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News 22 February 2021

Why decarbonisation requires green gas incentives to succeed

We take a look at what needs to be done to move the emerging green markets forward. 

Hydrogen

Despite the pandemic, climate change is still the defining topic of our time. The Covid-19 crisis provided us with a small insight into what radical change can achieve, with reduced pollution levels and significantly lower carbon emissions. However, this cannot continue and has already been reversed in many areas. The long-term impact of climate change is rising temperatures impacting weather, food production, disease, economy, and living conditions.  

The solution is to decarbonise our world, from energy production, mobility, and industry, right through to our own homes and how we produce and buy our food. Decarbonisation is the conversion to a new economic system that sustainably reduces and compensates the emissions of carbon dioxide, with a long-term goal of creating a CO2-free global economy. 

The UK has committed to reaching Net-Zero carbon emissions by 2050, by enshrining this goal as law and announced a £3bn investment in low carbon technologies in 2019. 

Decarbonisation is being achieved by increasing the share of low carbon energy sources, but for decarbonisation to be more widely adopted, low carbon energy needs to go further than green electricity, and this requires a structural economic change. 

  

What should the government be doing to support industry? 

Here in the North West, we have a region that hosts a diverse and large part of the UK industry. The answer is not in a single ‘golden’ solution, but in a wide range of decarbonisation strategies and funding streams that support industry to move itself, and the emerging ‘green’ markets forward. 

One route for industry to decarbonise, whilst staying competitive on the global market, is for the government to provide significant grant funding to support the development of industrial hydrogen clusters, in particular in the North West where there is the perfect mix of industries to provide and utilise all aspects of a Hydrogen economy, from production, storage, CO2 capture and use and utilisation of Hydrogen. Supporting industry to prove the technology and confirm the economics of hydrogen economy is essential. Hydrogen is indeed the only realistic path to decarbonise energy-intensive industry where electrification is not possible. 

There is also the emerging biomethane market. Biomethane is a renewable version of Natural Gas and again the North West and its farming community is well placed to move into this market with the support of green gas incentives.  

The Natural Gas storage industry can easily accommodate biomethane and hydrogen. These future-proof assets can meet the growing flexibility needs of a low carbon energy system. Beyond that, the provision of government funding would enable a joint enterprise to develop a pilot salt cavern bulk hydrogen store in the North West. In continental Europe, Storengy is already taking part in the Hypster[1] project. The UK risks being left behind if the development of the low carbon technology of tomorrow is not supported with suitable funding schemes. 

Being at the forefront of offshore wind energy development, the UK has a fantastic potential for energy storage salt caverns to be used to store surplus renewable electricity as hydrogen. That hydrogen can be converted back to electricity during high demand periods, contributing to reducing the grid balancing cost, or supplying to the industry at a competitive cost. 

  

What are energy-intensive businesses doing on the road to net-zero? 

Energy-intensive businesses are already well on their way with their decarbonisation strategies, seeking cost-effective opportunities to decarbonise across a wide range of areas, including heat, process, and mobility. However, without government incentives, their conversion to net-zero may not be aligned with the government target of 2050. 

At Storengy UK, we are looking at all aspects of our business to understand how we can decarbonise. This includes the installation of solar arrays, production of carbon-neutral renewable gas, minimisation of methane emissions, introducing electric cars/charging points, energy reduction projects, and carbon offsetting. We already have a road map to carbon-neutral energy use by 2025, however, we need to look further to support a true carbon-neutral position. 

  

What opportunities are there for the region? 

The North West has a significant number of large energy users in a relatively small geographical area, combined with the benefits of local depleted gas fields that could be used for carbon capture and salt caverns for bulk storage of hydrogen. The HyNet project offers the opportunity through hydrogen to decarbonise a significant number of large energy users with the lowest infrastructure cost in the UK.  

The region also has numerous farms and agro-industry which can provide the feedstock to produce bio-methane, reducing both greenhouse gas emissions and imports of fossil fuel natural gas, while providing local farmers and businesses with development opportunities. Compressed biomethane is a fantastic carbon-neutral fuel for farming and heavy goods transport, particularly for back-to-base fleets. 

Whether as a source of power generation, a vector for energy storage, or fuel for transportation, hydrogen, and biomethane can play a variety of roles to help meet the decarbonisation challenges faced by an economy powered by fossil fuels. 

Storengy UK has become the operator of reference in the UK energy storage landscape with the successful development of the largest natural gas storage site in the country. This asset is already bio-methane ready, and we believe that we now have the opportunity to become the number one provider of hydrogen storage solutions in the North West.  

  

How easy will it be for businesses to switch to cleaner energy sources? 

Where energy-intensive businesses operate in many different countries, it is easy to move production to the country with the lowest cost of energy. This makes it difficult for businesses to move towards cleaner energy sources without some form of incentive. Their decarbonisation targets will be aligned to what is happening within their key operating locations. 

Governments need to be careful when setting energy policy, as energy prices and carbon taxes can distort competition in the world market and drive industries to low energy cost countries. 

By using alternative sources of energy as outlined, industries can reduce the amount of CO2 emitted into the atmosphere and can help to slow the effects of climate change. 

A study by Carbon Brief in 2019 found that the UK’s carbon emissions have decreased by 38% since 1990, which is faster than any other developed nation. However, this was mainly due to the reduction of the carbon intensity in the electricity sector, particularly with the closure of coal-fired power plants.  

Now that the UK has picked the low-hanging fruits, we need to find innovative solutions to decarbonise the industry, heavy goods transport, and the heat sector. We are convinced that biomethane and hydrogen offer the most cost-effective solutions, but this will require massive funding. 

As we want to build back better, now is the time to look at our options to decarbonise the industry, keeping in mind that electrification is only part of the solution and that the development of green gases (hydrogen and bio-methane) is now the priority for the country. 

 
 
 

[1] https://www.storengy.com/sites/default/files/mediateque/pdf/2021-01/Press%20release%20HyPSTER%20-%20European%20demonstrator.pdf