Written evidence submitted by GMB Scotland (HCC0028)

GMB Scotland submission to the Scottish Affairs Committee Inquiry into Hydrogen and Carbon Capture in Scotland

March 2022

Introduction & summary

GMB is the largest union in gas and energy, and therefore represents the interests of many of those workers who are meeting the UK’s energy needs.

Hydrogen has massive potential. However, the transition to blue and then green hydrogen must meet several key aims: utilising the skills and experience of the gas workforce, utilising existing gas infrastructure as well as developing new infrastructure, developing strong UK supply chains, combating fuel poverty, and ensuring that low-income households do not bear the costs of technological transition.

GMB is committed to protecting the long-term future of the UK’s energy industries. There must be secure investment in hydrogen and carbon capture to protect the long-term future of the gas industry and its workers, and wider energy intensive manufacturing. Hydrogen is a safe, clean fuel that can utilise the current gas network and protect our members’ jobs in both gas transmission and heating. It is vital that public funding and investment is provided to ensure that this fuel is developed with a long-term goal of converting current boilers to the new fuel where required.

The Department for Business, Energy & Industrial Strategy (BEIS) believes that hydrogen

could play a ‘vital role’ in meeting our carbon reduction targets by 2050 as well as

creating up to 8,000 jobs by 2030, and 100,000 jobs by 2050.[i] The UK has a historic opportunity to develop renewables in a way that supports jobs and helps to secure a viable future for the gas industry. The production of green hydrogen – utilising wind power – offers the prospect of a truly net-zero energy source which could be integrated into the gas distribution network.

There exists in Scotland massive potential for the production of blue hydrogen and carbon capture via the Acorn project. Scotland already possesses much of the skills and the infrastructure to build such a project. What is required now is the political will backed up by direct investment.

Building Capacity and Infrastructure

The UK Government’s Hydrogen Strategy is not ambitious enough. The UK Government’s target 5GW hydrogen production target is widely regarded as insufficient. Not enough hydrogen home heating trials are being funded, despite the substantial sums spent on Electrification of Heat Demonstrator project.

For starters GMB would argue that the hydrogen production target laid out within should be doubled. The UK Government has delayed several key developments, such as the consultation on hydrogen-ready boilers and the call for evidence on the future of the gas system. We also urgently need more trials for home heating. This is delaying action in an emerging field which has massive potential.

The energy and cost-of-living crisis has exposed the fragility of our energy supplies and underlines the need to ensure that there is a long-term plan in place for the development of new technologies which can be domestically produced and utilised within existing energy infrastructure.

An essential step in making Scotland a hydrogen and carbon capture leader is providing the funding and government support required for the Acorn CCS and hydrogen projects in the northeast of Scotland.

The Acorn CCS project could capture CO2 emissions direct at the source from the St Fergus gas terminal and Grangemouth refinery and store them underground in the North Sea using existing Goldeneye and Atlantic pipelines which have previously been used for fossil fuel extraction.

The Acorn Hydrogen project could take natural gas extracted from the North Sea and reform it into clean hydrogen which can be used to heat homes. Any CO2 produced from the process can be captured at source and stored using the Acorn CCS infrastructure. Initially, hydrogen will be blended with natural gas. Replacing 2% of natural gas with hydrogen can remove 400,000 tonnes a year of carbon emissions. However, this can grow to a 20% blend over time with some homes already possessing the required pipework for such a transition.[ii]

In 2021, the UK Government approved plans for the HyNet Northwest carbon capture bid providing access to a £1billion fund. This is a great success for the Northwest of England, however the Acorn project in the North East of Scotland was not approved despite the array of existing infrastructure e.g. pipelines, which would have made the project more cost effective and a skilled workforce which could easily begin work on the project.

The Acorn CCS and hydrogen projects have massive potential to ensure a real just transition for the fossil fuel workforce in the Northeast of Scotland; meet net zero targets; and has the unique advantage of already possessing much of the required infrastructure. Therefore the UK Government must provide approval and funding for Acorn without delay.

Green hydrogen production is already commercially competitive in niche industrial applications, and it is projected that the technology will be commercially viable at scale within a decade on current cost trajectories.[iii] Coupled with the UK’s natural wind resources, and with active Government support, this nascent industry could grow into a strong exporting manufacturing, fabrication and installation sector.

A gradual blending of green gasses (biomethane, synthetic natural gas/bioSNG, and hydrogen) offers a sustainable option that would minimise disruption for consumers and make best use of the existing gas workforce and distribution network. Both products can be safely blended into the natural gas supply (including hydrogen blends of up to 20%) without a change to existing appliances.

The UK’s 280,000 km gas grid supports more than 24 million homes. Finding ways to ensure that homes are not disrupted by changing their heating systems through hydrogen conversion – if the technology and cost is viable – would see massive benefits for consumer acceptance while also contributing to net-zero.

The value of the gas infrastructure is at least £20 billion.[iv] A detailed assessment by the Institution of Engineering and Technology concluded that ‘from an engineering perspective there is no reason why [the repurposing of the network to supply hydrogen] cannot be achieved safely.’[v] By contrast, an abrupt ‘electric by default’ policy risks turning much of the network into a wasted asset with write-down costs that run into the billions.

There is also a real opportunity to build strong, exporting supply chains in the UK too. Investment in hydrogen also opens the door for the sustainable powering of transport services through fuel cell technology, particular for modes for which electrification may not be suitable (such as heavier vehicles and some rail lines).

However, for households and workers to benefit from hydrogen production and consumption, hydrogen supply chains must be domestically based. Otherwise, accountability, jobs and profits will be offshored. Therefore, the production of green hydrogen using wind turbines, for example, must include turbines built in Scotland or the rest of the UK – not imported from abroad which also increases carbon emissions. The BiFab yard in Fife has been overlooked for turbine contracts in favour of foreign competitors meaning that supply chains and their benefits are needlessly exported.

A recent similar example is that of ScotWind. The Scottish Government awarded £700million worth of contracts to private firms to allow them to utilise Scotland’s seabed for the installation of offshore wind farms. Estimates show that the public purse could have lost out on £3.5 - £5.5billion every year as a public alternative which could have sold the new ScotWind electricity to the grid and retained operating profits had not been created.[vi] Therefore exporting supply chains and private ownership of infrastructure and production capacity prevents the public purse, households and workers from gaining the full benefit of large-scale energy investment. Publicly owned and run infrastructure is also an essential element of any energy strategy which aims to increase public accountability over jobs and profits; and reinvest profits in developing infrastructure and keeping energy costs low for households.

Funding Projects

Investment must be provided via direct funding from government through general taxation or borrowing – not the market. Borrowing or general taxation would be more cost efficient and accountable than the various market mechanisms that have been developed over past decades. This can ensure that those who are able to pay do so rather than other models which rely on household bills and spread costs across income brackets.

The issues effecting the energy market are those that GMB have long warned of with a fragmented system which is no longer fit for purpose. The failure of numerous energy companies has created massive problems for consumers and the fear is that this boom-and-bust approach will create issues for members’ jobs. GMB have always been clear that energy is too important to be left to a market system that discourages long term strategies in favour of quick profits and the failures of these energy companies underlines this view.

Energy consumers and industries across the UK need certainty – especially during a cost-of-living crisis – that their jobs will be protected through utilising existing skillsets or transitioning workers into similar jobs; and to ensure that their energy needs will be met. Any Hydrogen Strategy must therefore be backed up by considerable public funding which will invest in the production of hydrogen, infrastructure, and skilled jobs and also public ownership.

Workforce and Training

Recent developments over energy and the cost-of-living crisis have emphasised the need for the UK to develop a mix of domestically produced energy sources which exist as part of a strong domestic supply chain. Oil and gas should and will continue to play a leading role in meeting Scotland and the rest of the UK’s energy needs.

The 2018 COP24 Silesia Declaration on ‘Solidarity and Just Transition’ stated that environmental policies must be developed through social dialogue, as part of a process that ‘creates decent work and quality jobs.’[vii] Put another way, change must be done with workers – not to them.

The existing gas workforce is a national asset which can be drawn upon to deliver a strong hydrogen energy source. These jobs are skilled, often well-paid and are especially important in the North East of Scotland where many households rely on these incomes.

A fully developed programme of retrofitting will require a trained and experienced workforce. If we want to truly achieve a just transition from fossil fuels to green energy then the current workforce across British Gas, SGN and others must be part of that transition. These workers already install boilers that could be readily adapted to hydrogen, and they must be part of any public plans to retrofit homes.

The size of this workforce will need to increase to deal with the demand and this cannot be left to the private sector alone. Public investment must be provided to retrain the existing workforce with similar expertise and also to train new workers in the profession. However, the UK has a poor record on retraining schemes and there exists the issue that the UK’s 135,000 certified gas engineer workforce is aging due to underinvestment,[viii] and many older workers find it more difficult to access training.

As a generalisation, the evidence suggests that older workers find it more difficult to transfer into new roles and are at a heighted risk of exiting the labour market prematurely during industrial transitions. Therefore, a phased transfer towards green hydrogen will minimise the impact on the sector’s workforce.

In preparation for a full transfer to hydrogen, the UK can draw on its experience of arguably its only true ‘just transition’: the conversion from town gas (which was 50 per cent hydrogen) to natural gas in the 1960s and 1970s, with Government, industry, and union support. Estimates produced for BEIS suggest that a similar conversion programme today could provide work for 100,000 people and be completed in four years.[ix]

Much of Scotland’s offshore oil and gas infrastructure could be adapted to carry hydrogen, and there are active proposals to repurpose existing pipelines for green hydrogen production.[x] According to the UK Government, ‘there is considerable opportunity to take advantage of this infrastructure and consider this pipeline system for re-purposing [for hydrogen].’[xi] Hydrogen can play an important role in the future of communities that depend on oil and gas employment, but this will only be achieved as part of an active industrial strategy for decommissioning.

Conclusion

Hydrogen is without doubt a key element in meeting Scotland and the rest of the UK’s future energy needs.

Scotland’s current energy infrastructure including off and onshore wind and North Sea pipelines and an existing skilled workforce means it is poised to be a green and blue hydrogen, and carbon capture capital. The Acorn project is a prime example of this potential.

Energy production and infrastructure must be met by using and developing domestic supply chains to ensure the full benefits of energy projects and production are kept for the benefit of households and workforces. There must also be a public alternative to energy production to maximise these benefits.

The political will backed up by funding has been absent. The UK Government must approve and fund the Acorn project using direct funding to ensure costs are not shared by households across all income brackets. During a cost-of-living crisis, this would only further entrench existing income inequalities and deepen the crisis many are facing.

At the core of any hydrogen strategy must be a plan for jobs and training for the existing workforce and also for the workforce to grow to meet demand.

March 2022

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