Written evidence submitted by Net Zero Technology Centre (HCC0019)
Net Zero Technology Centre Response: Scottish Affairs Select Committee Inquiry: Hydrogen and Carbon Capture
The Net Zero Technology Centre (NZTC) was created in 2017 as part of the Aberdeen City Region Deal (ACRD), with £180 million of UK and Scottish government funding to maximise the potential of the North Sea. NZTC is the only organisation developing and deploying the technology with industry to accelerate an affordable net zero energy system.
NZTC co-invests with industry and works in partnership with the public and private sectors, funding R&D, driving investment, building a clean energy eco-system and influencing policy to accelerate the transition and close the gap on net zero technologies.
NZTC works cross-sector and internationally to tackle the most complex and most critical technology challenges; commercialising game-changing innovations, helping developers secure field trials, and accelerating those tech start-ups with the most promising clean energy solutions.
NZTC’s strategy focuses on delivering technology in three key areas.
• Emissions Reduction: develop technology to reduce UKCS operational emissions to net zero
• Energy Systems Integration: Integrate infrastructure to create a net zero offshore energy system - hydrogen, CCUS, floating wind
• Offshore Energy 4.0: deployment of digitisation and automation to drive a net zero North Sea
NZTC’s also runs the Tech X Clean Energy Accelerator, an intensive 15 week programme for up to 12 innovative clean energy start ups with clear potential to significantly accelerate the transition to an affordable net zero energy industry. Tech X is backed by industry-leading partners including Equinor, ADNOC, Accenture and Deep Science Ventures.
In its first 5 years, NZTC has:
• Co-invested £192 million with industry
• Approved over 300 projects
• Screened 1450 technologies and completed 86 field trials
• Commercialised 29 technologies, forged relationships with 64 partners
• Helped with the acceleration of 33 start-ups, with 12 currently beginning their innovation journey
NZTC has authored or co-authored a number of key reports that the Committee should take into consideration as evidence. These are below and NZTC would be pleased to provide further detail on each.
Further, NZTC will shortly be publishing a study, “Floating Offshore Wind Powered Hydrogen: Case Study Review for Local Supply Chains”, commissioned by the Offshore Wind Innovation Hub (OWIH), which examines the UK supply chain opportunity for floating offshore wind powered green hydrogen production projects. The study has been supported by the Offshore Renewable Energy (ORE) Catapult as part of the Energy Transition Alliance (ETA) between NZTC and ORE Catapult. This will build on previous work published by NZTC and ORE Catapult - “Reimagining a Net Zero North Sea: An Integrated Energy Vision for 2050” (below).
We will share with the Committee when published.
The report considers four case studies intended to cover suitable means of producing and exporting green hydrogen near identified key regions for floating offshore wind. Key regions have been identified by comparing areas of the United Kingdom Continental Shelf (UKCS) with suitable water depths for floating offshore windfarms, with predicted available offshore wind resource. Key regions have been identified in North Scotland, North East England and the Celtic Sea.
The report considers North Scotland as one case study as there is significant available wind resource and suitable water depths close to shore off the Shetland Islands. Infrastructure is available at Sullom Voe Terminal which could be repurposed for green hydrogen production onshore. The terminal also has jetties which are currently used for oil export via tanker, providing an export route to international markets for produced hydrogen.
Further, Aberdeen and the wider North East region of Scotland is a global centre of excellence in offshore and subsea engineering. It has an incredibly strong local supply chain with decades of experience in the design, engineering and operation of offshore facilities. The North Sea is a mature oil and gas basin with several assets reaching the end of their life each year. This offers potential for repurposing as offshore hydrogen production facilities, managed by the local supply chain. Most oil and gas developments lie in regions of significant wind resource and suitable water depths for floating offshore wind developments.
Further NZTC supported reports relevant to the inquiry
Reimagining a Net Zero North Sea: an integrated energy vision for 2050
https://www.netzerotc.com/reports-publications/reimagining-a-net-zero-north-sea/
The ‘Reimagining a Net Zero North Sea: an integrated energy vision for 2050’ report launched by NZTC and OREC as part of the Energy Transition Alliance in November 2020 highlights the opportunity for the oil and gas and renewable energy sectors to work together to transform the UK’s energy system and help deliver the country’s commitment to the Paris Agreement.
The key arguments are that investment is essential now:
• Up to £416bn required over the next 30 years – to unlock potential value of £125bn per year for the UK economy and support up to 232,000 jobs (if Transformational scenario is adopted)
• Investment at pace, together with commitment to a net zero North Sea, will accelerate new job opportunities which could mitigate major job losses expected in the Oil and Gas sector over the 2020s
• Focused investment in technology innovation could also deliver savings of £154bn by 2050, reducing costs for consumers and delivering affordable clean energy for UK homes and businesses.
Being a leader in clean energy skills and technology presents a valuable export opportunity that the UK must seize. The report outlines three scenarios which have been modelled on the Committee on Climate Change’s Further Ambition scenario. Each scenario sees the UK achieve its net zero goal by 2050, using a combination of energy solutions to meet demand, but delivering greatly differing levels of economic benefits and green jobs:
• In the Emerging scenario, renewable energy plays an increasing role, with gas still a significant contributor to the offshore energy mix and a significant requirement for carbon capture and storage (CCS).
• In Progressive, an increased share of offshore renewables dominates the electricity market alongside a blue/green hydrogen mix, with a major role for CCS.
• Transformational outlines an energy system which is driven by offshore wind and green hydrogen, with oil and gas demand matched by clean domestic supplies
Closing The Gap: Technology for a Net Zero North Sea
Sets out a technology roadmap for an integrated energy future in the North Sea, describing the technologies that can close the gap to 2050 across emissions reduction, hydrogen, CCUS, renewables and digitisation, and their economic potential.
https://www.netzerotc.com/reports-publications/closing-the-gap/
Development of Early, Clean Hydrogen Production in Scotland
NZTC supported this Scottish Enterprise project with Xodus Group, Wood and ORE Catapult which explores how Scotland can become a major producer and export of clean hydrogen.
One North Sea: Cross-border collaboration in the North Sea Energy Transition:
One North Sea, founded by TNO and the Net Zero Technology Centre, is a platform that focuses on stimulating international collaboration, bringing together the ideas and initiatives of research organisations, industry, and governments
https://www.netzerotc.com/reports-publications/one-north-sea/
Question 1: To what extent are the ambitions of the UK Hydrogen Strategy, published August 2021, adequate for Scotland?
Scotland’s Draft Hydrogen Action plan sets a route map for 5GW of renewable and low-carbon hydrogen by 2030 and 25GW by 2045. With a UK ambition for 5GW of the same by 2030, it is clear that the overall UK strategy can and should be more ambitious. With EU competitors like Germany launching ambitious strategies – Germany is now increasing its green hydrogen electrolysers capacity target to 10GW by 2030 - Scotland and the UK are now in a global race for investment.
The UK Hydrogen Strategy should focus on the technology supply chain, R&D and export potential in Scotland and the UK as well as hydrogen production, transport and OEMs/Tier 1s. The Hydrogen Advisory Council must be sure to take account of technology in developing the roadmaps for the hydrogen economy. Further, it should consider the potential of UK Government’s commitment to investing 2.4% GDP by 2027 and how the Net Zero Innovation & Research Framework’s challenge of developing the technologies to deliver efficient, cost-effective production of low carbon hydrogen at scale will be delivered in Scotland and the UK.
Scotland has abundant opportunity in linking blue hydrogen and CCS, particularly at the Acorn CCS project. Linking Blue H2 and CCUS has overall benefits for Scotland/UK in that carbon capture technology matures and strengthens the existing technology supply chain. Net Zero Technology Centre is working with NECCUS and other partners to develop a Net Zero Roadmap for Scotland funded by the Industrial Strategy Challenge Fund. This will identify future actions Scotland can take to accelerate the transition to net zero for its industries.
Question 2: What should be the focus of 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?
In the UK Governments recent ‘Levelling Up’ White paper the ambition is to ‘By 2030, domestic public investment in R&D outside the Greater South East will increase by at least 40%, and over the Spending Review period by at least one third. This additional government funding will seek to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth.’
‘In addition, the UK Government will target £100m of investment in three new Innovation Accelerators, private-public-academic partnerships which will aim to replicate the Stanford-Silicon Valley and MIT-Greater Boston models of clustering research excellence and its direct adoption by allied industries. These pilots will be centred on Greater Manchester, the West Midlands and Glasgow City-Region. These new clusters will be our Fourth Industrial Revolution Foundries, leveraging our global lead in scientific research.’
Scotland has a significant Hydrogen Corridor along the East Coast with Aberdeen, Dundee and Edinburgh all advancing hydrogen research, production and application projects. There is a case for a ‘Fourth Innovation Accelerator’ along the East Coast of Scotland to support research and development in these areas.
Specifically, we would recommend considering:
A Green Hydrogen Technology Test Centre or Facility in Scotland:
The lack of industrial-scale test and demonstration facilities for hydrogen production, storage and transportation technologies is a challenge facing hydrogen technology developers across the globe. Establishing an industrial test and demonstration centre would help Scotland develop home-grown hydrogen technologies and attract developers from around the world. Any initiative should be supported by a strong operational budget and linked to strategic low-cost manufacturing initiatives and long-term R&D programmes and academia. This is a successful approach in other sectors – for example, the success of ORE Catapult’s Blyth offshore wind test facility in attracting R&D investment from GE who subsequently went on to establish a blade factory on Teesside.
Developing Hydrogen Hubs:
NZTC, working with Shetland Islands Council and a range of other stakeholders, received £2.8m of funding from Scotland’s Energy Transition Fund in 2021, to develop the energy hub concept on the Shetland Islands. Energy hubs are where GW-scale low carbon hydrogen can be produced and integrated with Scotland’s offshore wind resource, will be an essential element of the transition to net zero. One of the core goals of this project will be to address the common challenges and opportunities that energy hub projects across Scotland will face.
The Outer Hebrides has abundant wind resources and there is significant potential to harness this energy to produce and export green hydrogen. The awarding of three Scotwind licences of a combined capacity of 1.8GW around the Outer Hebrides show the potential. NZTC, funded by Scotland’s £200m Green Growth Accelerator, is working with the Outer Hebrides Island Council to develop a business case for the Outer Hebrides Hydrogen Hub which will encompasse a suite of green hydrogen production, storage and end use projects with a total electrolyser capacity in the 8-10MW range.
Supply Chain
UK and Scotland must make every effort to capture the supply chain opportunities that global leadership would bring as well as the production potential. UK and Scotland are now in a global race to attract this investment. Test centres and Hydrogen Hubs will attract national and international supply chain and the development of technologies. NZTC is ideally placed to drive this collaboration between industry, governments and academia that will capture these technology opportunities in the supply chain.
There is rightly focus on attracting world-leading OEM and Tier 1 manufacturers to Scotland and the UK, for example electrolyser manufacturers. The same focus on the technology and materials required to supply these facilities is also required. Growing a Tier 2+ hydrogen supply chain in Scotland and the UK will derisk investment in facilities, reduce costs (particularly in transportation) and help support the OEMs and Tier 1s to invest in Scotland and the UK in the long term.
The upcoming study, “Floating Offshore Wind Powered Hydrogen: Case Study Review for Local Supply Chains”, commissioned by the Offshore Wind Innovation Hub (OWIH) and supported by the Offshore Renewable Energy (ORE) Catapult as part of the Energy Transition Alliance (ETA) between NZTC and ORE Catapult, states that CAPEX job creation in the supply chain is mainly driven by electrolyser spend. This represents over half of CAPEX related jobs in all case studies. SMEs developing electrolyser technologies therefore need to be supported to create and develop manufacturing bases in the UK, anchoring this critical infrastructure both for local projects and export opportunities.
The other area of significant CAPEX job creation is in hydrogen compression systems. Increasing UK content this area would be required to meet the 60 per cent content target for CAPEX.
Priority areas of technology focus in green hydrogen:
• Green hydrogen – saltwater electrolysis - cost effective integrated desalination or direct seawater electrolysis to prevent corrosion or formation of chlorine gas in seawater electrolysis
• Green hydrogen – electrolyser catalysts - low cost, high current density and durable catalyst materials
• Green hydrogen – subsea electrolysis - systems suited for autonomous, flexible hydrogen production and pipeline compression on the seafloor
Investing in early TRL R&D and local start-ups:
Establishing a support structure to validate and scaleup of technologies (via NZTC and Scottish academic institutions) will be key to develop and strengthen local supply chain and OEMs, thereby lowering overall system costs, compared to imported technology. Private / Public capital sources to fund and grow Scottish businesses across all TRL stages in the hydrogen space will be essential to delivering Scotland’s targets and maximising the benefit to the Scottish economy.
The ultimate goal of NZTC’s Tech X programme is to attract our cohort to invest and grow in the North East of Scotland, working with Scottish Government, Scottish Enterprise and related organisations. Expanding the Tech X program in Scotland and UK-wide would attract more early TRL investment in hydrogen technologies and be able to develop links with academia. TechX’s start up alumni have already generated over £5m revenue in 2021, forecasting £10-12m in 2022. This is from only 3 cohorts.
Organisations like NZTC that sit across academia, industry and Government can facilitate these discussions and drive these investments NZTC’s experience in our Tech X Clean Energy Accelerator and Tech X Growth programme is that there is strong appetite from business for scale up capital and to locate in Scotland. Close collaboration with DIT, SDI and Scottish Enterprise will support these start ups to grow in Scotland and the UK.
Export Capability
Scotland is capable of producing GWs of green hydrogen that will exceed domestic demand. As the ‘Development of early, clean hydrogen production in Scotland’ report, supported by NZTC and other partners states, “establishing the value chain downstream from production is critical (and) ultimately this means securing an export market for hydrogen produced from a Scottish site”.
The NZTC Hydrogen Backbone project, funded by Scotland’s Energy Transition Fund, should be prioritised; it is crucial for the development of potential export pathways for hydrogen. It develops the Scottish leg of the European hydrogen backbone as one of the earliest legs to be constructed, for example, the port of Rotterdam, is preparing for future hydrogen imports. From Rotterdam, Germany will import hydrogen via pipeline to the state of North Rhine-Westphalia in western Germany, which will become a major hydrogen demand centre. North Rhine-Westphalia is home to one of Europe’s largest industrial centres and Germany’s biggest coal region.
Question 3: Which market mechanism should be used to incentivise investment in producing low-cost green hydrogen?
No comment
Question 4: 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?
Scotland has had some early successes in public and private partnership projects utilising green hydrogen in transport. The Aberdeen Hydrogen Hub, which is securing demand, is demonstrating successful technological solutions today, and helping to position Aberdeen to be the first hydrogen city and helping to get that early mover’s advantage for Scotland.
Question 5: What role should the oil and gas industry play in achieving a “just transition” to blue and green hydrogen in Scotland?
NZTC’s CEO, Colette Cohen, is a member of Scottish Government’s Just Transition Commission.
The concept of a just transition recognises that while the move to net-zero is vital, it must not be inequitable. Scotland has a strong indigenous energy heritage, huge renewables potential as well as extensive design and manufacturing capability. It is imperative we support industries and communities to deliver a just transition through investment in skills and innovation.
A roadmap from Government and stakeholders for the development of Scotland and the UK’s hydrogen capabilities will support the oil and gas industry to invest in the skills required. Growing hydrogen capabilities without developing the indigenous workforce to deliver in the long term would be economically damaging and risks losing public support for the transition. Developing the workforce without the pipeline keeping would be equally as damaging.
Question 6: What training is required to build a hydrogen-ready workforce in Scotland? What is the long-term sustainability of the Scottish workforce for hydrogen power?
We would draw the Committee’s attention to the Hydrogen Skills Partnership initiative announced in September 2021 which aims to show the potential for green, sustainable skills and high value jobs emerging from a future hydrogen section in the UK. The Partnership is made up of ScottishPower, ITM Power, Arcola Energy, Robert Gordon University, Energy Transition Zone Limited, Skills Development Scotland, Aberdeen University, North East Scotland College and the Hydrogen Accelerator (based at the University of St Andrews).
For questions, clarifications and request to give oral evidence, please contact:
Mary Thorogood
Government Affairs, External Relations & Communications Director
March 2022