Written evidence submitted by Peel L&P (HCC0005)
Scottish Consultation Response – Scottish Affairs Committee – Hydrogen and Carbon Capture in Scotland: Peel L&P.
Peel L&P is an ambitious regeneration business which owns and manages 12 million sq. ft of property and 20,000 acres of land and water across the UK, with a total portfolio value of over £2.5 billion.
Peel NRE, part of Peel L&P, is at the heart of the nation’s activity around clean growth and the circular economy – helping the UK achieve net zero by 2050 and supporting the regions in their actions to achieve climate emergency targets.
We re-use, re-purpose and re-energise natural resources to develop and maintain vital infrastructure across the UK and are experts in renewable energy, district heating, waste to value, water management, materials management and electric vehicle charging.
Peel NRE plans to develop Scotland’s first waste plastic to hydrogen facility at Rothesay Dock on the north bank of the River Clyde, West Dunbartonshire will use pioneering DMG® (Distributing Modular Generation) technology developed by Powerhouse Energy Group plc (AIM: PHE). The £20m facility will take non-recyclable plastic waste destined for landfill, incineration or export overseas and use it as feedstock to create a local source of sustainable hydrogen. The hydrogen will be used as a low carbon fuel for HGVs and buses, with plans for linked hydrogen storage and refuelling station on the site.
The Powerhouse technology provides a modular community-based solution for end-of-life plastic, i.e., non-recyclable plastic, and provides a decentralised source of sustainable hydrogen – supplying low carbon hydrogen to where it is needed. Peel plan to develop over 70 sites to turn plastic to hydrogen around the UK, which would produce circa 150 tonnes of vehicle grade hydrogen per day, enough to fuel over 6,000 HGV’s every day.
Peel NRE are investing in a wide variety of Net Zero initiatives in Scotland including a new heat network at Glasgow Harbour on development comprising c1,100 apartments, a hotel, leisure facilities and mixed-use commercial and retail premises, along with the development of public EV charging points on our estate including the Straiton Retail Park, Edinburgh. Furthermore, Peel NRE are seeking to bring forward several Windfarm schemes in Shetland and are exploring new opportunities on the mainland. Peel NRE also secured approval for the South Clyde Energy Centre in Glasgow which is being brought forward by the company's development partner Fortum Oyj.
Elsewhere, our Protos energy and resource hub in Cheshire leads the way in low carbon energy and waste management with the deployment of innovative technologies including the UK’s first plastic-to-hydrogen facility, a 50MW windfarm, a 21.5MW biomass plant, a 49MW energy from waste plant in construction and a Plastic Park blueprint to revolutionise plastic recycling and recovery nationwide.
The Plastic Park uses industrial symbiosis to revolutionise how plastic waste is currently handled and provide a value proposition that encourages collecting and sorting all plastic regardless of product form, colour or polymer. Envisaged to be one of several Plastic Parks across the UK, it will provide a comprehensive solution for some of the 5 million tonnes of plastic waste generated in the UK each year, preventing it from ending up in incinerators, exported overseas or in the ocean.
Protos, currently under construction, will provide the infrastructure to house a cluster of innovative energy generation and resource management companies. Protos is located close to the proposed routing of the CO2 pipeline that will form part of the North West HyNet infrastructure, transporting CO2 via pipeline to be stored in a depleted gas field in Liverpool Bay. Proximity to the HyNet project provides a potential export route for CO2 produced as a waste stream from Protos-located industries. Rather than each emitter developing its own CO2 pipeline connection, Peel is assessing the feasibility of an interconnected CO2 transportation system that will receive captured CO2 from a number of emission points on the site and transport and redeliver to HyNet for further transport and geological storage.
Peel NRE formed and administered the North West Hydrogen Alliance (NWHA), a joint industry group comprising 30 firms in the hydrogen supply chain. Peel sits on the Advisory Boards of both the NWHA and the Decarbonised Gas Alliance.
We are engaged with BEIS in developing strategies and policies to build the emerging hydrogen economy. We also cooperate with BEIS to assess different forms of advanced conversion technologies capable of converting waste materials into low carbon fuels.
To what extent are the ambitions of the UK Hydrogen Strategy, published August 2021, adequate for Scotland?
We believe that Scotland should continue to adopt the core UK Hydrogen Strategy by leveraging its unique renewable and natural gas assets during the transition to 2050 net zero. This of course, includes the early assignation of ACORN as a Track 1 Government supported Industrial Cluster, where in 2025, CO2 from natural gas pipelines into the St Fergus gas terminal facilitates hydrogen production from Reformation as outlined by Storegga and its partners. The connection of ACORN to the Grangemouth manufacturing complex is key.
Project Union, a National Grid-led proposal to create a connected hydrogen market, will include all major manufacturing hubs and critically Bacton with a longer-term opportunity to connect to the European Hydrogen Backbone vision and the broader UK markets.
Scotland’s plans to develop Green Hydrogen projects, for example, Orion and in the Cromarty Firth, are key, as is the opportunity for the Dolphyn offshore hydrogen production project. In summary, we believe that the UK hydrogen strategy is adequate for Scotland, but ultimately the market will be driven by the definition of low carbon hydrogen irrespective of “colour”.
What should be the focus of the UK Government investment to ensure that Scottish industry, supported by Scottish research, is able to become a world leader in green hydrogen for domestic use and export??
Supply and Demand for Scottish Industry:
As discussed in Q1, a colour agnostic approach to hydrogen manufacture will provide substantial economic benefits to Scotland and contribute to its energy transition. In the short-term, investment in hydrogen for transport, particularly public sector fleets, will help create certainty of demand to support investment in production. Meanwhile, hydrogen blended into the grid (as per the ACORN project) will create further flexible hydrogen demand.
Hydrogen supply is likely to develop to contribute to some heating markets. Major industrial markets for hydrogen are already emerging at the Grangemouth complex and ExxonMobil Fife plant.
Scotland is in a unique position for incremental renewable energy (evidence ScotWind); as a result, hydrogen may be produced through incremental renewables (through electrolysis); for example, the Dolphyn project. Of course, it’s not just wind, Scotland is also blessed with a high potential for hydro, tidal, thermal and geothermal generation capacity, either through dedicated renewable electron supply to electrolysers or potentially utilising excess energy to produce hydrogen when power demand is low.
Support Research:
Scotland’s world-class University network has a big opportunity to provide research, collaborate with industry, and proactively lead and support hydrogen and CCUS development. This collaboration and networking would bring significant benefits for industry, universities and governments to partner up for research grants and programmes combining efforts and resources to boost hydrogen and CO2 technology development and deployment.
Examples of these are:
Export:
The initial focus is to supply low carbon hydrogen to meet the demand of Scotland’s transport, heating, industry and power market demand supplied at scale from 2025. Export to the rest of the UK is possible, facilitated by the National Grid through blending and ultimately through Project Union, which ultimately plans to install some new pipeline whilst repurposing existing gas transmission pipes to become the UK hydrogen ‘backbone’.
The ammonia market is likely to grow as a direct fuel opportunity especially in the marine sector and as a hydrogen carrier supporting local and long-distance export opportunities.
Which market mechanism should be used to incentivise investment in producing low-cost green hydrogen?
It is essential that adopted market mechanisms create a level playing field for hydrogen pricing on a post-subsidy basis. There must be a level playing field for small distributed hydrogen manufacturing projects that is not unduly distorted by subsidy. Government subsidies and financial instruments such as RTFO should be coordinated to ensure a level market price (post-subsidy) playing field.
Carbon taxes will underpin and incentivise hydrogen as an economically attractive net zero energy vector.
Peel understands the current thinking and plans on Contracts for Difference on a ‘variable premium’ construct (for the hydrogen business case) as applied primarily to reformation and electrolysis.
What infrastructure, and investment in infrastructure, is needed for green hydrogen to be easily available for heavy transport and buses across the whole of Scotland?
We think that the emphasis should be on low carbon hydrogen as defined rather than “green hydrogen”.
Key Scottish “Green” hydrogen projects such as Orion and, to a lesser degree, Cromarty Firth will stimulate the use of hydrogen in a number of markets including transport. However, distributed hydrogen manufacture may be key; and that’s where we believe plastics to hydrogen is an attractive solution for the production of ‘firm’ (24/7) hydrogen. There are major societal and environmental benefits in this proposal as plastics are removed from land, rivers streams and oceans and crucially from the food chain. Peel NRE is proposing to develop a plastics to hydrogen facility in North Clyde, near Glasgow.
Plastic to hydrogen pilot facility is capable of supplying 3 tonnes per day of 99.999% pure, hydrogen, which is sufficient to fuel approximately 60 HGVs, 750 buses or 3,750 cars per day. We plan to replicate this model across multiple sites in Scotland.
The Committee on Climate Change recognised the important role of hydrogen in decarbonising the transportation sector. The North Clyde proposal includes a 2000kg/day Hydrogen Refuelling Station (HRS) element that will help to kick start the infrastructure needed to support the rollout of hydrogen vehicles which will be a vital part of Scotland’s journey to net zero. Proposed to be operated by HRS developer Element 2, they are looking to establish a network of hydrogen refuelling stations across the UK, with plans to deliver 2,000 pumps by 2030, and is looking at further sites with Peel NRE.
Development/Investment of Hydrogen and Carbon Capture technologies:
The development and investment of hydrogen and CCS/CCUS technologies is a key priority, and a range of approaches could be deployed.
What role should the oil and gas industry play in achieving a “just transition” to blue and green hydrogen in Scotland?
The oil and gas industry must play a significant part in the “energy transition” to net zero in terms of infrastructure and production of blue hydrogen, transferable skills, knowledge and energy security.
The Climate Change Committee (CCC) refers to this in detail, setting out the role of both oil and natural gas in several scenarios through to 2050. Natural gas is, of course an essential feedstock to produce many commodities and products, but it will be the primary feedstock in producing low carbon-hydrogen (blue hydrogen) through reformation with CCS – which is what the ACORN project plans to achieve. Natural Gas is likely to be a necessary component of the power generation mix through CCGT for many years, providing system flexibility when the wind doesn’t blow and the sun doesn’t shine. The planned decommissioning of nuclear capacity and systematic delays in any new capacity build will emphasise the need for gas-fired generation, which will be subject to pre or post-combustion CCS by 2035 at the latest.
What training is required to build a hydrogen-ready workforce in Scotland?
The IDRIC Project will define and develop skill and knowledge transfer from the oil and gas industry (and other industries) to ensure effective workforce education, training and development.
Several projects are already underway, including:
What is the long-term sustainability of the Scottish workforce for hydrogen power?
Opportunities for the Scottish workforce in the hydrogen domain are likely to expand and be long-term, high paid progressive positions.
February 2022