It’s official – Britain’s green energy revolution is underway. Under pressure to address soaring energy bills and reduce reliance on Russian fossil fuels due to the Ukraine war, Boris Johnson has published his long-awaited energy strategy. This promises “a power supply that’s made in Britain, for Britain.”
What’s on the menu? More solar, with plans to increase the UK’s current 14GW solar capacity fivefold by 2035. More offshore wind, with a new target to generate 50GW of energy from turbines by 2030, thanks to relaxed planning laws. Hydrogen production will also be ramped up, with a target to double it in the UK to 10GW by 2030. There’s a promise to increase energy efficiency in homes and businesses and a new government body called Great British Nuclear will deliver up to eight new nuclear reactors before 2030.
So far, so green. While nuclear power may not be strictly speaking renewable (since it uses up radioactive fuel), it is the second-largest source of low-carbon energy in the world. But here’s the rub: “Net zero is a smooth transition, not an immediate extinction, for oil and gas,” the Prime Minister pointed out in his introduction to the strategy. It takes time to set up the infrastructure for a green energy transition and it’s expensive.
To bridge the gap, the strategy sets out plans for a new licensing round of North Sea oil and gas projects this autumn and a review on shale gas. This has prompted anger from campaigners, who argue that as head of the UN’s climate negotiations process following COP26, the UK should be leading the move away from fossil fuels, not promoting their use.
But the reality is that Britain is doing rather well compared with other countries in the race to decarbonise, doing so faster than any other G20 country since 2000. In 2019, greenhouse gas emissions from electricity generation were down 12 per cent on 2018 levels and 71 per cent lower than 1990 levels. The share of low-carbon electricity generation rose to 59.3 per cent in 2020, with renewables at a record 43.1 per cent.
Ahead of COP26, the government announced it was bringing forward the deadline to decarbonise the UK power system by 15 years to 2035. The Balanced Net Zero (BNZ) Pathway, set out by the Committee on Climate Change, outlines how the majority of UK energy consumption will shift from fossil fuels to electricity. Electricity demand will, according to the report, increase by about 50 per cent by 2035 as it becomes the primary fuel for the transport and building sectors. Meanwhile, electricity will experience a steep reduction in emissions by 2035, to 88 per cent below the 2020 baseline.
Renewables, particularly offshore wind, are a key part of this. But they come with their own problems, namely their intermittent character. You cannot always rely on the wind to blow, as we saw when the UK was embarrassingly obliged to fire up its coal power plants to keep the lights on at COP26.
One solution is to use batteries to store renewable energy until we are ready to use it. Our client Sunlight Group Energy Storage Systems is committed to playing a central role in the transition to clean energy in industrial and motive applications. It is increasing its battery manufacturing output capacity to 7GHh annually and has invested €105m in the company’s research and development department.
Another solution is hydrogen fuel cell technology. As a gas, hydrogen can be combusted in a boiler, turbine or engine, but it can also be stored in fuel cells at large scale and transported. The UK Hydrogen Strategy argues that hydrogen is critical for the UK’s transition to net zero, helping to bring down emissions in the industrial sector. It plans to produce blue hydrogen, made from burning fossil fuels within carbon capture and storage systems, and green hydrogen, produced by electrolysis with very little environmental impact. UK companies, it says, can offer world-class innovation and expertise to growing domestic and international markets.
British business is already on the case. Based in Sheffield, ITM Power manufactures market-leading PEM electrolysers which convert green electricity to green hydrogen for storage. Johnson Matthey has just announced it is teaming up with 8 Rivers Capital to produce clean hydrogen using the latter’s carbon capture technology.
The work has begun, but the UK hydrogen economy will have to scale significantly and quickly if the race to net zero is to be won. The government’s £240 million Net Zero Hydrogen Fund will go some way to helping, as will its £60 million Low Carbon Hydrogen Supply 2 competition. But the cornerstone of its plan is to stimulate £4 billion of private sector investment in the UK low carbon hydrogen markets in the 2020s.
The European Commission has made hydrogen production one its key solutions to “terminating our dangerous overdependence on fossil fuels from Russia”, which it believes can be achieved well before 2030. It is planning a Hydrogen Accelerator, which will develop the infrastructure, storage facilities and ports and replace demand for Russian gas with an additional 10 million tons per year. Siggi Huegemann, of our client the African Hydrogen Partnership, says that amount is significant, producing enough fuel for 100 million hydrogen fuel cell passenger cars.
There is a long road ahead, but things are moving in the right direction – perhaps faster than most might realise. Renewable energy produced more of the world’s electricity than coal last year, according to energy think tank Ember. Clean energy sources generated 38 per cent of the world’s electricity in 2021, more than coal, which generated 36 per cent. As Dave Jones, Global Lead at Ember, says: “Wind and solar have arrived. The process that will reshape the existing energy system has begun.” Here at Wilful, we look forward to supporting businesses that are coming up with innovative ways to decarbonise our energy sector and help the transition to a cleaner world.
