Written evidence submitted by the European Marine Energy Centre Limited (EMEC) (HCC0039)
Executive Summary
EMEC welcomes the opportunity to respond to this timely consultation. By way of summary:
I would welcome the opportunity to meet you and Committee colleagues to discuss our views further. In the meantime, should you have any questions, please do not hesitate to contact Neil Kermode, Managing Director.
Introduction
EMEC was founded in 2003 in Orkney, Scotland and is the only accredited wave and tidal test centre for marine renewable energy in the world. Today we’re also pioneering the development of a green hydrogen economy in Orkney, having set up a hydrogen production plant onshore next to our tidal energy substation on the island of Eday.
Producing hydrogen and using it as an energy storage medium is a solution to overcome local grid constraints, enabling large scale renewable integration. In 2017 EMEC achieved the world’s first tidal generated hydrogen using power from tidal energy. With the ability to use locally generated hydrogen to decarbonise across a range of power heat and transport applications, Orkney has become a leading example of a developing hydrogen economy. EMEC actively collaborates on hydrogen research projects and offers a demonstration site for new hydrogen technologies. Most recently EMEC’s project involvement has focussed on hydrogen demonstration in the marine and aviation sector, supporting the decarbonisation of lifeline transport services.
1.1 To what extent are the ambitions of the UK Hydrogen Strategy, published August 2021, adequate for Scotland?
We welcomed recognition with the UK Hydrogen Strategy of Orkney, EMEC and various projects including BIG HIT, HySEAS III, and HyFlyer I & II, as well as wave and tidal technology (in relation to potential green H2 production in Scotland and Wales). It is encouraging that demonstration is highlighted as a core pillar of innovation in the hydrogen space, and that regulatory barriers thwarting innovation are recognised.
However, the UK Government’s firm commitment to CCUS and blue hydrogen is a concern in relation to the renewed target of reducing emissions by 78% by 2035; and the long-term net zero aim by 2050. Renewable energy targets should be driving a sustainable, long-term transformation of our energy system and the UK’s focus on ‘non-green’ hydrogen is a distraction from this. IRENA’s 2021 World Energy Outlook report positions BECCS, CCUS and blue hydrogen at the bottom of the transition model, prioritising green hydrogen and other renewables instead.
While the UK Government Hydrogen Strategy acknowledges a role for green hydrogen, it puts excessive focus on the Levelised Cost of Energy (LCOE). Although clearly important, renewable electricity and clean fuel sources such as green hydrogen have multiple roles within the future energy system that build up their true value as energy ‘carriers’. An excessive focus on LCOE, but without the externalities of pollution and climate change being costed leads to an excessively cautious approach.
At EMEC, project experiences have demonstrated the synergies between developing hydrogen economies alongside marine renewables, particularly in our case through the co-deployment of tidal energy generators and electrolysis plant. Tidal energy combined with hydrogen production, holds great potential to ensure a secure and flexible energy mix on the grid, given its predictability.
Though the Orkney Islands are particularly well suited to the deployment of marine energy convertors, there is great scope for replication in other island and coastal environments around the UK and indeed worldwide.
EMEC would encourage the government to strengthen support for green hydrogen as a production method. Doing so would mean taking the opportunity to level up island and coastal communities through the co-deployment of renewable technologies such as offshore wind, wave and tidal, with electrolysers.
1.2 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?
Islands such as Orkney, with highly reputable and extensively developed expertise in innovation and in renewable energy sectors, offer a tremendous opportunity for the development of green hydrogen. This green hydrogen will benefit from vast amounts of renewables available for its production; existing offshore infrastructure and expertise; and proximity to end-use and export logistics. Green hydrogen and renewable energy deployed fairly and in line with regional needs and opportunities therefore present the ultimate economic development opportunity for both Scotland and its regions.
Market support:
It is desirable that the build-up of supply of hydrogen will be matched by the increase in demand with both staying in balance, however this is implausible due to the unknown nature of the market, technology or indeed the behaviours of customers. Balance will not be achieved, so the alternatives are for the demand to exceed supply which will lead to increased cost and inefficient shortages, or for demand to lag the supply. It should be noted, however, that the main cost of production is related to the electricity used. Having production capacity ready to supply, but left unused, is therefore likely to be less expensive than a market that is underserved.
It will be hard to persuade business that it should provide the production capacity before demand is established unless it is paid to do so. Providing support to establish the means of production is therefore a necessity. This financial support needs to fund the provision of the plant i.e. capital. This will be necessary to attract early adopters into a market where plant costs will be falling rapidly. However it must be recognised that there will be no reduction in equipment costs unless there are equipment purchasers in the market. Government’s role is to stimulate that entry into the production market.
At the same time it is likely that the costs of production will be closely tied to electricity prices and the continuing fall in costs of electricity from renewables will see increasing activity to increase its value by turning it into other fuels such as hydrogen. Whilst market stimulation will initially be needed to produce hydrogen; this is likely to fall as supply comes online.
It is also possible that Government may need to help stimulate the demand for hydrogen in order to displace fossil fuel use. Initial users will experience interruptions in supply and volatile prices as the market establishes. Smoothing such volatility will bring nervous customers into the market and so build demand.
R&D:
Hydrogen research and demonstration should be one of the areas in which innovation is enabled and encouraged. In the UK Innovation Strategy then intention for the UK to become a “science and innovation superpower” is clearly and powerfully set out. EMEC would argue that the scale of opportunity within the hydrogen arena is such that this should form a plank of that work. This work will help identify the most cost-effective applications of hydrogen, and pilot projects to demonstrate these applications at increasing scale in order to inform future refinement and prioritisation.
By way of example: There are gigawatts of generating potential around Orkney alone and there is potential for the area to become a significant supplier of hydrogen and derivative fuels for the UK. There are aspirations for an initial project at the Flotta Oil Terminal that could be of the order of 500 MW of electrolysis, but at present there is less than 2 MW of electrolysis on the islands. The scale of the gap between present activity and potential delivery is several thousandfold and therefore the potential error bands are enormous. Effective and directed R&D along with deployment will reduce those bands and drive towards maximum delivery in the minimum time.
Manufacturing and maintenance
EMEC clearly sees through its experience of manufacturing hydrogen from tidal and wind energy that maintenance and manufacturing costs need to reduce. Such cost reductions will inevitably occur as the sector develops and the learning from repetitive deployments feeds back into industry. The learning rates for this sector should be monitored to ensure that policy is informed by contemporary information.
EMEC has already seen the cost of electrolysis plant fall dramatically over our involvement in the sector and we have every confidence that this will continue. A coordinated programme to drive down cost (often by improving reliability and ‘installability’ rather than cheapening the product) should be encouraged. In EMEC’s experience there is a pressing need to develop supply chain capability (both manufacturing and O&M) within Scotland. Although there is enormous capability within the Oil & Gas sector, this has not proved easily accessible. Getting such access, through encouraging and supporting diversification from Oil & Gas would improve resilience and reduce cost. EMEC’s direct experience of having to ship its electrolyser from the island of Eday to England for maintenance and upgrade is clearly unsustainable; creating more capability in Scotland would link well to aspirations for the Just Transition.
Regulatory coverage
EMEC has utilised the renewable resources available in Orkney to showcase a wide range of future energy system technologies. This has led us to unearth a variety of regulatory challenges along the way.
EMEC has been working on projects to use hydrogen in marine transport, heating, aviation and other sectors. To date, the use of hydrogen for heat seems to have received the most regulatory attention where it has been anticipated to be used as a ‘drop in’ replacement for ‘natural gas’. In addition, the automotive sector has well developed standards and processes for the handling and use of hydrogen as a replacement for petrol and diesel.
EMEC has found that the regulatory environment for marine transport and for aviation are less well developed. In the case of aviation then there is significant international effort being deployed, but in the case of marine, EMEC has found this to be far further behind. In addition, it has proved a challenge to see experience from other sectors brought across into the marine environment. EMEC would recommend that more flexibility at a faster pace will be needed if the full benefits of hydrogen are to be realised in the UK. Our experience is that we are a long way from being ready to embrace innovation within the existing processes and so the UK will need to change if it is to achieve ‘innovation superpower’ status.
Safety, standards and certification
One of the key focuses of our work is embedding safety and good working practices in all the work that we do, to ensure that the energy system transition takes place safely, and to safeguard asset and process integrity. Key gaps in the emerging hydrogen ecosystem include: standards for safe working, absence of clear regulation on appropriate use cases for hydrogen, and lack of clarity on how hydrogen will be certified for sale.
As an accredited test and demonstration institution, at EMEC we see great value in certification. EMEC operates to relevant test laboratory standards (ISO17025) enabling the Centre to provide independently-verified performance assessments. We are also accredited to ISO/IEC 17020 offering technology verification on marine energy converters and sub-systems. Moreover, in 2020, we were designated with Renewable Energy Testing Laboratory (RETL) status, the highest international designation for marine energy test laboratories.
Enabling institutions such as EMEC to be formally accredited in hydrogen operation standards will increase credibility of progress made by hydrogen technologies. This in turn reduces the time, cost and risk of these technologies to reach the market, as well as improving their investability, as their health, safety and compliance with hydrogen production and use requirements will have been verified.
The creation of the suite of appropriate standards will provide consumers with clear signals. Firstly, showing that the government is being transparent about its approach to new energy sources, and their characteristics, specifically commitment to renewably sourced hydrogen. Secondly, ensuring customers will be able to trust companies claiming zero emissions based on ‘green hydrogen’ contributions, for example, if they meet UK government standards.
If standards are not globally comparable, UK businesses across the hydrogen value chain will be hindered in their ability to grow internationally, instead limited to the UK market and to those which are similar in their hydrogen standards. A single label ‘low carbon’ standard for UK-produced hydrogen will be at risk of being inherently incompatible with definitions of green or clean hydrogen elsewhere.
International consistency
The UK’s Hydrogen Strategy recognises the value in international collaboration, including references to ongoing contributions to institutions driving multilateral collaboration on hydrogen innovation, policy and standards. As the world leading test and demonstration institution for marine energy, EMEC is not only accredited to internationally recognised standards as outlined above, but has played a key role in the coordination of international standards development in the marine energy industry. We have coordinated the development of 12 industry guidelines, and six of the guidelines are being progressed for global adoption as the first international standards for marine energy.
Given hydrogen will permeate an array of international dimensions, a UK hydrogen standard must be compatible with the rest of the world to reap export and emissions reductions opportunities. Examples of the range of matters to consider would include: the eligibility for hydrogen to attract carbon credits and emissions reductions; refuelling stations for flights and vessels in multiple destinations; guarantees of origin given the different emissions characteristics of hydrogen production methods.
1.3 Which market mechanism should be used to incentivise investment in producing low-cost green hydrogen?
Policies to support the development of green hydrogen should include: 1. revenue mechanisms to help tackle high capital investment costs such as those of electrolysers, and 2. the inclusion of a CfD-like mechanism for green hydrogen, to tackle issues faced by suppliers. Simultaneously, government should assist by investing in the transformation of infrastructure and on the exploration of hydrogen applications through real-life pilot demonstration projects at increasing scale. EMEC’s experience is that these are the most effective mechanisms to de-risk such wide ranging innovations.
Moreover, international collaboration in the green hydrogen space will be key to kickstart the sector and the jobs that will come with it. There is a need for a guarantee of origin scheme, for instance, which will incentivise the demand, and the supply of ‘green’ electrolytic hydrogen. This standard must be international, to facilitate export relations.
Adopting approaches that address both demand-side and supply-side barriers, such as fuel cost and price and reliability of supply/offtake, will enable and support private sector and other forms of investment. Effectively incentivising early adopters will enable them to overcome potential early market issues such as higher prices and lower reliability than high carbon fuels.
EMEC would also ask that care is taken to avoid excessive complexity in the creation of incentives. Given the comparatively small scale of green hydrogen production now and the epic scale upon which it will be undertaken in future, it is more important that progress is made right now than that any immediate solution is completely watertight. EMEC’s experience with other energy support mechanisms has been that complexity leads to excessive attention to the fine print, whereas the UK needs to establish activity and build a lead. EMEC would therefore prefer to see ‘quick and dirty’ support now that will enable rapid progress and then bring in more subtlety as the market grows. The UK needs to be ready for this to be slightly ‘messy’ as this is the nature if innovation.
1.4 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?
Green hydrogen will play a key role in decarbonising ‘non-electric’ final uses of energy and its storage may well be an important part of that jigsaw. EMEC is unclear at present as to whether the storage will be as gaseous hydrogen or as a derivative of hydrogen such as ammonia or methanol since these materials are easier to store and handle. Depending upon the configuration of the production processes of these derivatives; the storage of hydrogen may well be through ‘line packing’ or geological storage and more work is need in order to better determine the ‘balance of plant’ across the various options.
Optimising the storage and handling of green hydrogen:
To date EMEC has handled the supply of hydrogen from the tidal energy test site on the island of Eday, to the Orkney Mainland. We have worked with technology partners and the local authority to facilitate the use of ‘tube trailers’, which consist of pressurised hydrogen gas storage tanks on board mobile trucks, which are carried on board inter-island ferries. While this option will continue to be relatively convenient in our own operating context, and could be replicated in other communities, as hydrogen production capacity scales, more efficient storage and handling solutions will be required. EMEC anticipates that pipelines for hydrogen conveyance will be the norm once the locations of supply and demand are resolved.
A range of possible hydrogen storage alternatives should also be explored, including chemical solutions such as solid state hydrogen storage, as well as the use of liquid organic hydrogen carriers, alongside an evaluation of liquified hydrogen logistics.
Additionally, consideration must be actively given to the role for hydrogen derivatives such as ammonia and methanol in transporting hydrogen. EMEC has significant concerns that the storage of the large volumes of hydrogen near the point of use must be fully considered before commitment is made to specific refuelling approaches. At present it is not clear that this is being comprehensively undertaken and there is a risk that unforeseen blockages in the decarbonisation journey will be encountered if sufficient foresight it not applied.
Grid and pipelines:
The means by which Scotland will make the most of opportunities presented by hydrogen are now visible, but the balance of the infrastructure to accomplish this is not yet clear or settled.
The scale of the energy in the waters around Scotland is far greater than present use. In Orkney’s case there are multi-GW schemes in the vicinity through the Scotwind offshore wind leasing round, and marine renewables could double this; Orkney’s total energy demand is presently under 300MW. The opportunities to make the most of hydrogen therefore need to be based around the means to export the harvested energy or to locally convert it.
Whilst most present plans focus on expanding the electrical grid to export energy, the use of the gas grid to move bulk quantities of energy should be more actively considered. Anecdotally it is possible to move over 20x as much energy down a pipe as down a cable of the same diameter; possibly more. Turning renewable electricity into hydrogen simply to move that energy in bulk should be examined in detail.
Furthermore, the final use of the energy should be considered. Orkney anticipates that the loss of polar ice will see shipping traffic begin to arrive in Europe from the north. The fuelling of these vessels will require substantial stocks of fuel to be held at their chosen bunkering locations and it is conceivable that the Northern Isles of Scotland may provide the best location for this if suitable fuel is manufactured locally from renewables. EMEC expects that shipping will settle on liquid ammonia as the fuel of choice and so the synthesis of this from locally produced green hydrogen and air captured nitrogen is likely to become a significant industrial activity. If this use of green hydrogen dominates then the need to export the harvested energy by cable or pipe will diminish.
Orkney has also played host to the production of experimental quantities of synthetic gasoline through IGTL Ltd. This gave rise in 2021 to the RAF’s first flight using purely synthetic gasoline. It may well be that the manufacture of this fuel could also become a significant use of green hydrogen; once again obviating the need to fully uprate the electrical grid or provide export pipelines.
EMEC therefore recommends that further analysis is undertaken holistically of the opportunities presented by both renewables in Northern Scotland, and also the changing fuel needs of the nation and region. EMEC sees this as a means to deliver decarbonisation of several hard-to-reach sectors such as aviation and shipping whilst also accessing wave, tidal and offshore wind resources efficiently.
Maritime decarbonisation:
Commercial viability of zero emission shipping, as with other technologies, heavily depends on deployment of projects at scale. Projects such as HyDIME, have studied commercial viabilities of zero carbon shipping technologies and of the usability of hydrogen as a fuel. First-of-a-kind real world testing of a hydrogen-diesel dual fuel auxiliary power engine system on board a ferry was anticipated for the project, however challenges associated with inflexibilities in regulation in the marine environment limited the scope of possible project activities to ancillary exercises; and then finally closed even them off. This project exposed flaws in the translation of learning from the terrestrial to the marine regulatory environment and the slow development rate of the controlling frameworks. Nonetheless Orkney has played a leading role in seeking to showcase innovation opportunities in maritime, notably through the HyDIME, HySeas III and HIMET projects.
The challenges of hydrogen use in shipping are largely regulatory, not technical. Codes written for other fuels are silent on hydrogen use and the regulatory environment seems isolated and impervious to terrestrial experiences.
Moreover, the storage of large volumes of gaseous hydrogen remains a considerable challenge, and more effort is needed in the conversion of hydrogen into more stable fuels such as ammonia. Tackling these challenges in the shipping sector, where fuel demand is high, may facilitate transition in other fuel-reliant sectors including agriculture, aviation, and perhaps even road transport.
Aviation decarbonisation:
Hydrogen powered inter-island aircraft offer wide opportunities to the aviation ecosystem and supply chain. At present, it is very expensive to refuel aircraft in Kirkwall airport due to the need to import (fossil) fuels. Therefore, operators try to minimise refuelling at outstations generally, because it is cheaper to fuel where costs are lower – a highly inefficient use of time and fuel, with greater emissions, which creates a vicious circle. A hydrogen-based aircraft fleet would create a different dynamic, given that it is likely that gaseous hydrogen production will in fact be cheaper in Orkney rather than elsewhere.
Policy support through demonstration pilot programmes will be particularly effective in supporting this industry’s de-risking and move towards commercialisation, as projects such as HyFlyer I and SATE are already illustrating. This should be coupled with effective cross-R&D programme knowledge sharing and collaboration within the industry.
1.5 What role should the oil and gas industry play in achieving a “just transition” to blue and green hydrogen in Scotland?
A model for a Just Transition of the oil and gas industry would be represented by the Flotta Hydrogen Hub. The oil terminal in the island of Flotta is an important North Sea facility and national resource, having had a significant impact on Orkney’s economy and communities since starting its operations in 1976. Through an energy industry partnership, this potential £multi-billion project would utilise a repurposed area of the Flotta Terminal to create a green hydrogen hub powered by offshore wind around Orkney. This would result in new employment opportunities for existing workers, significant inward investment, 25+ years of operation and a potential low carbon maritime refuelling port. The repurposing of Flotta will require retraining and upskilling the current workforce as well as the creation of long-term skilled jobs during both construction and hydrogen operations.
It is important to recognise that the safe operation of oil facilities is as a result of many elements not the least of which are the processes and attitudes of the staff. Porting those into green hydrogen production should be relatively straightforward. There is a risk, however, that failing to capitalise on existing workforce capabilities and allowing it to drain away will make the Juts Transition harder. Retention of these skills and personnel is therefore a matter of priority.
More generally, the development of green hydrogen from offshore wind has the potential to create high value jobs, a significant proportion of which are likely to be in island and coastal communities located close to offshore wind resources. These can serve as an avenue for workers to redeploy and develop skills learned from oil and gas, in line with Just Transition principles.
Whilst CCUS and hydrogen are presently seen by Government as important opportunities to revitalise industrial clusters, there is a requirement to position green, electrolytic generated hydrogen centre-stage for three key reasons: this form of hydrogen production offers greater longevity than those reliant upon dwindling fossil fuel sources; it presents significant opportunities for energy systems resilience in coastal and island communities across the UK; and is directly aligned with government commitments to decarbonise the energy system through long-term solutions towards net zero by 2050. Scotland’s green hydrogen sector offers opportunities for the creation of new secure jobs as well as security of energy supply.
1.6 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?
There is a huge opportunity associated with hydrogen for existing energy sector workers to retrain, and the realisation of this Just Transition opportunity will rely upon agile redeployment of skills and expertise. We have been involved in preliminary activities through the HyDIME project which have focused on developing a training course aimed at providing an introduction for existing mariners in safety aspects relating to the use of hydrogen as a fuel. This pioneering activity should be built upon to enable transition.
Scotland has in many ways led the charge with regards to the Just Transition, which EMEC welcomes. Nonetheless, we would highlight that currently, the Just Transition is mostly focused on reskilling, jobs and CCS. Analysis and actions based on social justice dimensions of developing hydrogen infrastructures, and implementing hydrogen as a fuel, are crucial to understanding the real just transition impacts of hydrogen adoption.
We suggest the selection and development of hydrogen pathfinder projects across Scotland, (such as the Flotta Hydrogen Hub) are an opportunity to guide decision-making based on effective just transition design, to ensure tangible, long term spread of hydrogen benefits and fair cost distribution.
EMEC is involved in a range of green hydrogen projects demonstrating the breadth and depth of opportunities in this space:
For more details on these projects: EMEC hydrogen projects
Recommendations
March 2022