Ahead of the Spring Budget 2024, the National Infrastructure Committee (NIC) has called for “increased levels of investment” from UK government officials.
In an open letter to the chancellor of the exchequer, Jeremy Hunt, and secretary of state for energy security and net zero, Claire Coutinho, the NIC chair, John Armitt, asked for quicker decision-making and further funding for renewable projects.
The letter focused on business models for hydrogen production and carbon capture and storage (CCS) plants, suggesting their current level of support will not be enough to achieve 60GW of short-duration flexibility and 30TWh of persistent, flexible generation by 2035.
NIC said at least “£40 million of development expenditure (DEVEX)” will be required annually in order to deliver the new hydrogen and CCS pipelines for 2035.
Armitt also argued that the policy mechanisms take too long to decide on, citing the two-and-a-half-year gap between issuing a call for evidence on support for long-duration energy storage (LDES) and consulting on specific measures as a key example.
When focusing on hydrogen storage development, NIC said that the current plan to support two projects means the “vast majority of the 8TWh required” will not be in operation until very close to the 2035 target.
Referring to Contracts for Difference (CfD) as a “well-established business model”, the letter asked why similar business infrastructure is not yet available for hydrogen transport and storage.
Partners in objection
This is not the only recent call out of the UK government’s net-zero strategies, as many other officials invested in the renewable energy sector want their voices heard before the Spring Budget is finalised and announced on 6 March.
For example, Scotland’s deputy first minister and cabinet secretary for finance, Shona Robinson, wrote an open letter to the government, urging Jeremy Hunt to address fuel poverty challenges in the Budget.
Moreover, global assurance and risk management provider DNV released a report which suggested that net zero seems to be stalling, citing disappointing results of the latest wind allocation round, uncertainty around decarbonising home heating, and hydrogen’s role in the UK as areas of concern.
The report suggested that the government should prioritise creating a clear and consistent policy for this ever-evolving sector.
Is the UK government answering the call?
In response to the advice and criticism offered in these reports and letters, the Department for Energy Security and Net Zero (DESNZ) has taken action by opening a call for evidence today (27 February) to help inform the design of the hydrogen and Carbon Capture, Usage and Storage (CCUS) Green Industries Growth Accelerator (GIGA) supply chain fund.
The GIGA fund is a £960 million package announced in Autumn 2023, which focuses on supporting renewable energy supply chains in the UK, and this call for evidence will affect where the funding is allocated.
In response to the DNV report, which argued that the country required clearer long-term policy, the government has released a strategic policy statement setting out its priorities for energy transition policy in the UK.
It outlines the roles of government, Ofgem and the National Energy System Operator (NESO) in the upcoming transition, as well as how each of the renewable or low-carbon energy sectors will contribute.
The government also announced today that its net zero economy grew by 9% in 2023, contrasting the nation’s wider economy growth of only 0.1%.
The total gross value added (GVA) by businesses involved in the net zero economy now sits at £74 billion in the UK.
