Written evidence submitted by Aberdeen City Council (HCC0026)

This return is submitted on behalf of Aberdeen City Council (local authority for the Aberdeen City region in North East Scotland) to the request below:

Call for Evidence

‘Hydrogen and carbon capture in Scotland’

Terms of reference: Hydrogen and carbon capture in Scotland

The Committee calls for evidence to be submitted on the following issues: 

 

  1. To what extent are the ambitions of the UK Hydrogen Strategy, published August 2021, adequate for Scotland?

 

“The UK Hydrogen Strategy is valuable context for project specifiers and delivery organisations working in Scotland however for northern project’s, the equivalent policy and guidance produced by the Scottish Government will be similarly valuable and sometimes more directly relevant. To ensure that projects and ambitions are developed in a manner that delivers as consistent a set of benefits as possible to all stakeholders, clear guidance on how UK and Scottish policy support and integrate with each other to ensure the successful delivery of both UK and Scottish ambitions would be very positive going forwards.”

 

  1. 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 this early stage of the hydrogen sector’s growth in Scotland, it is likely that many initiatives and projects developed will include an element of both public and private sector input. Scotland has a track record of good quality pilot and demonstration projects delivered by the public sector in relation to potential hydrogen deployments and the next stage of this path towards economic sustainability is to be able to start the transition towards partly, and ultimately fully, private sector funded/financed/delivered programmes. In this interim phase, having access to government investment options such as preferential capital financing options, underwriting of demand commitments by public sector users to manage risk for investors and collaborative funding mechanisms that include both public and private capital are all beneficial. Ensuring that the governance of any available investment mechanisms allows for the inclusion of private capital on commercial terms and factors in the inevitable changing timescales and funding ratios that are often very much ‘in development’ for early, pre-commercial projects is also important.”

 

  1. Which market mechanism should be used to incentivise investment in producing low-cost green hydrogen?

“With the general requirements of a supportive policy backdrop at both UK and Scottish level alongside the appropriate, flexible investment tools discussed previously which allow for the successful integration of both public and private investment to deliver mutually beneficial outcomes, a further key focus may need to be the market mechanisms of the energy sector underpinning hydrogen production. Given green hydrogen in most cases will require a substantial electrical energy input, the cost of this marginal input is a key driver of unit costs and the delivery of the aspiration of ‘low-cost green hydrogen’. In all scenarios, but particularly in the volatile energy market the UK is experiencing, government incentivisation of appropriate market mechanisms around supply of energy (particularly ‘surplus’/off-peak renewables from current and future UK assets) could be a really important aspect of ensuring ‘low cost’ hydrogen is a feasible delivery option in the UK.”

 

  1. 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?

“The key element at this early stage of the sector’s development is for distribution infrastructure (such as storage and dispensing plant) to be as flexible as possible in terms of input; this allows for the mixing of on-site production and delivery of off-site produced fuels for local dispensing as appropriate and as commercial options allow. Additionally, having these refuelling options sited conveniently for potential volume users appears to be a key end-user requirement in many scenarios that Aberdeen City Council has explored in the past. It is much easier to persuade a volume user of the viability of transitioning to a low/zero emissions fuel source if the day to day operations of the alternative are comparable in terms of time and effort to their baseline, conventionally fuelled scenario. As such, removing barriers to adoption such as perceived lengthy and inconvenient charging times or ‘dead miles’ travelling to and from distant low emission fuel depots/sources makes the adoption path more viable for end users.”

 

  1. What role should the oil and gas industry play in achieving a “just transition” to blue and green hydrogen in Scotland?

“It would be positive if UK and Scottish governments were in a position to work collaboratively with the private offshore energy sector to ensure the managed transition of skills, experience and jobs in a way that protects and sustains the resultant prosperity of the local economies and communities those jobs are based in and support. The role of government in this scenario is to identify ways of delivering mutual benefit incorporating both public, ‘just transition’ policy aspirations alongside the technical viability and economic and commercial sustainability that the private sector requires to be able to engage with a project or initiative.”

 

  1. 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?

 

“The training of the workforce is an area which, ideally, would be spearheaded by the private sector in response to the market opportunities available for the hydrogen sector. Many of these private sector operators, particularly the established, high-value oil and gas sector based in and around Aberdeen, will be best placed to adapt and refine their existing highly skilled workforces to these new challenges. A new UK Offshore Energy Workforce Transferability Review recently published by Robert Gordon University highlights that the offshore energy workforce mix will change significantly in the next 10 years, and projects that decarbonised energies roles will increase from 20% to 65% of all jobs in the offshore energy sector (oil & gas, offshore wind, carbon capture utilisation and storage and hydrogen). The Review also indicates that over 90% of the UK’s oil and gas workforce have medium to high skills transferability and are well positioned to work in adjacent energy sectors. The role of UK and Scottish government at this time is best placed in supporting the expertise in the private sector to deliver this skills transition in an economically viable and sustainable manner.”

 

The Committee values diversity and seeks to ensure this where possible. We encourage members of underrepresented groups to submit written evidence.

Deadline for submissions

The Committee calls for evidence to be submitted by Tuesday 1 March. 

March 2022