The annual cost of delivering a net zero gas grid could prove up to £13bn lower by 2050 if the UK switches to low carbon gases such as biomethane and hydrogen alongside the transition to renewable electricity sources.
That is the conclusion of a new industry report, which offers a counterpoint to calls for a decarbonisation programme that focuses heavily on the large-scale electrification of heating systems.
Launched today, the analysis argues a net zero UK gas and heating system is deliverable over the next three decades if action is taken swiftly to scale up carbon capture storage and utilisation (CCUS) capacity, commercialise green hydrogen production, and step up investment in energy efficiency measures alongside any roll out of electric heating systems.
It argues that a “balanced pathway” towards a net zero gas grid would come at a total system cost of around £109bn a year in 2050. In contrast, it estimates that restricting low carbon and renewable gases in favour of relying on electricity alone, which would require a major rollout of heat pumps and district heating to satisfy the heating demands of 23 million UK homes, could cost around £122bn a year by 2050.
The findings come in a new report commissioned by the Energy Networks Association (ENA) that marks the industry’s first attempt at drawing up a viable pathway to a decarbonised gas network by 2050 following the UK government’s adoption of a net zero target over the summer. The research was carried out by consultancy Navigant and independently reviewed by Imperial College London.
Decarbonising the gas network will form a critical part of the UK meeting its statutory net zero greenhouse gas emissions goal, However, heating – which is at present largely provided by natural gas in the UK – is widely seen as one of the biggest and most urgent challenges.
Yet at present the UK lacks a clear strategy for decarbonising gas and heating, and the Committee on Climate Change has said such a plan needs to be developed within the next two yearsto unlock the necessary investment in CCUS, hydrogen production, and heat pumps.
The ENA’s new report argues that delivering the most cost effective decarbonisation path would involve the government mandating ‘hydrogen-ready’ boilers in homes, overhauling gas metering and billing regulations, and building hundreds of biomethane and biomass plants over the next decade.
The government has promised to set out details of its plans for heating and gas decarbonisation early next year in its long-delayed Energy White Paper, but with a General Election now taking place in December there is no guarantee it will ever see the light of day. Labour, meanwhile, would likely take a different path to the Conservative Party, after last week setting out a plan to deliver net zero energy system as soon as the 2030s centred on a major rollout of heat pumps.
The differing routes for decarbonising heating remain subject of fierce debate. Writing on BusinessGreen earlier this month, Tim Rotheray of the Association for Distributed Energy (ADE) warned that there was a risk that hydrogen’s use as a heating fuel could be over-hyped.
“Imagine a world where we manage to create abundant zero emissions hydrogen,” he wrote. “The sectors that are going to hoover it all up are these hard to tackle areas. In fact, I imagine a stiff competition for them because we will probably have to build power stations just to meet their demand for hydrogen. Even a future abundant supply will be matched by an abundant demand from these five sectors. Sectors that have very limited choice.”
He added that in this context “burning hydrogen just to make warm air (21C) and hot water (up to 60C) in homes seems unwise”. “In a world of high demand and limited supply, the result is a high price,” Rotheray explained. “These energy-hungry sectors with an obligation to decarbonise and limited options will probably keep hydrogen prices high. So to go on a programme of heating homes with hydrogen risks creating high heating bills for homes for years to come.”
However, advocates of hydrogen maintain that plummeting renewables costs could provide a pathway for abundant, low cost green hydrogen, and under such a scenario it could provide a relatively seamless replacement for natural gas.
But whichever pathway is chosen, ENA chief executive David Smith today called on policymakers and regulators to urgently get moving to accelerate the pace of heat decarbonisation. “We are facing a climate emergency and now is the time for action,” he said. “It is now for government, the regulator and industry to build on that success and create the right policy and regulatory environment to attract the investment required to deliver the world’s first net zero emissions gas network for the public.”
Both scenarios set out in today’s ENA report would necessitate the eradication of fossil fuels from the gas grid, as well as an overall reduction in the volume of gas used by homes, businesses and industry in 2050 in favour of an upscaling of electrification and energy efficiency.
At present end-use gas demand stands at around 820TWh, but even with a widespread switch to low carbon gases over the next three decades, the report estimates demand would have to fall to 440TWh, or even further to 220TWh under the heating electrification scenario.
A major overhaul of the UK’s gas and heating systems, not to mention the efficiency of its building stock, is therefore required in either case. But the report maintains that a balance of heating electrification alongside low carbon gases such as biomethane from anaerobic digestion (AD) and biomass energy plants and hydrogen generated from renewable electricity presents the cheaper and most optimal pathway.
One of the first in a suite of measures the report recommends is mandating new boiler installations in homes to be ‘hydrogen-ready’ so they are able to operate using H2 once production of the gas scales up to replace natural gas.
Moreover, a comprehensive energy efficiency programme to tackle fuel poverty and reduce demand for homes heating, alongside changes to gas safety, metering and billing regulations to allow hydrogen onto the system would also provide a springboard for heating decarbonisation, it argues.
Around 20 new AD plants – which produce gas and electricity from waste or agricultural products – would need building each year from 2020, rising to 40 from 2029 onwards, while large-scale trials of CCUS to provide the bedrock for UK-wide hydrogen supply chain would need to start by 2026 at the latest, it adds. Developing hydrogen clusters in different UK regions could also harness excess energy from renewables and high-carbon industries, while also delivering co-benefits for fuelling heavy transport such as trucks and ships.
The report argues low carbon gas alongside heat pumps where appropriate can be delivered with minimal impact on the public, providing the same heating services as today. But it emphasises the need for a major upskilling of the UK workforce to provide the engineering, installation and plumbing expertise for the transition to green gas sources and heat pumps.
Of course, with the ENA counting gas network companies among its members, it is perhaps unsurprising the report favours a replacement of the existing natural gas system with green gas alternatives, rather than wholesale electrification. And there are undoubtedly many sceptics who continue to argue developing a large-scale hydrogen supply and delivery system across the UK would be a hugely complex and costly venture – indeed the CCC itself said last year “there isn’t a market for hydrogen at the moment”.
But the analysis nevertheless presents a compelling pathway for heat decarbonisation that should provide food for thought for policymakers as the election campaign gets underway – particularly as, after years of inaction, there are signs politicians of all stripes are finally mulling how best to decarbonise the gas grid.
After all, there are no easy solutions to decarbonising heating and gas in the UK, and as such whoever takes charge after the upcoming election will need deliver an ambitious new policy programme, whichever pathway to net zero they opt for.
As today’s report concludes: “The energy transition must be completed in 30 years if the 2050 net zero target is to be met. Historical precedents suggest that this will be extremely challenging without significant government intervention.”