Contribution
The hon. Member is entirely right. Ammonia is a very important part of the future energy mix. It is interchangeable bidirectionally with hydrogen and it is a very compact energy carrier. It is a liquid—it is relatively easily handled and stored—but it also, vitally, provides direct injection into the agricultural fertiliser chain. That makes it a vital asset in our future energy system, as agriculture currently plays a very large role in our total carbon emissions.
How we get to the future energy system is similar to how we got to this point: economics is overtaking technology as the driver for change. It is not about choosing technologies; it is about choosing these key energy vectors and then facilitating markets to grow around them. If we look more closely at that challenge and at the current UK energy system, we have seen electricity decarbonising, but if we look at electricity use in comparison with other vectors in the UK, it plays a relatively modest role. If we look at our energy use over the course of a year, our daily electricity consumption is pretty flat, but if we overlay on to that the amount of gas we use as a country—remember, gas is providing a vital part of our electricity production, and indeed the responsive part—and we see waves with peaks in the winter and troughs in the summer. The peaks of those waves are three times higher than our day-to-day electricity use. Gas is doing the lion’s share of moving energy around the UK and supporting our electricity system, and oil, which is primarily used for transport and is our main vector for transport, sits at about the same level as electricity. That is the picture of how energy is split across the UK energy system.
What we can learn from that is that UK energy demand is peaky. It varies very rapidly, seasonally and throughout the day, especially for heat applications. As we move into a renewable world, we need to recognise that renewable production is also subject to these synchronous peaks and troughs. The UK is a small enough country that one weather system can influence the production of all our renewables. We are therefore subject to fluctuations both in the supply of renewable energy and in demand. We also know that global prices for energy will continue to fluctuate, and part of our Government’s strategy to make the UK rightly more energy independent is informed by our vulnerability to variations in international energy prices.
Whatever our vector mix, and however we cut up the pie of our future energy system, we absolutely will need storage to navigate these variations. The transition has rightly been described as a chicken-and-egg problem: how do we build a new energy system out of an existing one? We are led by economics, which means that we need a price for the new system. We need a price that breaks the cycle by providing producers with a way to sell their energy and by providing people decarbonising at the end-use point with the ability to buy the energy they need for decarbonisation and to make long-term investments. That price enabler is made stable by storage. The crux, therefore, of building this future energy system is to build transmission and storage of the key vectors that we want to use in the future. Therefore, it would be very valuable for the UK to develop a plan to commission and build out a strategic national clean energy reserve. That can be left to markets, but the Government need to drive it with an extremely strong and firm grip and with a clear vision. I urge the Minister to look at the ways that we can build on our current work in storage, while expanding it with a very clear and ambitious vision.
We can also start blending. Blending is sometimes misunderstood. There are currently investigations into blending hydrogen into our natural gas supply. That has a small benefit for decarbonisation, but it has a huge benefit for allowing us to build out production of hydrogen, because it gives producers a large and available sink for their hydrogen to be produced and sold and it allows them to build large-scale production with the certainty of a market. Blending is therefore a key enabler not of decarbonisation but of building production for a future energy system with hydrogen playing a major role.
It is also vital that we take action to fill the remaining gaps. Through my experience as an engineer working in research and development I have seen personally how powerful it is when the Government set goals and work in partnership with industry to try to meet those goals. Goal setting cuts through the noise of the usual business of research and development and the competition for investment, and it allows us to move forward. It has put the UK in an incredibly strong position.
The UK is already the leader in hydrogen standards, and with the publicly available specifications 4444 series, it is leading the way in establishing technical standards. We have an opportunity to build those out up to the norms of the British Standards Institution and the International Organisation for Standardisation. The UK has led and is leading that. The UK has led on technology with a series of first-in-the-world projects in hydrogen over recent years, and we have an opportunity to lead through our geography with a well-established oil and gas industry ready to transition with fantastic geology for salt cavern storage.