anglia and the whole of the UK. There is a great deal of work to do. From my perspective, it is good to end what has been an awful year on an upbeat and positive note.

Photo of Chris Matheson Chris Matheson Shadow Minister (Digital, Culture, Media and Sport) 3:36 pm, 17th December 2020

It is a great pleasure to serve under your chairmanship, Ms McDonagh. I congratulate Alexander Stafford on securing this debate and his comprehensive introduction.

There was some criticism, slightly reflected in the hon. Gentleman’s positive introduction, about the comparison with other countries in terms of investment. My right hon. Friend Edward Miliband, speaking from the Front Bench earlier in the week, mentioned that. Today, however, I want to be positive about the Government’s strategy as it stands. [Interruption.] I am being positive to the Minister and supporting him. I will support the issue of financing, particularly because of a point raised by Peter Aldous, which was eloquently put, about this not being a competition but a jigsaw. I will refer back to that excellent point.

I am here to represent the case for my own region in the north-west and, in particular, Cheshire, which has a historical position in the chemicals industry through the salt mining that took place in mid-Cheshire for many years. In the energy sector, we also had strong nuclear expertise, through Warrington and Capenhurst in my constituency. Energy is part of our region’s DNA. There are offshore wind farms, which we share—as well as the ambition to drive forward our own hydrogen project—with north Wales, in the cross-border area represented by the Mersey Dee Alliance. The scheme that we are keen to promote has widespread support across Manchester, Liverpool, Cheshire and north Wales. Our local enterprise partnerships and the North West Business Leadership Team are behind it, as are the local councils.

The exciting opportunities that we have in Cheshire and Warrington will give us the chance to drive forward a new hydrogen economy at pace. Industry is at the forefront of proposals that are deliverable quickly, and which will protect and support high-value employment and can create thousands of green jobs in the local economy. One of the main projects is HyNet, which could start capturing industrial carbon dioxide emissions as early as 2025, if the Government make speedy decisions on the industrial decarbonisation challenge programme.

Hon. Members may be aware that the north-west region has the highest concentration of advanced manufacturing and chemical production in the UK and industry accounts for nearly a quarter of the region’s 40 million tonnes of annual CO2, so if the Minister can drive this forward, he will make a real difference.

As part of the projects that we are proposing, Liverpool Bay gasfield owner ENI has now been licensed to store CO2 permanently. Detailed design work is already under way on the pipelines needed to connect the Ellesmere Port industrial cluster to the CCUS—carbon capture, usage and storage—facility.

We also have the potential to start producing low-carbon hydrogen at scale by the middle of the decade, subject to the positive decision on HyNet. The Essar refinery complex at Stanlow could ultimately produce 18 TWh per year of low-carbon hydrogen for use to fuel industry and transport and, potentially, to feed into the gas networks in nearby homes. I say again to the Minister and the House: we already have the human infrastructure —the expertise—as well as the physical, in place and ready to go.

Photo of John Spellar John Spellar Labour, Warley

Time and again, even when there is the expertise, Whitehall puts new capacity down south, as it did with nuclear. There was considerable nuclear expertise in Cheshire, yet the next development was put down in Oxfordshire. More recently, with vaccine production, Whitehall had a choice between Oxford and the north-east. Once again, it chose Oxford. Must we not change that mindset in Whitehall?

Photo of Chris Matheson Chris Matheson Shadow Minister (Digital, Culture, Media and Sport)

I entirely agree with my right hon. Friend. Slightly off subject, in Cheshire we also have expertise in pharmaceuticals, and lost that to the south-east. We hear about levelling up, and I am sure that he and I will be pressing the Government to match their slogans with reality. I say that with a willingness to work with the Minister.

By the mid-2030s, HyNet could be capturing more than 25 million tonnes of CO2 per annum, or two and a half times the target that the Government hope to achieve by 2030. Together with our production capability, that makes Cheshire and Warrington, and the wider Mersey region, a prime candidate to be one of the first low-carbon industrial clusters in the UK. There are also wider domestic applications for using the gas network. Hydrogen can be stored as a pressurised gas, ready for use in the pipes. Hon. Members have already referred to that. Cheshire also has the largest UK storage capacity for hydrogen, using the network of salt caverns that I have referred to. They have excellent geological properties and are one of the more cost-effective options, making them a preferred site for development.

My plea to the Minister and hon. Members is not to set up a beauty contest, playing off one region against another, when there is capacity, capability, expertise and desire across the UK. Five clusters are bidding for funding. For them all to get what they want and need, the funding pot, I am informed, would have to be increased by around £20 million to £30 million. The alternative is to exclude one of the clusters from the funding. That is why I mentioned the question of funding at the start.

I welcome what the Government have proposed, but it would not take much of an increase for everyone to get a piece of the action, so that the jigsaw that my friend the hon. Member for Waveney talked about is not missing a piece. We all know how frustrating that can be. This is a great opportunity for all of the UK, and I hope that the Minister will seize it.

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

Before I call the next Member, I should say that we have three more Back-Bench contributions. If people agree to stick to a limit of between five and six minutes, we will get to the wind-ups in good time.

Photo of Andy Carter Andy Carter Conservative, Warrington South 3:43 pm, 17th December 2020

It is always a pleasure to serve under your chairmanship, Ms McDonagh. It is lovely to hear a time limit mentioned when I have a 25-minute talk—I will pull it right down to three or four minutes.

It is a pleasure to follow my near neighbour, Christian Matheson. He said a tremendous amount of the things that I was going to say—he must have seen my speech. However, I have learnt that when things are worth saying, say them several times, and I certainly will. I also pay tribute to my hon. Friend Alexander Stafford. He made an excellent opening to this debate, and covered so many points.

To start, may I ask the Minister a question? Has he yet been in a hydrogen car? I suspect that the answer is no. Last week, for the first time, I had the pleasure of test-driving a new hydrogen car. I will let the Chamber into a secret: it was just like driving a normal car, but with one crucial difference—there were no carbon emissions. That is the real benefit that we will get from investing in and moving forward with hydrogen.

We are quite some way from the mass roll-out of hydrogen vehicles. When we sat in a hydrogen car in Warrington and I said, “Where can we fill up?”, the answer was Rotherham, which is about 200 miles away, or perhaps 100 miles away. By the time someone had driven from Rotherham to Warrington and back, they would not be able to go to many other places without filling up. We have a huge job to do as a nation to get ready for hydrogen, because as yet there is nowhere in the north of England to refuel a vehicle.

Despite that, hydrogen is certainly the future of our long-term energy needs as we head towards net zero. We have a lot of opportunities in Warrington, Cheshire and the wider north-west to drive forward a new hydrogen economy at pace. I say that because, as the hon. Member for City of Chester indicated, energy is in our DNA in Warrington, certainly with nuclear, but with hydrogen development too.

Encouragingly, the industry in Warrington is at the forefront of proposals that are deliverable quickly and that protect and support high-value employment. We could see perhaps 6,000 green jobs in the local economy as a result of investing in hydrogen. Key businesses in my constituency, including Novelis, one of the UK’s largest aluminium recycling plants, and Solvay, a key employer based outside Stockton Heath, have been in touch to invite the Minister to Warrington to see some of the opportunities that hydrogen could present for their sectors.

By 2050, our energy system will look very different from today. One of the most advanced schemes that will contribute to that is HyNet, which could start capturing industrial carbon dioxide emissions as early as 2025—just five years away—if the Government make speedy decisions on the industrial decarbonisation challenge programme, which is my key ask for the Minister today. By the mid-2030s, HyNet could be capturing more than 25 million tonnes of CO2 per annum, which is two and a half times the national target that the Government hope to achieve by 2030. The north-west can really contribute to that target.

As the hon. Member for City of Chester said, there are wider domestic applications too. I talked earlier about driving a hydrogen vehicle for the first time. I also chair the all-party parliamentary light rail group. We have seen huge developments in hydrogen-powered trams. We have been looking at them in the United Arab Emirates, and I am looking forward to getting on a plane and going out to see them in the not-too-distant future.

For use in the gas network, as has already been mentioned, hydrogen can be stored as pressurised gas ready for use in the pipes. Cheshire has the largest UK storage capacity for hydrogen in the salt caverns, which have excellent geographical and geological properties, and are one of the most cost-effective options, which makes them a preferred site for development.

We could start to produce low-carbon hydrogen at scale by the middle of the next decade at Stanlow, subject to a positive decision on HyNet. Together with our production and storage capacity, that makes Cheshire and Warrington, and the wider Merseyside corridor, a prime candidate to be one of the first low-carbon industrial clusters in the UK. As my hon. Friend Peter Aldous said, however, it should not be a competition between areas of the UK; it has to be a jigsaw that comes together. Without every part of the UK contributing, we will not see the UK benefiting in the way that it could.

I congratulate my hon. Friend Jacob Young on his work as the chair of the all-party parliamentary group on hydrogen. I hope that he will not mind me saying that in the north-west, we have that deep manufacturing history. The project will play a critical role in our fight against climate change by producing, storing and distributing hydrogen to decarbonise the north of England and north Wales.

In short, HyNet is a game changer that will provide a bedrock to level up across the north-west. It will create about 6,000 permanent highly-skilled green jobs and deliver clean hydrogen energy into our local network to heat our homes. Businesses and investors need to be confident that their investments will deliver a reasonable return for risk, and consumers need to be confident in upgrading their heating systems with potentially costly and disruptive net zero solutions.

Dr Cameron is no longer in her place, but she made an incredibly valuable point: people do not actually understand hydrogen at the moment. I talked to my wife the other evening when we were looking at the hydrogen car and she said, “Well, how does hydrogen work?” She had never really seen it. We have a real challenge in the UK, and as a Government, to convey that message to consumers so that they understand the benefits of hydrogen.

To conclude, I look forward to seeing the UK’s hydrogen strategy in spring 2021, which should set out the UK’s business models and revenue mechanisms, and the Government need to secure the private sector investment that is needed to ensure we can get the most out of hydrogen production as we head towards net zero.

Photo of John Spellar John Spellar Labour, Warley 3:50 pm, 17th December 2020

It is a pleasure to serve under your chairmanship, Ms McDonagh. I congratulate Alexander Stafford on securing the debate and on his considerable enthusiasm and the detail with which he presented it. I think we all agree that hydrogen has considerable potential, but at present that is exactly what it is. I do not mean that in the way that the electricity industry talks about nuclear fusion—nuclear fusion is the future and always will be. I mean it as a call to action, so that we explore the production and utilisation of hydrogen at pace. One benefit of covid has been to demonstrate how, without cutting corners, we can evaluate systems and roll them out. We, particularly Whitehall, need to learn from that.

My hon. Friend Christian Matheson slightly chided me to say that we were going off topic, but given the way that the Government work, it is absolutely crucial that we get to the heart of this and change the processes within government, otherwise we will find it very difficult to survive in this future world. Key to this is the civil service’s addiction to process, with extended timescales and time not being a factor. That is true under Governments of all parties. It is enormously important that Parliament relentlessly holds it to account to get things moving.

It could be argued that both Brexit and covid enable and also force the Government to change. That means that we are compressing processes but also, and equally importantly, paralleling them: trying different approaches, seeing what works, and seeing what does not work and shutting that down.

To start with transport, buses and trains are a considerable component of the hydrogen economy and contribute to clean air, particularly in urban areas—by definition—but an important issue is where they are made. Up until now, the Government have been indifferent to where they are manufactured. We have the capacity in Ballymena, Falkirk and Leeds to produce the buses, but what those facilities need, of course, is a market. They need to get on the manufacturing learning curve. The operators need to get the operational experience and find out what the issues and problems are. There needs to be continuing feedback between operators and manufacturers, and that will of course enable us to secure the export markets that have been mentioned.

It might be that, in some conditions, batteries will prove to be better. We need to test that out and assess what will work. We need to learn the lessons that have been mentioned before about where we missed out on batteries and allowed that work to go abroad. We have the largest installation of wind farms in Europe, yet so much is manufactured abroad. Governments, including devolved Administrations, have not focused on that enough.

On domestic heating, nobody mentioned that town gas is composed of a substantial percentage of hydrogen. It might be a much better answer, as was mentioned, than heat pumps for flats and terraced properties, which is a big issue in moving to alternative form of heating.

Also, we need to look at how the production of hydrogen will take place. Let us be realistic. If we are going to roll out the utilisation of hydrogen, some of that initially, but hopefully very shortly, will need to come from hydrocarbon sources. That might be dealt with by carbon capture, but I sometimes think that that is the easy answer that people trot out to deal with that. We need to move much more towards green sources of hydrogen, and we therefore need to look at the institutional barriers. It is truly extraordinary that in the first two months of this year, National Grid paid wind farm operators £72 million to not run their wind farms. That is absurd, and it has been going on for a decade.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Energy and Climate Change)

Is the right hon. Gentleman aware that £50 million was also paid out to turn off the nuclear plant? It is not just wind farms.

Photo of John Spellar John Spellar Labour, Warley

Indeed. I was not being dismissive of wind farms; I was talking about the institutional barriers. That is not a technical barrier; it is an institutional barrier. It is the same with nuclear. The problem is that in order to qualify for the renewable transport fuel obligation that was mentioned by the hon. Member for Rother Valley, new capacity has to be utilised. We have existing capacity, even though it is not needed. At the same time, we are paying the wind farm or nuclear operators, and that is acting as a barrier to producing cheaper hydrogen. These are the sorts of areas where Ministers, with the support of Parliament, need to be cutting through. We obviously also need to look at the question of energy storage—hydrogen is an effective form of energy storage—but we need to do a proper evaluation.

I am mindful of the constraints on time. I am slightly concerned about the Government’s announcements, because I would like to see a bit more cost accounting. I would like to see a proper analysis of how much each different system is costing. I am not saying that we should not have a subsidy at a certain stage. I would like to see it being a diminishing subsidy, because we have to exercise that rather than all having our pet theories and ideas, important as they are for driving the process. We need to make sure that this is affordable going forward. If we are to compete in an international market, that is where it will really be tested—whether something is affordable or not. I shall yield to the Chair and conclude my remarks.

Photo of Claudia Webbe Claudia Webbe Labour, Leicester East 3:57 pm, 17th December 2020

It is a pleasure to serve under your chairmanship, Ms McDonagh, and I congratulate Alexander Stafford on securing this important debate. Climate breakdown is not a distant threat; it is happening here and now. The World Meteorological Organisation found that the 20 warmest years on record have been in the past 22 years. Human-caused climate change has already been proven to increase the risk of floods and extreme rainfall, heatwaves and wildfires, with dire implications for humans, animals and the environment. It is true to say that without immediate Government intervention, the urgent action required to preserve a habitable planet will be too slow. This will cause unimaginable disruption and could cost millions of lives, most immediately and sharply in global south countries, which have contributed the least to climate change.

The coronavirus crisis has demonstrated that we are only as secure as the most vulnerable among us, and that rapid social and economic change really is possible. At this unprecedented moment, the Government must consider all possible interventions and regulations in order to phase out the extraction of fossil fuels and to transition to renewables as soon as scientifically possible. Hydrogen has a crucial role to play in this endeavour, as well as in providing much-needed jobs as we rebuild from the coronavirus crisis. A report released earlier this month by the Offshore Wind Industry Council suggested that the UK’s green hydrogen industry could generate £320 billion for the economy and sustain 120,000 jobs by 2050.

I was proud to be elected on a manifesto that pledged to trial and expand tidal energy and invest to reduce the cost of renewable and low-carbon hydrogen production. Significant amounts of energy are lost in using electricity to produce hydrogen and then in burning hydrogen to produce electricity. The cheapest and therefore most widely used hydrogen is made from reforming fossil fuels, which involves using energy to convert fossil fuels into hydrogen and CO2. To make the process carbon neutral, that CO2 must then be removed by carbon capture and storage.

The production of green hydrogen through electrolysis is currently much more expensive. I challenge the Minister and the Government to commit to and focus their investment on making this cleaner form of hydrogen cheaper and more widely accessible. Otherwise, we risk the same fossil fuel companies that have profited from the climate crisis continuing to dominate and possibly even hampering our move towards renewable.

It is particularly vital that we introduce a zero-carbon homes standard for all new homes as part of heat decarbonisation. We must urgently roll out technologies such as heat pumps, solar, hot water and hydrogen and invest in district heat networks, using waste heat—

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

Order. I am terribly sorry that I have to ask the hon. Lady to bring her remarks to a close. I apologise for that.

Photo of Claudia Webbe Claudia Webbe Labour, Leicester East

Okay. The green industrial revolution on which I was elected would have upgraded almost all of the UK’s 27 million homes to the highest energy efficiency standards, reducing the average bills by £417 per household per year by 2030 and eliminating fuel poverty. That speaks to the fact that, in any green industrial revolution, it is vital that the protection of all workers and communities is guaranteed during the transition to renewable energies and a socially just economy. The climate crisis is clearly a class crisis and it must be the big polluters and corporate giants who bear the cost, not ordinary people.

Photo of Siobhain McDonagh Siobhain McDonagh Labour, Mitcham and Morden

Order. I thank the hon. Lady for her contribution. I do apologise. I call the spokesperson for the SNP.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Energy and Climate Change) 4:02 pm, 17th December 2020

It is a pleasure to serve under your chairmanship, Ms McDonagh. Like everybody else, I congratulate Alexander Stafford on bringing forward this important debate—his second debate. He has a huge interest in the subject and spoke very well on it. Believe it or not, I agree with pretty much everything he said.

Because of time constraints, I will not pay tribute to everybody who has spoken, except to say that it has been a very good debate. I agree with pretty much all the contributions. Peter Aldous said it is not a competition, but then made a very valiant plug for East Anglia. Everybody else said that it is not really a competition, but we have to be careful. The way some of the system is set up by the Government at the moment, with picking clusters ahead of others, makes it very much a competition. I would like to see a greater commitment from the Government on taking out carbon emissions, particularly through CCS, and on giving the go-ahead for five or more clusters rather than a couple at a time.

For the most part, when it comes to hydrogen, the UK Government say the right things and have set out some very welcome measures in the White Paper. If the UK and Scotland really are to be world leaders in this technology, it needs more work and greater financial commitment. The reality is that the White Paper was a year and a half late, which has had knock-on consequences for the rest of the policies that follow. The planned production of a hydrogen strategy is obviously welcome but, as the hon. Member for Rother Valley said, we cannot wait any longer. We really need that strategy to come out as soon as possible in 2021.

Germany published its hydrogen strategy in June 2020, so if we do not watch, the UK is going to be a year behind Germany. As we know, it has committed €9 billion. The £240 million net zero hydrogen fund may be welcome, but over a 10-year period, it looks quite paltry compared with Germany’s €9 billion. The UK plan target of 5 GW of low-carbon hydrogen production by 2030 is welcome, but it is the same as Germany’s. Could greater ambition be shown, to get ahead of the game?

When it comes to hydrogen business models, the UK Government are again behind the curve. The proposal to finalise those models in 2022 should and could be speeded up. We know the contract for difference process has worked well in bringing down the costs for renewables, although there are issues about the supply chain, but CfD could still be looked at for hydrogen production. Meanwhile, the effort—I am repeating myself on this point—that has gone into plugging nuclear is beyond belief. Let us put that effort into hydrogen and CCS and other low-carbon technologies.

Again, although the UK has made good progress in decarbonisation, 27 million homes are still reliant on fossil fuels for heating, and transport is still a huge contributor. In both those sectors, hydrogen will be pivotal, as has been said. On heating, we still need to see the buildings and heating decarbonisation strategy, and a future homes strategy is required. As the hon. Member for Rother Valley said, we need to look at a whole mix of options for our decarbonisation. Heat pumps, for example, are welcome, but we need a clear strategy and technology selection framework for that to develop and go forward. The way in which those measures will be paid for also needs to be evaluated, because there is a limit to what can be passed on to consumer bills. We already have too much fuel poverty in the UK; we cannot risk any more.

When looking at the 27 million homes that are still reliant on fossil fuel heating systems, and others that are reliant on electrification, it is impossible not to see hydrogen as the only large-scale conversion approach. Even so, the full large-scale roll-out of hydrogen would be in 2030, which means that every week for some 20 years, 27,000 homes will need their heat sources decarbonised. That is a huge task that requires much planning, and perhaps even an independent body to oversee it—like the switch from town gas, it will require a massive effort. Manufacturers in the UK already make hydrogen-compliant boilers, so will the Government mandate the sale and installation of hydrogen-ready boilers by 2025? That is an industry ask.

I welcome the H100 trial in Levenmouth and Fife, where up to 300 homes will be powered by green hydrogen. Interestingly, that project is funded by the Scottish Government and Ofgem, but no money is forthcoming from BEIS as yet. I wish Scottish gas networks well with that trial, and I hope that it will lead to an unlocking of money from and trials by the UK Government.

As has been touched on, hydrogen blending has long been talked about and planned as a way of initially reducing carbon emissions from the domestic heating system. There has been a lack of joined-up thinking on that, however, because, as I hope the Minister knows, the Gas Safety (Management) Regulations 1996 need to be changed to allow that blending to take place. That is a must, but the Government keep holding off on it. The Health and Safety Executive is consulting on that, but the time that we need for the consultation process, and to decide what to do and whether to change the regulations, could be a barrier to what the industry wants to do.

As my hon. Friend Dr Cameron mentioned, another facilitating requirement is a robust measuring system to allow the trading of hydrogen. That is a simple but necessary step. Those ideas have been waiting in the National Engineering Laboratory’s funding proposals for too long. The proposals ask for £10.5 million for a clean-fuels metrology centre, which could be the world’s first, and I have written to the Secretary of State about it. If the Minister could meet or write to my hon. Friend about that, it would be much appreciated.

On transport, hydrogen needs to play a major role in the reduction of shipping and aviation emissions. Again, for joined-up thinking, I urge the UK Government to include those measures in the 2050 net zero target. Those international emissions must be included if we are really serious about net zero. The Scottish Government have included those emissions in their 2045 net zero plans to drive innovation and industry. Other welcome initiatives include the world’s first hydrogen-powered crane—I welcome the Department for Transport’s £400,000 grant for that—and the setting-up of the Jet Zero Council, as well as the Airbus plans for ZEROe.

Aberdeen has led the way on buses with the introduction of 15 of the world’s first hydrogen double-decker buses. The Scottish Government invested £3 million in that project, but another £8.3 million came from the EU. In future, that money must be replaced by the UK Government if we want to roll out more hydrogen buses across the UK. As has been touched on, that is a fantastic manufacturing opportunity for bus companies such as Alexander Dennis and Wrightbus.

Will the UK Government provide a capital subsidy for ultra low emissions vehicles, including hydrogen buses? Will they consider changes to the bus service operators grant to move away from diesel buses? As the hon Member for Rother Valley asked, will any consideration be given to subsidising hydrogen as a fuel to incentivise its use? That could be done through the renewable transport fuel obligation. Again, for a forward-thinking strategy, will the Government set targets for the roll-out of hydrogen HGVs and buses? Those are all sensible measures that would help to create that step-change process.

Finally on transport, it is clear that the maritime sector is also gearing up for change. I welcome the HyDIME project—that is hydrogen diesel injection in a marine environment—that has been supported by £400,000 from Innovate UK for the design, construction and integration of a hydrogen-diesel dual fuel conversion system to take place on a commercial ferry operated between Kirkwall and Shapinsay. The project will unlock the licensing system to allow further projects to follow. Ports across the UK are looking at developing hydrogen as a fuel and the design of hydrogen-fuelled ferries.

Away from transport, Scottish Power’s Whitelee wind farm project proposed in my constituency demonstrates that the co-location of renewables and hydrogen production is on the cusp of commercial profitability. The proposal is to develop and install a combined solar photovoltaics, green hydrogen production facility and battery energy storage system in the existing wind farm site. It is proposed that hydrogen production will commence by 2023, with that sold as transport fuel within the Greater Glasgow area. That is the joined-up thinking that we really want to see developed across UK.

I cannot mention hydrogen production without mentioning Peterhead and St Fergus. The UK Government need to make up for the betrayal on that project and include it within the first CCS cluster to be given the go-ahead. I hope the Minister can confirm that while the White Paper shows only Grangemouth on the map of the UK, it will look at the overall project that links with St Fergus in the north and the hydrogen production facility. We also need the oil and gas transition deal to be signed off.

I can see I am getting a look from the Chair, so I will wind up. There are fantastic opportunities at stake here and I really hope that the UK Government grasp that. We need to see policies put in place going forward.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy) 4:11 pm, 17th December 2020

I congratulate Alexander Stafford on securing the debate, having guided it through the Backbench Business Committee process. He made an excellent case for the relevance and importance of the hydrogen economy, as did pretty much every hon. Member who spoke. It was a great pleasure to find that, far from my previous preconception, we have such a number of dedicated hydrogen geeks in this House able to put forward the debate in such a knowledgeable and concise way for our edification.

I do not need to reprise too much of that content, because we agree that the potential for the hydrogen economy in this country is not only bright but essential in our drive to net zero. We heard about how hydrogen will play a substantial role in the decarbonisation of heat and the efficiency of energy going into homes. We heard that it is more than possible to inject hydrogen into the system—after all, town gas used to be about 50% hydrogen before natural gas was introduced into the system, so it is not a new thing, but it could aid us enormously in getting down to net zero in our heating. Beyond 20%, we can envisage hydrogen towns, hydrogen islands and a whole range of hydrogen-heated areas. I was slightly disappointed to see in the energy White Paper how the Government are only thinking about consulting on hydrogen-ready boilers for the future. We need to get on with that now. Let us mandate hydrogen-ready boilers across the country tomorrow so that they are ready and we have the proper equipment to make it work when these things come to pass.

We also heard this afternoon about the role that hydrogen can play in heavy vehicular transport. I was slightly disappointed to read in the 10-point plan that the Government are consulting

“on a date for phasing out the sale of new diesel heavy goods vehicles”.

I hope that that can be done pretty immediately. We need to phase them out and replace them, as far as possible, with hydrogen-based heavy goods vehicles, because that is the obvious fuel for long-distance logistics.

We also heard about developments in other areas of transportation. Hydrogen trains and hydrogen buses are an essential part of our low-carbon fleet for the future. My hon. Friend Christian Matheson, Andy Carter and others spoke about the enormous opportunities in industrial clusters for the development and use of hydrogen. Those clusters stand ready to go now, and we need to get behind them as quickly as we can. Getting that work under way is a very important part of the future of the hydrogen economy.

I will briefly sound a little note of caution, which hon. Members did mention—albeit in passing—about the future. We need to recognise that hydrogen does not grow in the ground, but is produced; the question of how we produce it will be an essential element of the future health of the hydrogen economy. Hon. Members briefly mentioned the distinction between grey, blue, red and green hydrogen. We are getting an increasing number of colours in the hydrogen market.

Green hydrogen is, of course, hydrogen produced by electrolysis and therefore completely carbon neutral in its production and deployment. As Claudia Webbe said, grey hydrogen comes from the process of cracking it from gas, with the obvious outcome of a large amount of carbon dioxide that has to be CCS’d if it is to become blue hydrogen and have any hope of taking part in the low-carbon economy. If we allow the production of hydrogen over the next period to go into the grey rather than the green camp, we will overthrow a lot of what we want to do regarding the low-carbon element of the hydrogen economy.

I earnestly ask the Government—I raised this briefly in BEIS questions yesterday—to consider very carefully what they back with the £240 million hydrogen fund announced in the 10-point plan and the energy White Paper. If that goes into grey hydrogen production, we will not have sorted out for ourselves a very good base for the hydrogen economy in the context of low carbon. If, on the other hand, we ensure early on that we have a head start in the world on the mass production of green hydrogen, we will not only put our hydrogen economy securely on a low-carbon base, but have tremendous potential export opportunities for jobs and industry—particularly the industrial clusters that were mentioned.

It is essential that we invest early in green hydrogen to get the hydrogen economy going properly. I have seen the very interesting minutes of the meeting that the Minister got together in June to discuss those points further; that was very much an element of the Council for Science and Technology briefing that he took part in. I hope he has firmly taken the message on board about future hydrogen production. Hydrogen has a bright future, but we have to create it in the right way to make it as bright as it can be. If we get it wrong at this stage, we will regret it severely, in terms of our net-zero carbon ambitions.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy 4:20 pm, 17th December 2020

It is a real pleasure to conduct this debate with you in the Chair, Ms McDonagh. I am very pleased to be taking part. I am conscious that we have to revert back to my hon. Friend Alexander Stafford at the end, so I have only about eight minutes—that shows how full of content and well informed the speeches were. It is a real pleasure, as Energy Minister, to take part in a debate in the House of Commons with so many right hon. and hon. Members participating at such a high level. It is the House of Commons at its best.

We heard a range of opinion, but we broadly agree about the way forward and the potential dynamism of the hydrogen economy. I pay special tribute to my hon. Friend for the tireless, indefatigable way in which he pushes hydrogen at every opportunity. Even though my officials might not agree, I hope he continues to do so, because it is absolutely necessary for Members of this House to hold the Government to account. I am very happy to take part in these debates and express the Government’s point of view, share some of our thinking and respond to points that Members of the Opposition parties make.

The first thing I want to talk about is investment. One hears all the time about the German strategy—I have read the German strategy and the EU strategy this year. Ours will be different because we are looking at blue hydrogen, which Dr Whitehead alluded to, and green hydrogen. The EU and German strategies talk almost exclusively about the production of renewable hydrogen. We in this country, given our North sea heritage and the assets there, want to do both. Ours will be a very interesting strategy. It is the first ever hydrogen strategy that the Government have produced. When it is published in the first half of next year, I look forward to having more debates and answering more questions about it.

This has been an extremely busy time for the energy industry. The Government have had the Prime Minister’s 10-point plan, the second point of which was all about hydrogen. It outlined our ambition for a 5 GW capacity. Subsequent points in the 10-point plan referred to the use of renewables and decarbonised sources of fuel in jet propulsion and marine transport. A number of Members mentioned the role of hydrogen in transportation. It is absolutely right that we should be focusing on HGVs, for which it is particularly suited.

I can say to my hon. Friend Andy Carter that I have been in a hydrogen car. I was not driving it—I was there in a ministerial capacity, so someone else was driving—but I look forward to taking that step in the imminent future.

My hon. Friend Christian Matheson have done a great job in this debate of highlighting the strengths of the HyNet industrial cluster. Everyone has said, “Let there not be a beauty contest,” yet they have been very good at presenting the particular attractions of their areas. They have done a very good job on that. I am on the record as having pledged to visit HyNet, hopefully in the next few months. I have spoken to representatives of the cluster on Zoom and in various other forums, and they are doing a fantastic job in pushing this agenda.

On deployment, Alan Brown said that we should be going faster. We can always be going faster, and he is absolutely right to be holding the Government’s feet to the fire. We should seek to deploy a lot of these business and financial incentives earlier, and I am working closely with officials to do that. However, I cannot stress enough that the success of the hydrogen deployment will involve a substantial degree of private capital and private investment. If we look at the deployment—the success—in making the offshore wind industry in this country the biggest installed capacity of any country in the world, we see that the reason it happened was that something like £94 billion has been spent since 2010—the vast majority of which was private capital. It was not merely a function of the Government writing cheques; it was a function of the Government creating a framework and creating a CfD process, which private capital could participate in and spend and deploy the resources to develop the capacity. So I have to stress—it always comes up, and it is quite right for Opposition Members to push the Government on it—that ultimately the strength of the investment and the vast majority of the capital that will be deployed will come from private sources, which is a recipe for success.

I should mention the fact that we have hydrogen trials and that the Prime Minister announced in his 10-point plan that we want to see a hydrogen town. The hon. Member for Kilmarnock and Loudoun rightly raised the issue of the gas standards needing to catch up with the potential of hydrogen deployment. I have a conversation on that subject with colleagues in the Department of Health and Social Care on a regular basis, because ultimately that is their responsibility, given the health impact and the relevance to health and safety.

There are so many other points that I want to raise. Dr Cameron, who is no longer in her place, made a very good point about how we should try to bring the public with us. Even today, there is not much knowledge or engagement from our constituents or from people across the country with regard to hydrogen issues. It is quite legitimately a job of Government to improve that situation. However, it is also the job of all of us as MPs to try to get that message out, because it is not simply the Government who have the platform—the bully pulpit. Each and every one of us here, as individual MPs, can also make the case.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

The right hon. Gentleman has wonderful timing; I was just coming to the points that he made. He made some very good points, particularly—if I may say so—about town gas. He is quite right, and the hon. Member for Southampton, Test made this point as well, that the transition from town gas to natural gas that happened in the 1960s and 1970s was a whole-country endeavour. He is also right to point out, as I think the hon. Member for Southampton, Test also did, that town gas was largely composed of hydrogen. So in a way, having hydrogen in the gas network is not so novel an idea; it has happened before. Of course it was a much dirtier gas then, but hydrogen as the basis of a heating system is something that we can certainly achieve.

The last thing I will say before I conclude—

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

We can discuss that issue at another time; I am afraid that I am limited by time constraints today.

The last thing that I will say in conclusion is that this is not a beauty contest; there is huge opportunity for every part of the country to benefit from the hydrogen revolution. I look forward to speaking to right hon. and hon. Members about how we can best deploy capital in the levelling-up agenda. The fact that HyNet is represented by Members on both sides of the aisle, and also other areas, is a really good sign. We can work together to bring about the hydrogen revolution.

Photo of Alexander Stafford Alexander Stafford Conservative, Rother Valley 4:29 pm, 17th December 2020

Very briefly, I listened carefully to what the Minister said. I noticed his use of the term “the hydrogen strategy in the first half of next year”; I was under the impression that it was in the first quarter of next year. I just wonder whether it has been pushed back. I also remind him about my comment on RTFOs.

I thank all hon. Members who have taken part in this debate—there were great speeches. I completely agree with Dr Cameron, who talked about bringing the public on board with us. We need to explain why hydrogen is better. It is very simple to understand an electric vehicle; I think people get confused by hydrogen cars and engines. We need to explain hydrogen. The Government have a job to do on that.

I thank my hon. Friend Peter Aldous for talking about agriculture. That is a sector that I had not actually thought much about, but he is right—Rother Valley is 75% rural, and we can put hydrogen into our tractors and our processing equipment. It covers everything.

My hon. Friend Andy Carter and Christian Matheson talked about local companies, which I mentioned. It just shows that everyone can benefit.

Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).

Sitting adjourned.