Gas will “play a crucial role for many decades to come” in the UK’s energy mix and can help to decarbonise heating, transport and industry, but clear policy direction is needed if the sector is to remain compatible with the government’s clean growth goals.
That is the conclusion of a major new report from grid operator National Grid, which sets out its vision for the role of gas in the energy market as the UK works towards meeting its decarbonisation targets.
Published on Friday, the Future of Gas report emphasises the urgent need for “national policy clarity” and a clear strategy for decarbonising the UK’s gas infrastructure.
Across all of its different energy mix pathways through to 2050, National Grid said there was a “clear, enduring need for gas” to unlock economic opportunities, improve air quality, and cost effectively meet the UK’s statutory climate change targets. But it also acknowledged concerns amongst green groups that the UK risks locking itself into fossil fuel infrastructure that could break long term emission reduction targets, unless investment in emerging low carbon gas-related technologies is ramped up.
At present, eight in 10 UK homes use gas for heating, while natural gas also provided 42 per cent of UK’s electricity in 2016. However, the government acknowledged in its Clean Growth Strategy last year that decarbonising heating across both households and industry – which accounts for around a third of emissions – represents a major challenge for meeting climate targets.
In its report, National Grid examines the potential role for hydrogen, biogases and carbon capture utilisation and storage (CCUS) in shifting the UK’s heating sources away from higher carbon fossil fuels, although it stresses “the ability to keep options open is key”.
However, in order to support low carbon innovation and investment in these areas, the report argues “action is needed now to remove the policy gaps and barriers to decarbonising gas”, adding that industry, government and regulators should work closely together on deciding solutions.
For example, National Grid said a national rollout strategy for low carbon heat using only electric heat sources would mean converting 20,000 homes per week from 2025 to 2050.
As such, the report calls for a heat oversight body to be established in order to undertake a cost-benefit analysis of options for decarbonisation, with a view to making a decision on the best approach by early in the 2020s.
“Pioneering in this field will allow the UK to create new industrial and export opportunities through innovation, skills and services,” the report states. “This can be through utilising the UK’s existing strengths from the oil and gas sectors, as well as new opportunities from moving to a hydrogen economy, utilising biogases and low carbon heat networks.”
The intervention follows National Grid’s first gas deficit warning in eight years when a week of cold weather and snow hit the UK earlier this month. The shale gas industry claimed the warning demonstrated the need for greater domestic gas supplies, but green advocates put the situation down to an overreliance on gas instead of lower carbon alternatives alongside insufficient action to improve energy efficiency.
Speaking in the House of Commons last week, energy and climate change minister Claire Perry described the warning as “an entirely normal signalling”, adding that “at no point was domestic energy supply under threat”.
Elsewhere, the report said fast tracking CCUS was “vital” in supporting the UK’s low carbon gas ambitions, and it urged the government to earmark specific projects as early as next year for the £100m carbon capture funding promised in last year’s Clean Growth Strategy.
CCUS, it said, could be used to capture and store emissions from existing natural gas or biofuel power stations and industrial sites, while also producing low carbon hydrogen gas for use in heating and transport.
But in order for CCUS projects to be operational by the middle of the next decade – such as that proposed at an industrial site in Teesside – a CCUS council should be established alongside a decision on government funding by the end of 2019.
Dr Luke Warren, chief executive of the Carbon Capture and Storage Association (CCSA), welcomed the report, which he said demonstrated how crucial CCS was to meeting the UK clean growth ambitions.
“By removing emissions, CCUS enables gas to have a long-term future in a low carbon economy,” he said in a statement. “This will provide value to consumers against more costly alternatives. We strongly support National Grid’s recommendation that the first CCUS projects must be in operation in the 2020s. Industry and government must now work together to deliver a CCUS deployment pathway that enables the UK to benefit from this critical technology.”
National Grid’s analysis also points to the key role of gas in decarbonising transport, with the latest provisional greenhouse gas emission figures recently showing that transport has leapfrogged energy as the single biggest emitting sector of the UK economy.
The report calls for coordinated action to encourage gas as a means of reducing carbon emissions from commercial transport such as heavy goods vehicles (HGVs) and buses in the short term, as well as developing hydrogen fuel cell transport options for the longer term.
While diesel powered HGVs account for only five per cent of vehicle miles in the UK, they are also responsible for 18 per cent of road transport greenhouse gas emissions and 16 per cent of NOx emissions. Gas is “the only commercially viable solution available today to decarbonise” HGVs, it added.
“Policy makers, regulators and the industry have the opportunity to come together now to create a smooth transition to decarbonised gas, which will support not only the low carbon transition, but a low carbon future that delivers for all consumers,” the report concludes.
The Department for Business, Energy, and Industrial Strategy (BEIS) was considering BusinessGreen’s request for comment at the time of going to press.
It remains to be seen which path the UK will take towards decarbonising its domestic gas and heating sector, on which it remains heavily reliant at present. Ministers have signalled both publicly and privately that they are well aware of the challenge and some funding for CCUS and hydrogen trials has been promised as part of the Clean Growth Strategy. But National Grid’s analysis adds to a growing feeling across the energy industry that more ambitious and urgent policy action is sorely needed. Gas has a role to play, but only as a bridge towards a greener energy system.