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23 July 2020

UK fund to kickstart decarbonization is tiny, just £350m

The UK will place hydrogen and carbon capture at the core of its industry decarbonization, following a £350 million boost to fuel green recovery, announced this week. But compared with other countries in Europe, the amount seems tiny.

As part of the country’s drive to reach net zero emissions by 2050, the injection of finance aims to help businesses slash emissions across heavy industry, construction, space and transport. This also comes alongside the inauguration of the country’s Jet Zero initiative, which had its first meeting this week, aiming to create a net zero future for aviation.

The paltry £350 million is unlikely to make any real dent in the investment required for the UK’s industrial sector to reach net zero, but the range of programs that it will fund will hope to point companies in the right direction and prompt their early transition to green power.

“The UK now has a huge opportunity to cement its place at the vanguard of green innovation, setting an example worldwide while growing the economy and creating new jobs” said Prime Minister Boris Johnson in announcing the policy, also highlighting that the UK has cut carbon emissions by a greater percentage than any other developed nation since 1990; down 42%.

The £350 million package will be split across four sectors. The first will see £139 million directed into heavy industry, to aid a transition from natural gas to clean hydrogen, while also scaling up carbon capture and storage technologies, which the government claims can stop over 90% of emissions being released. Funding will be made across 12 projects, with the potential to cut 20% of emissions by 2030.

You won’t have to read too many issues of Rethink Energy before you see our opinion on CCS – technologies in the sector are being developed at a sluggish rate, especially when compared to renewables, storage and hydrogen, and the capacity build out has always fallen short of that expected by organizations like the IEA – again while Solar and Wind have raced ahead. Capture rates can often be as low as 20%, rather than the 90% stated by the government, and the price of the technology alone should be enough of a deterrent; Rethink Energy has forecast that the inclusion of CCUS will double the amount of stranded assets in the gas power sector by 2040.

One of the cases for CCUS is in the production of blue hydrogen, in the absence of enough renewables to create sufficient green hydrogen to supply an ever-growing demand. But this £139 million portion of the fund should just focus on green hydrogen production and developing industrial infrastructure to incorporate a higher proportion of hydrogen blended into the gas mix.

Most European countries without domestic gas production have already committed themselves to green hydrogen, without using blue as a stepping stone. While the EU has been more agnostic, roadmaps have been formed in large economies without the need for CCUS in the hydrogen sector, which also has the benefit of removing the risk of greenwashing.

It’s possible that persistence with CCUS is an indicator of Drax, the UK’s largest emitter and leading provider of gas-based power, pulling some strings – there’s even a Drax employee on the country’s Committee for Climate Change. On a side note, this week ClientEarth won the right to appeal against a High Court Decision, which upheld planning approval for Drax’s 3.6 GW gas project, with promises of biomass and CCUS speculative at best, and the argument that the plant goes against the country’s ambition to decarbonize as soon as possible.

The second chunk of the new funding details £149 million for innovative materials in heavy industry, through 13 initial projects which will reuse waste ash in the glass and ceramics industry, as well as the development of recyclable steel. In the steel sector in particular, we hope that some of this funding is earmarked for the early transition to hydrogen-based production, similar to that we’ve seen at the Hofors steel mill in Sweden, as a collaboration between Ovako and Linde Gas.

More modest parts of the program include: a £26 million boost for new building techniques which minimize carbon emissions; £10 million for new construction technologies across 19 projects, including the use of reusable materials and digital clones of smart buildings; £15 million for a New National Space Innovation Program, largely to fund climate change monitoring; and opening up bids for a further £10 million for R&D in the automotive sector.

This fund builds on other measures put in place by the UK government this year, including a ban on the sales of new petrol, diesel and hybrid cars by 2035 (which may move to 2032 or even 2030, shortly), as well as a £1 billion budget to support the rollout of low emission vehicles – largely EVs – across the country.