In its webinar, Gas Goes Green: What is the role for hydrogen in the future support for low carbon heat?, held on 1 July, the ENA hosted speakers from the Renewable Energy Association (REA), KPMG and Northern Gas Networks (NGN) to discuss the government’s announcement of a Green Gas Support Scheme (GGSS) and its relevance for hydrogen.
The event was structured around four key questions on decarbonising heat, including:
- Are the government’s proposals on decarbonising heat sufficient?
- What is the most appropriate market-based mechanism for green gas support in the long-term, and how might this operate?
- How can the GGSS support the role of hydrogen?
- What are the main barriers and solutions for deploying biomethane anaerobic digestion plants?
All speakers welcomed the proposals by the government, but emphasised that they are not sufficient to meet heat decarbonisation targets. However, Gaynor Hartnell, REA Head of Transport/Fuels and Landfill Gas, noted the purpose of the proposals as a tie between the end of the Renewable Heat Incentive (RHI) scheme and the start-up of a new long-term mechanism. KPMG Associate Director for Power and Utilities, James Mackay, outlined the immediate requirement for a national framework for decarbonising heat, with appropriate focus given to hydrogen. Alongside this, Mackay stressed the requirement for a comprehensive public engagement plan to create awareness around the changes net zero will create for consumers. Ashley Muldrew, NGN Senior Analyst, referenced the need for government to set out specific plans for net zero in heat decarbonisation, with more ambition given to reflect net zero targets.
In terms of market-based mechanisms for green gas support in the long-term, all speakers were in agreement that an obligation on suppliers was likely to be the most effective, with 40% of event attendees also favouring this option (Figure 1). Reasons for a preference for an obligation on suppliers approach, either based on carbon intensity or volume of green gas inject, included the ability to allow for a gradual reduction in the carbon intensity of gas whilst allowing many gases to compete. James Mackay raised the possibility for a combination of mechanisms, such as an obligation on suppliers in tandem with carbon pricing. Gaynor Hartnell highlighted issues with a Contracts for Difference (CfD) approach being the risk of favouring very large projects as has been the case with offshore wind.
The GGSS scheme was unanimously viewed as a short-term policy approach. All speakers urged for there to be greater focus on incorporating hydrogen into a longer-term market-based mechanism, rather than misusing time and resources on incorporating it into the GGSS. James Mackay identified local area energy plans as essential, with the need for specific consideration across each geographic region. He urged the government to engage with local entities and the private sector to determine true hydrogen potential.
On facilitating biomethane development, Gaynor Hartnell stressed that the GGSS scheme must be kept simple and avoid technicalities incorporated into the RHI schemes. She also highlighted the need for standardisation across gas network operator areas, a focus on driving down feedstock cost and a more serious consideration of other potentially competitive technologies such as bio syngas.
The event gave a good view on the current policy approach to decarbonising heat and what is required from policy in the long-term. All speakers were in agreement that hydrogen will be essential for decarbonisation, and that a strategy, along with a well-designed market-based mechanism, will be necessary for long-term heat development.