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Future of the Gas Grid

It is a pleasure to serve under your chairship, Dame Siobhain. What better birthday present could my hon. Friend the Member for Cannock Chase (Josh Newbury) have than debating such a crucial and timely topic? I anticipate that perhaps, as he blows out the candles on his cake, as someone who cares deeply about the energy transition, he might wish for something remarkably similar to a clean and green national gas network.

Electrification is inevitably going to be a go-to tool for decarbonising many parts of our economy, but it is equally clear that it cannot do everything. First, gas can do things that electricity cannot. Industry needs it: around half a million businesses in the UK currently rely on gas for their operations, and around 30% of those say that electrification is simply not feasible for them, technically or economically. Those businesses are spread across our nation, not just in clusters, so a national gas system is the only way for UK industry to not only survive but thrive.

Secondly, our national security depends on us having a multi-vector energy system. The UK has always ensured that homes, businesses and critical infrastructure have multiple energy sources available, typically electricity and either gas or oil fuels. As the world becomes increasingly uncertain and dangerous, now is not the time to roll back on the essential principles of security and resilience.

Thirdly, as we face the challenge of rapidly delivering an energy transition, gas provides us with vital flexibility and optionality, which means that we can make it over the finish line in our target time. Industry, transport and heat are all transitioning with uncertainty about the final mix of technologies. Government can secure the successful transition not by picking technologies to win or lose but by specifying a clear set of core energy vectors for the transition and investing in their core infrastructure. I put on record that those might be, for example, electricity, hydrogen and ammonia.

As a case in point, my hon. Friend mentioned that his installation of a heat pump was fairly typical, costing around £15,000. My discussions with industry indicate that the installation of a hybrid heating system, even a new one, would typically come in at under £7,000—a significant difference in the up-front cost, which is a major barrier for homeowners. Alongside that, installation times are shorter, and homeowners avoid the need to install hot water storage tanks or replace radiators.

Industry has already indicated that it will be ready, in four years, to make all its boilers 100% hydrogen-ready. It also indicated to a previous Secretary of State that it would provide price equivalence with the products in existence then. I recognise that the Climate Change Committee has tried to move us along by suggesting that there is no role for gas in the future of heat, but as someone who spent my entire career trying to decarbonise heat, I would humbly say that, although that guidance was well intended, it might be misguided.

Even as electricity remains our primary energy vector, reliable energy generation depends on large-scale energy storage, and that means gas. A system that can produce, store and utilise clean gas is vital for electrification to be successful. Although gas is seen as cheap and dirty today, it does not have to remain so tomorrow. Its versatility means that it will be a valuable resource in the future. While forecasts are for the cost of clean gas to reduce dramatically in the future, its role will be one where its value is recognised, and cost parity with today is not a prerequisite for a future clean gas market.

Private capital has successfully been released to deliver billions of pounds of investment into our gas networks, making them safe, fit for the future, and ready for future gases such as hydrogen and methane. More capital stands poised and ready to be invested. However, our previous Government, who should be congratulated on putting the UK in a leading position for a few years in the 2010s, then created a cloud of uncertainty that has left our gas industry in limbo.

Our mission to make the UK a clean energy superpower should be a powerful beacon that burns that uncertainty away, but it must include a tangible future role for the gas networks in our envisaged energy system. Ambition must be converted into some techno-economic goals that are clear and certain. For gas, that means committing to two things: storage and transportation. The prize is for the UK to once again lead and be an innovating leader in a new global energy outlook.

It has become dazzlingly clear from my discussions with industry that storage is a key enabler. It provides a price and a sink for producers to make clean gas, and a price and a source for users to plan their transition. It could be delivered by establishing and planning a progressive build-out of a strategic national clean energy reserve, which could utilise private capital but, crucially, be publicly commissioned, operating in the national interest for resilience and stable markets.

For those markets to develop, storage must be backed up by transportation. Fortunately, that solution already exists in our world-leading gas networks and can be completed through the delivery of a national hydrogen backbone. We could make a decision on blending now, and that would unlock those markets and allow for the large-scale production of clean gas.

The key signal to unlock all that is reassurance from the Government that the gas system, having transitioned to low-carbon gas, has a future for decades to come. That single declaration—one line that says, “We can see clean gas playing a role in the energy future of our towns and cities”—would be transformational. With it, we can ensure that the industrial economy spread across our country has a sure and hopeful future of opportunity and renewal. With it, we can ensure that the UK’s energy system is resilient, robust, secure and a source of strength, not vulnerability, in our national security. With it, we can deliver a deep and rapid energy transition through agility, partnership and UK innovation. With it, we will be on a strong pathway to making the UK a clean energy superpower.

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