Northern Ireland Affairs Committee
Oral evidence: Renewable Energy and Net Zero in Northern Ireland, HC 428
Wednesday 6 March 2024
Ordered by the House of Commons to be published on 6 March 2024.
Members present: Sir Robert Buckland (Chair); Stephen Farry; Sir Robert Goodwill; Claire Hanna; Carla Lockhart; Jim Shannon; Kelly Tolhurst.
Questions 79-102
Witnesses
II: James Richardson, Chief Economist, UK Climate Change Committee; Professor David Rooney, Research Centre in Sustainable Energy, Queen’s University Belfast.
Written evidence from witnesses:
– [REN0019] - Professor David Rooney, Research Centre in Sustainable Energy, Queen’s University Belfast
Examination of witnesses
Witnesses: Professor David Rooney and James Richardson.
Q79 Chair: I am very grateful to the second panel for being here. They are both an in-person panel. We are joined by Professor David Rooney from Queen’s University Belfast, and James Richardson, chief economist at the UK Climate Change Committee. A warm welcome to you both.
I am going to start off with the same short question that I asked the previous panel, which you might have heard. The evidence that we had is that the planning regime is disjointed, unsupportive and incoherent, and is a barrier to NI’s achievement of its net zero targets. Would you agree with that characterisation?
Professor Rooney: Yes.
James Richardson: Planning is a general concern across many jurisdictions and is clearly an issue in Northern Ireland as well.
Q80 Chair: In particular, just looking at what the specific barriers are in Northern Ireland and then being more positive, what would effective look like?
Professor Rooney: The issue with planning, as has been pointed out by many people so far, relates to the speed of decision-making and getting consents to start projects and get them running.
James Richardson: Speed is clearly the issue. You can help that by having a clear political statement on the overriding public interest in renewable energy in Northern Ireland, so that the planners know which direction they are pointed in. Simpler issues include resources in the system to make sure that everybody can meet the timetables set out in the system, which are quite rapid but not being met. If you can get things to hit those targets, you can make decisions more quickly.
There are other things that you can do. For example, on environmental data, rather than waiting for a planning submission to come in and then collecting data, which can be time-consuming, you can collect that data up front, if you know the kinds of areas that you are going to be investing in. There are things that you can do in parallel that would accelerate the whole process.
Q81 Jim Shannon: Gentlemen, it is nice to see you. Thank you for coming along. The themes, the pointers and the focus will have come from the previous panel, because we have already seen what their thoughts are, and many of us here on the Committee would subscribe to those. Unfortunately, as outlined by the previous panel, the lack of financial investment in Northern Ireland’s renewables sector is a very clear current barrier to moving forward. From your point of view, could you outline the conditions that would be necessary to be in place so that Northern Ireland’s renewables sector can attract more investment? More investment is so simple and lots of people have looked at it, but tell us what your thoughts are to make that happen.
Professor Rooney: When you speak to the planners, who are the people who are trying to deploy projects, it does come down to planning, plus the mechanisms to support projects in order to be able to then provide that low-risk certainty of an income and to guarantee that those projects will be successful over the longer term. Planning has been an issue. Regulations have been an issue. Connection charges have been an issue. Support mechanisms have been an issue. These have been highlighted by others who have spoken.
James Richardson: At the risk of repeating everything, the support mechanisms that we see in both the UK and the Republic are absolutely essential for a technology with the economics of wind, essentially. They are not subsidies, but they are about getting the right market structure in place. We have talked about planning. The other big thing is grid connections and the ability to make anticipatory investments in the grid, so that that can happen in the same time that you are building, rather than everything waiting on everything else.
Q82 Jim Shannon: Ultimately, with the reinvigorated and renewed Northern Ireland Assembly and a new Minister in place, is it the responsibility of that Minister to move it forward, ever mindful that all of our panel members, with whom I and probably all of us agree, have said that there is a necessity for the drive to come from Westminster and to work with all of the regions? Who makes it happen? We all know what needs to be done. That is a fact. You know; I know; everybody in this room knows. Indeed, I suspect that Uncle Tom Cobley knows as well. Who moves it forward? It is about making it happen. I am really keen to get your thoughts on which backside we kick hardest to make it happen.
James Richardson: It is about moving all the players forward together. The Northern Ireland Executive has the key convening role to bring things together. The point was made to you earlier that, in Great Britain, Ofgem—the regulator—has a net zero objective. That is not true for the Utility Regulator, so it would be worth looking at that to ensure that the Utility Regulator has a clear net zero objective.
The system operator does not have quite the same powers as the system operator here, but it does have that key spatial planning role that is being developed in Great Britain. You also have the people who do the planning decisions. You need to get all of these people moving forward.
There are issues in co-ordinating with the UK Government—for example, you heard about interconnectors—and with the Republic, which is a single electricity market. It is important to co-ordinate all of those things.
The players are in place. They mostly know what needs to be done. Clearly, it is a matter for the Executive and the Assembly to put a support system into place, but a lot of the rest of it is about just moving everything forward as fast as possible.
Q83 Jim Shannon: In terms of what you are saying, would that be enough to ensure that the private investment happens as well? Hopefully, it does, but what are your thoughts?
James Richardson: If you have a support scheme in place, if you have a planning regime that allows you to build and if you have anticipatory investment in the grid, I would be extremely confident that investors will come forward.
Professor Rooney: I would have to agree with that. The anticipatory investment is a critical factor here in terms of being able to prepare for the future, not just what we think that we need now. We vastly underestimate the potential role of electricity moving forward within Northern Ireland, and we are designing a grid that can handle only a fraction of what it probably needs in the future. The anticipatory investment needs to operate at a scale probably beyond what our current thinking is, and Departments such as DfE, etc, will need to be prepared for that. In terms of the overall net zero journey for Northern Ireland, it will need to link in with many other Departments at the Assembly in order to be able drive forward the overall trajectory and to allow us to get to net zero within the timeframes.
Q84 Kelly Tolhurst: We have heard about the merits of the different renewable energies and technologies. Could you set out which technologies will be most important in helping Northern Ireland reach its net zero targets?
Professor Rooney: There will be a range of technologies that need to be applied here. It is perhaps worth reflecting on the overall energy mix within Northern Ireland and where that goes. A lot of the focus here has been on electricity, which is only about 14% of our grid at the moment. Northern Ireland uses approximately 1 billion units of energy a week. All of the renewable capacity in Northern Ireland at the minute would not even last one month. Even with the expansion of the grid to go out to 80%, we would get only about six weeks’ worth of energy, so there is a lot that needs to happen in the future in order to be able to help decarbonise.
You will get efficiency savings by switching to EVs and to heat pumps, but, even there, we will still need a whole range of technologies to come in to be able to meet that using either electricity or other types of low-carbon fuels, as has been pointed out elsewhere in the conversations today. All of that needs to come to play. The CCC has also provided additional advice reports on the rollout of that over the next decades in order to be able to help to achieve the 2050 target.
James Richardson: Electricity is going to be key to this, and that is partly because electricity is relatively straightforward to decarbonise 100%. It is also because electricity is so much more efficient than the things that it displaces. An electric vehicle is three times more efficient than a petrol vehicle. A heat pump is three times more efficient than a fossil boiler. When you hear all these figures about different amounts of electricity and how much goes into households and so on, you have to remember that, if you replace it with electricity, you are cutting it by a third. Yes, you need a lot more electricity—perhaps double—but you do not need to replace all of that energy that is going into homes and businesses at the moment, because those fossil processes are so inefficient.
Electricity is the key technology. To deliver that, it is mostly going to be wind in Northern Ireland, because you have such fantastic wind resources, but solar will be useful, because solar is a good complement to wind. It tends to be either windy or sunny and, therefore, it helps at times when it is less windy.
You have heard a lot about interconnectors. It is very valuable connecting both to the Republic and to the UK, but the Republic is also connecting to France. France is in a different time zone, which is very helpful for managing electricity demand.
In terms of storage, you will need short-term storage—things such as batteries—that can get you through the fact that demand is much higher in the evening than it is in the middle of the night. Flexibility in when you charge things such as electric vehicles is also a way of managing demand.
You also need longer-term storage for what happens if it is not windy for several days in a row. As you heard earlier, that will probably be hydrogen in Northern Ireland. In Great Britain, there will probably be a role for gas with carbon capture and storage, but carbon capture and storage is harder in Northern Ireland, because you do not have such good access to stores.
The process of round-tripping surplus electricity into hydrogen and back again into electricity is quite inefficient. There are big losses in all of those stages, so you do not want to do this routinely, but, because hydrogen is storable, it is a good solution for those long periods when you need a lot of energy for days, or perhaps even a week or more, and when it is calm, and may be calm also across Great Britain. It will be part of the mix to solve that bit of the problem, and then lots of heat pumps and lots of electric vehicles.
Q85 Kelly Tolhurst: I represent a constituency that has a place called an energy island, because we have interconnectors, a power station and hydrogen, so it is really interesting to hear from you about that wider mix and plan. Thank you for that.
Professor Rooney: We have done some work that demonstrates that the energy island-type concept would work exceptionally well across regions of Northern Ireland. In terms of your colleague sitting beside you, areas around Craigavon would fit extremely well in terms of an energy island concept to support not only industry but hospitals, schools and leisure centres within that specific jurisdiction.
Q86 Sir Robert Goodwill: We have heard that you are very enthusiastic about heat pumps and how much more efficient they are, but we heard in the first session that it could take 20 years or so to get the grid capacity up to that level. How long is it going to take to get the housing stock in Northern Ireland sufficiently well insulated to make heat pumps viable? Are they the two challenges that we need to address before heat pumps could become much more attractive to homeowners?
Professor Rooney: The thermodynamics of heat pumps are very difficult to beat. The only thing that tends to beat thermodynamics is economics in the real world, and hence the economics of putting in systems is very expensive at the minute, which has been touched on by previous speakers.
It will take a long time to get the retrofit programmes in place in order to be able to make heat pumps cost-effective to most consumers, but, in terms of energy efficiency and what that will do towards net zero, they are the best solution. It will take time and it will take a longer rollout for that, and there are intermediate technologies that can be put in place.
Examples within Northern Ireland that could be installed more quickly would be hybrid-based heat pump systems that, essentially, can top up the heat within the network using gas. It has a much lower retrofit, and efficiencies are less, but they are better than simply gas and could be deployed alongside solutions such as biogas within Northern Ireland in order to be able to make a significant impact in terms of the carbon emissions.
Q87 Sir Robert Goodwill: We also heard in the first session—and this almost sounded like low-hanging fruit—that hydro-treated vegetable oil could very quickly be deployed, with maybe 20% inclusion in domestic heating, which has a much higher proportion of users than in the rest of England, certainly. Would that be something that you would favour, or would that just put off what we really need to do, which is to install heat pumps?
Professor Rooney: There is a time delay in terms of people who have just installed oil boilers needing solutions for the next 15 years as those pieces of technology run their natural course. There is a danger with ripping out old technology and putting in new technology that you do not really see the savings, so there is a role for HVO and versions of low-carbon fuels in the short to medium term within Northern Ireland. Longer term, the analysis would indicate that some of those fuels would be more likely directed towards areas such as aviation. There probably will need to be longer-term solutions in order to be able to then get those homes off kerosene and on to lower-carbon fuels as a result.
James Richardson: Some of the numbers that were being put forward were perhaps a bit disingenuous. HVO is roughly twice the price of heating oil, whereas a heat pump, because it is so much more efficient, particularly in our electricity system that is heavily renewable and will, therefore, be cheaper than today’s very high prices, will cost a lot less to run. If it costs about £1,500, which is the industry figure, to run off heating oil, it will cost about £3,000 to run off 100% HVO, and maybe £1,000 to run a heat pump in that property.
A heat pump does not cost £24,000. The boiler upgrade scheme that is running in England has an average cost of £13,000. Half of those installs are going into rural areas. 20% of them are replacing oil boilers, even in England, which has a much lower rate of oil boilers. What we are increasingly seeing is a move towards higher-temperature heat pumps, which is just a slight change to the technology and is being driven by more regulatory changes, but it makes them much more of a drop-in replacement, even in buildings that do not have particularly good energy efficiency.
Energy-efficiency investments are good, because they save people money and they save carbon, but they are much less necessary for the next generation of heat pumps that are coming through than a lot of what people are saying. It includes heat pumps being manufactured in Northern Ireland by Octopus. They simply operate at a higher water temperature, so they are much more substitutable for the existing, where the house works. You are looking at a cost of roughly £13,000 to put a heat pump into a building. A new oil boiler might be £3,000 to £5,000.
You are saving about £2,000 a year on the running costs, so the economics of heat pumps are much better, but there is also a problem with using biofuels, particularly in Northern Ireland, in that they simply do not get you to net zero. They themselves are not net zero, whereas electricity can be, so they do not get heating to zero. Also, because Northern Ireland has this very large agricultural sector, which means that you cannot get methane emissions down to zero, you have to have offsets to get Northern Ireland to net zero by 2050.
Q88 Sir Robert Goodwill: Is it not the case with methane that you need to reduce it only to be less than 20 years ago, so that, as it is dissipated, you are not net zero?
James Richardson: Right now is when we need to take action on the climate, so we need to offset those residual methane emissions that will continue to come from Northern Ireland’s large agricultural sector. While some will be on land by growing trees and so on, the most cost-effective way of doing that is to use the biofuels that you have—things like biomethane—with carbon capture and storage. That is difficult in Northern Ireland, because you will probably have to ship the carbon to be stored elsewhere, but the alternative to that is direct air capture, which is more expensive.
You really want to concentrate the use of biofuels within Northern Ireland on biofuels with carbon capture and storage. There may be some exceptions, where you have on-farm AD and it is just too difficult to get the fuel out of the farm if it is remote, and you might have combined heat and power on farm. Mostly, you want to try to concentrate those resources, so that they can provide the offsets to the methane in the most cost-effective way.
Q89 Carla Lockhart: I have a very similar question to the one that I asked the last panel around the UK Government’s involvement. What do you feel the UK Government could do to further help the situation in Northern Ireland? Are there specific schemes that you would have witnessed here in GB that would be of benefit to Northern Ireland? If we could lift and replicate them in Northern Ireland, are there specific schemes that you think would be of benefit?
James Richardson: You would certainly want to look at the contract for difference scheme for renewable generation. Would you lift it exactly the same? There are issues—and some of those came up earlier—about the fact that Northern Ireland is much smaller and that, therefore, some things are not going to work exactly the same. It is a well-established scheme, the scheme in the Republic is also relatively similar, developers are used to it, and so you do not need to change lots of things to get that scheme going. The more familiar the scheme is to developers operating either in the GB or Republic markets, the quicker it is going to be to get things done and the fewer lawyers you will need. Broadly speaking, that scheme is very successful.
On heat, it is worth looking at the scheme both in England and in Scotland, where they have very ambitious proposals on heat. They are still proposals at this stage, but they are very interesting. They involve subsidies for those upfront costs of heat pumps, because lots of households will find it very difficult to pay that upfront cost.
In Scotland, there is also low-cost finance for the part that sits with households. What is particularly important in England and will be important for gas customers, but much less so for heating oil customers, in Northern Ireland is looking at the relative costs of electricity and gas in England. Electricity is expensive, because we have added a series of costs to it. If you can rebalance those—and you heard earlier about carbon pricing—that tips the incentives, so that people making the low-carbon choice get the better thing.
That is not really an issue with heating oil, because it is so much more expensive when you are not in the current Ukraine-influenced market. That is almost certainly why we are seeing a lot of people in England shifting away from heating oil towards heat pumps. There is a series of things that are being done there, which are helping take-up. Of course, other countries are also being very successful. Heat pumps are taking off very strongly in countries such as France and Poland.
Professor Rooney: CfD schemes work extremely well for electricity, but electricity is only 14% of our overall energy demand, so we do need to be looking at other schemes as well. There are things now starting to come through in England, etc, around gas and biogas, but we have to just recognise all of the other added value that could come from working alongside agriculture in order to be able to then utilise it to generate energy in support of the wider ambition.
There are caveats that have been mentioned already, such as what the additional values are that come from nutrient management, energy services and carbon services. All of those potentially change how you might work with a scheme to add value to biogas in the future. If it is simple, such as electricity, CfDs for electricity work very well, but, when you start to move into other areas, the economics can be a little more complex.
Q90 Carla Lockhart: Would you say that, in Northern Ireland, there are very forward-thinking schemes? I am probably thinking specifically of the one down at Granville and the industrial units there. Do you feel that better support for initiatives like that would be helpful? Do you believe that there is learning from that, and that other areas such as my own in Craigavon could pick up and use some of the learning from that particular scheme?
Professor Rooney: Yes, absolutely, and that scheme has learned from other activities throughout Europe and in England, where gas injection on to the grid occurs. Dungannon was the first place to do that gas grid injection in Northern Ireland and has been successful in doing so. We would like to be in a position to be able to take that type of idea and combine it with, say, an energy island-type link in district heating networks and energy transmission between different users. The Carn/Seagoe area is an example of where you have bakeries, chemical factories and manufacturing, as well as hospitals, schools and leisure centres. These types of systems would not be incentivised under a CfD scheme, so how would you move to incentivise projects where the carbon savings are shared over multiple users, including both the private and the public sector?
Q91 Carla Lockhart: You referenced the agriculture industry in Northern Ireland. There is quite an intense focus on agriculture, which is doing exceptionally well with regard to giving back and trying to make strides. How can we ensure that we do not get ahead of the industry and penalise it unnecessarily while they are making every effort to advance their give-back on these particular issues?
Professor Rooney: The agricultural industry in Northern Ireland has probably the strongest hand to play in the decarbonisation agenda. They have the ability to, effectively, farm carbon from the atmosphere. At the minute, it is done in a way that is still wasteful. Do not get me wrong, but they are producing lots of methane emissions, which are contributing to the overall emissions profile of the region. They also have the power to completely reverse that, and there would be ways whereby we could work proactively with the sector in order to be able to make very strategic interventions that would then deliver real value to the economy.
We have already heard about carbon capture being an issue for Northern Ireland, and it is. We do not have the ability to store and sequester CO2. We would have to offshore that for injection into subsea aquifers off Scotland, which would be costly. We also then have the ability to serve as an e-fuel hub for parts of the UK, for instance, whereby we would utilise that CO2 as a hydrogen storage vector for marine-type fuels or for sustainable fuels as part of an overall UK ambition. There may well be opportunities within Northern Ireland to align new types of industry alongside agriculture in order to be able to serve the best interests of the UK and Ireland as a whole.
Q92 Carla Lockhart: There has to be a recognition that the agriculture industry has made huge strides, and it is important that they are not the sole focus of endeavouring to get to the end point. Our farmers in Northern Ireland have been very proactive and to the fore in improving the situation, but we have to recognise that we cannot get ahead of them and unduly demand things of them that are not achievable.
Professor Rooney: You are right. We have done some work with the community to understand what carbon co-operatives could look like in terms of how you work with that sector in order to be able to then maximise carbon sequestration, taking the ideas that have been very successfully applied throughout Northern Ireland, including dairy co-operatives, and applying that into new types of industry, trying to envision what that would look like under climate change agenda within Northern Ireland, and giving more power and control to farmers, etc, in terms of being able to make positive decisions that help to get us there. There are issues, which have been pointed out by the CCC. It does need to be done right. With a joined-up approach across the islands, we have an opportunity to completely reverse the problems.
Q93 Chair: I wanted to ask you about limited grid capacity, which is an issue both in Northern Ireland and in GB. Companies wanting to bring on new projects are being told, “You cannot connect for years”. That is one facet of it. What is the importance of it in terms of the Northern Ireland context and achieving the net zero goals? The limitations are clearly going to be a challenge, are they not?
James Richardson: It is a key issue in Northern Ireland, but also in GB. We are going to use electricity to displace most other sources of energy, and that requires a grid. It is mostly going to require upgrading the grid. There are certainly things that you can do, which mean that you do not have to upgrade the grid by as much as you are upgrading the use of electricity, by putting more flexibility into the system and shifting demand out of the peaks, because you have to build these grids for the peak. It is typically in the evening when you can shift demand for things like electric vehicle charging. Heat pumps are pretty flexible about when you can put them on.
All of those things help. You can co-locate demand, supply and storage, which you have already heard about. There are things that you can do, but none of them gets away from the fact that you need a big upgrade not only to the transmission grid but also the distribution grid, both in Northern Ireland and in GB. You need that for electric vehicles, regardless of all the debate about heat pumps. These are big, fixed-cost projects, particularly on the distribution network. If I am going to dig up the street to put a cable in, the cost is in digging up the street, not in the cable, so I might as well put a much bigger cable in. It does not cost a lot more to put a big cable in than it does to put a small cable in. The cost is in the civil engineering.
A lot of the challenges there are about getting anticipatory investment in. You can do this in a well-ordered, planned way. It is not that we do not know how to build this stuff. We have been building electricity grids for 100 years, but, if you try to do it all at once, you will find it hard to get electricians. You cannot dig all the streets up at once, so you need to start as soon as possible, to have a well-planned approach and to get that investment in. You are probably catching up with the demand, but you ought to be able to keep pace with the rise in demand for electricity. If you wait, you are then trying to run uphill.
Professor Rooney: I would agree. Large-scale investment in the main energy carriers in the future, which is electricity, needs to happen and needs to happen as soon as possible. You have heard about interconnection. That is one aspect of it, but it does need to go alongside changes in the region in order to be able to allow for additional capacity to come on.
The analogy is with trying to build a shopping centre on the edge of a town in somebody else’s jurisdiction. That will boost consumer confidence. It will provide them with additional things, but it also runs the risk of running down renewables generated, for instance, within Northern Ireland. We need to do both, if we are to expand to the level that we need to in order to be able to hit the targets.
Q94 Claire Hanna: I will pick up on that interconnection and how significant hybrid distributed generation will be in terms of maintaining our energy security and targets.
James Richardson: As with all these things, the mix of technologies improves the efficiency and the security of supply. You want a mix of grid. You want localised storage. You want flexibility. You want interconnectors. These things all have slightly different characteristics and, therefore, you can get a lower-cost, more secure system if you use a mix of those things. Even though the bulk of generation will inevitably come from wind, having local storage, hydrogen batteries and interconnectors will bring down the total cost and make it easier to balance the system.
Professor Rooney: Interconnection will allow for the major infrastructure highways to go between regions. It is a bit like the A6, the M1 or Larne port. That type of thing is what we need in order to be able to allow that to happen, but we also need more of the energy island-type concepts dotted around the region to look at maximising the energy efficiency within those regions and allow them to be connected through a backbone that then gives stability across the entire region of Northern Ireland and beyond.
Q95 Claire Hanna: In that regard, what state are we in at the moment?
Professor Rooney: We are not in a very good state. We have lots of small bits of power such as wind turbines on people’s houses. It is a weaker grid particularly in West Bann. There is a lot of work to do in order to be able to then provide resilience to the overall network. I know that NIE has plans to do so. They have the investment and are making that investment call to boost that grid. We just want to make sure that it happens in a balanced way that allows for various concepts to come through and give long-term resilience and security.
Q96 Claire Hanna: I wanted to come back to wind specifically. I was asking before about how reliant we are on wind. Do you have any comments on what that poses for our ability to maintain energy security during that transition?
Professor Rooney: As has been pointed out, wind is still the primary renewable energy in Northern Ireland, and about 85% of it comes from that. A simple calculation would be that, if you took the installed wind and multiplied it by two, you would get the number of weeks that Northern Ireland could run on it. If we are talking about 1 GW of offshore wind, that is equivalent to two weeks’ worth of energy in Northern Ireland. We need a lot more, and the only way that we can get a lot more is either to put more in or to take on additional technologies such as EVs and heat pumps, where we get an automatic multiplier effect by three.
Q97 Claire Hanna: Do you agree with that assessment that the offshore, whether we like it or not, just is not going to be a factor between now and 2030?
Professor Rooney: It is unlikely to be delivered by 2030 at this stage.
Q98 Claire Hanna: Could it be if we got the finger out?
Professor Rooney: We probably could do it if we got the finger out, but I would also argue that places such as Scotland have put in more installed renewables in one year than we have in the last 20. Other places are doing it at pace. Our ambition is quite low in terms of what we could do. If we want to do it, we should probably be aiming higher and making sure of the anticipatory investments that could go along the backbone of that. Utilising that in effective ways would lead to much better outcomes for the overall economy.
Q99 Claire Hanna: I could be off the mark here, but is it a fair assessment that we are really going to struggle to hit our 2030 targets but that we could do it with offshore if we got the finger out?
Professor Rooney: We could do it with offshore if we got the finger out.
Q100 Claire Hanna: In the previous discussion, we touched on the decision on cap and floor, and the Ofgem decision. What are your thoughts on that?
James Richardson: It is not one that I have specifically come across. As with all of these interconnectors, you have two parties, but, in this case, you have two parties that are both part of the United Kingdom, so there is clearly a case for the regulators engaging with one another. I am a little surprised if they are not, but there may be benefits to be had there. Each one has to have its business case, but the more widely interconnected markets are, the easier it is to get the full value out of any asset on that market.
Q101 Chair: Just coming back and developing on the theme of Government support and financial incentives, how much is a Government-backed investment support scheme going to be an essential prerequisite for Northern Ireland achieving net zero? What would best practice look like in terms of developing a Government-backed scheme that is going to work?
James Richardson: It is not a single scheme, because you have different parts of this transition where the economics look very different. Within electricity generation, transmission and distribution, there is no reason for the Government to be subsidising those, because the low-carbon technologies are easily cost-competitive, particularly with today’s very high gas prices. As you have heard, you need Government intervention to ensure that the market is structured in a way that developers can have the certainty to get their money back. That is one type of Government intervention, but it does not have an implication for the overall budget of the Northern Ireland Executive.
In terms of electric vehicles, you might want to do things to kickstart bits of the market in the short term, but, fundamentally, this is going to be a much cheaper technology than a petrol car. It is going to be cheaper to buy pretty soon. It is already a lot cheaper to run. It is cheaper to maintain. Again, you might want some support for charging infrastructure, particularly in rural areas where you do not have the density of consumers. In urban areas, it probably already is. If you can get the demand for the cars in, the charges are almost certainly cost-effective, but you want them everywhere, and that helps build confidence. That would be quite a targeted thing.
On heat, because of these big upfront costs of heat pumps, you probably want to be looking at something a bit like the boiler upgrade scheme, or the Scottish scheme, which is quite similar, that does provide direct support to households. You might also want to look at this market mechanism that we have in England, which says that manufacturers have to be shifting towards manufacturing heat pumps. That is trying to shift the industry, as it were, into the new technologies, because that is where the jobs of the future are, and you want to be getting these industries to be shifting into it. That helps accelerate the process of bringing down the costs of the new technology.
You need a range of things. It is not my expert area, but you will need support for agriculture, which is a huge issue. You may need some targeted support for particular industries. It is a range of interventions.
Professor Rooney: I agree that there is a range of things that should happen from Westminster, and also at regional level. It is useful to reflect on the fact that baseline targets for the climate were set in 1990. Northern Ireland is in a very different position now than it was in 1990. Energy consumption has increased by about 20% relative to a decrease across the UK of about 20%. That is just the nature of what happens when you come out post the Good Friday agreement, so that does need to be considered.
With the implications about transport and the fact that our gas grid was not as developed, these have all led to long-term issues that we need to rapidly catch up on. We will need help as we accelerate to meet the overall net zero target that the UK has set, as well as ourselves. That recognition of where Northern Ireland is relative to where the journey for the net zero started does need to be considered, and we will need support.
Q102 Claire Hanna: We were talking in the previous discussion about mutualisation. What is your assessment of that recommendation to explore and utilise mutualisation, and the points that were made by Paddy about the ripeness of long-term, stable infrastructure-type investments?
Professor Rooney: My view on it would be that there are a lot of opportunities within Northern Ireland that are probably untapped in terms of additional mutualisation options, particularly in lower-risk technologies and their deployments, which could provide services. In that capacity, it is about how we work with public estate such as NI Water, the Education Authority or the NHS, etc, in order to access parts of their estate and create energy projects that could then be mutualised for the benefit of the region. There is a lot of opportunity that we could take forward with a lot of that infrastructure that is already there and could be monetised in a way that also delivers carbon savings for consumers.
James Richardson: I do not have a particular view on the right mix. What I would say is that you do have to raise a lot of finance, so you need business models that are capable of mobilising finance. That would be the question to ask of any business model in this position.
Chair: Thank you so much to you and the previous panel for giving us very succinct and comprehensive answers in the same breath. We are really grateful to you. We will continue with another session next week, but, in the meantime, thank you for attending. We are most grateful to you all.