Energy Security and Net Zero Committee
Wednesday 4th November 2026
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09:09
09:09
Speaker 1
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Speaker 1
So today there are 140 biomethane plants in GB. There are sufficient capacity in those plants to heat and decarbonise about a million homes. What's amazing is those homes probably don't even know they're decarbonised. Now, we commissioned a piece of work by this expert group called Alder Bio Insights to assess what's the potential for biomethane in the UK. This analysis concluded there is sufficient sustainable feedstock in the UK to generate 120 terawatt hours of biomethane by 2050, so that's more than a tenfold increase on existing capacity now compared to existing gas demand. It's about 20 ish percent.
But compared to 2050 demand in the nyiso central scenario, the holistic transition, we could be in the sort of two thirds share. So it can make a material contribution to our energy security. To give you sort of a a real example, one terawatt hour of gas produced in this country or biomethane is the equivalent of one LNG tanker. So 120 terawatt hours of biomethane is 120 LNG tankers equivalent.
But compared to 2050 demand in the nyiso central scenario, the holistic transition, we could be in the sort of two thirds share. So it can make a material contribution to our energy security. To give you sort of a a real example, one terawatt hour of gas produced in this country or biomethane is the equivalent of one LNG tanker. So 120 terawatt hours of biomethane is 120 LNG tankers equivalent.
09:11
Speaker 1
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Speaker 1
So well, one of the things that we can do from biomethane, if we supply it into the market, it biomethane can help set the marginal price. So the good thing about biomethane is the price is it's flat. It's flat as a pancake. There's no variation in the cost. So the average cost of producing biomethane in the UK is about £90 per megawatt hour, with the potential to get the cost down by about 25%. If we build bigger plants and unlock some of the co-benefits of biomethane, such as digestate, or we prefer to call it renewable fertilizer and also bio CO2.
So biomethane plants produce a really pure stream of CO2 that you can use in industry, the health sector, etc., etc.. So if you unlock those, it gets the cost down materially.
So biomethane plants produce a really pure stream of CO2 that you can use in industry, the health sector, etc., etc.. So if you unlock those, it gets the cost down materially.
09:12
09:12
Speaker 1
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Speaker 1
So. Well, that depends how quickly you can build bigger plants and unlock the unlock the. I mean, if the government were to introduce a future framework, which is a consultation we've been waiting on for quite some time. Okay. And introduce the policy which incentivized bigger plants and unlocked the benefits valorise those feedstocks. It can be a it can be as soon as as that. One of the other quick things I'd like to add is this government is obviously very focused on, you know, local jobs on the importance of that and growth all over the country.
So for oil and gas, you have to take a geology first approach. You go with the geology is makes sense for biomethane because the feedstocks vary so broadly from food waste, animal waste, rotational crops, whisky waste, it really spread all over the country. So the 57,000 jobs that if we unlock the sector's maximum potential, could be delivered. If you actually spread that out, it's around 90 in every single constituency of the UK. So it is good, well-paid, skilled jobs, 20% above the national average in every constituency.
So for oil and gas, you have to take a geology first approach. You go with the geology is makes sense for biomethane because the feedstocks vary so broadly from food waste, animal waste, rotational crops, whisky waste, it really spread all over the country. So the 57,000 jobs that if we unlock the sector's maximum potential, could be delivered. If you actually spread that out, it's around 90 in every single constituency of the UK. So it is good, well-paid, skilled jobs, 20% above the national average in every constituency.
09:13
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09:13
Wera Hobhouse
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Wera Hobhouse
Can I just ask a quick question? I had a meeting with Bath and West Utilities very timely last week, and they were basically talking then about grid connection. And we are having a similar problem with the electricity grid that the grid is currently not really fit for, providing that decentralised supply of gas. Can you just expand a little bit of what it actually needs, and also the investment that it needs in order to make your vision happen?
09:14
Speaker 2
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Speaker 2
Can I pick this one up because it's a gas network question. Is that okay? Yeah. And so depending on where the biomethane production happens and depending on where the gas network is in that location, you can put the gas in the network. Now, in order for there to be space in the network for the biomethane to be added, there needs to be a pull on the network for that demand. And so we have maps across our whole region looking at the capacity of the gas system. And so in some places there's no need to what we call reinforce the gas network to take biomethane.
And in some places there is a need to do that. So it, it, it's dependent on location as to whether you would do that or not. The cost to reinforce isn't significant. We already do this today, and currently the cost of reinforcement is on the producers to pay for rather than consumers. And then what we can also do is look at hubs. So where you have smaller biomethane plant opportunities, we're looking at rather than them all connecting individually, which is quite potentially expensive. Then bringing their biomethane into a central hub where you would then connect.
So I think there's lots of different types of solutions to managing grid capacity to maximise maximise this, but it is regional specific.
And in some places there is a need to do that. So it, it, it's dependent on location as to whether you would do that or not. The cost to reinforce isn't significant. We already do this today, and currently the cost of reinforcement is on the producers to pay for rather than consumers. And then what we can also do is look at hubs. So where you have smaller biomethane plant opportunities, we're looking at rather than them all connecting individually, which is quite potentially expensive. Then bringing their biomethane into a central hub where you would then connect.
So I think there's lots of different types of solutions to managing grid capacity to maximise maximise this, but it is regional specific.
09:15
Speaker 1
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Speaker 1
Thank you. Can I just jump in quickly very quickly on that. So the reason why I would say the Green Gas Task Force has done so well is because it is the biomethane producers and the gas networks working together in order to deliver a common result. So the gas network is the necessary prerequisite to deliver biomethane at scale. So nationally to a broad range of end users and at least cost if the gas network wasn't as expensive or or didn't exist, or if we weren't working so closely together, the biomethane would have to be transported by other, more expensive means.
So that's key to unlocking it.
So that's key to unlocking it.
09:16
09:16
09:16
Speaker 1
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Speaker 1
That is in the same range. So what we're doing is we're paying a large amount of money to import gas. When we could produce green gas in this country. So that that is a material way to get well-paid, skilled jobs into every constituency. Point one, point two. And another really important point here, UK content is a really key part of maximising the broader benefits to UK plc. For every £1 you invest in biomethane, £0.85 actually stays here. That's because we've actually really good supply chain that is able to build you know we've been campaigning.
The biomethane is reliable, renewable and it's ready. It is a proven technology and the supply chain can deliver it. Importing it doesn't give us any of that.
The biomethane is reliable, renewable and it's ready. It is a proven technology and the supply chain can deliver it. Importing it doesn't give us any of that.
09:17
09:17
Graeme Downie
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Graeme Downie
Thank you very much, chair. I want to move on to talk a little bit about storage and security in particular. So , Jenny, we know that we've got lower UK storage and EU storage we've had for a number of years. Can you talk about what the implications are for UK energy security of that reduction in storage over this winter in particular?
09:18
Claire Young
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Claire Young
Sure. So I'd just like to take a minute to explain how GB storage works, because it is different from from that in Europe. So in GB there are nine storage sites that are connected to the transmission network. They can fill up from empty in two weeks and they can empty from full in two weeks, give or take a couple of days. But that's not the way they operate. The way they operate is that they sit partly full and they respond to what's going on in the market. So today they might be putting gas in. They might be putting gas into the storage sites.
But if there's a loss of supply or an increase in demand and the market needs to balance, then that gas can stop going into the storage site and they can actually turn around within a day. So they provide a really important service, 365 days a year to the market to provide flexibility to go up and down as and when the market needs it within day. But having said that, if there's a cold snap coming, what we also see is they do fill up significantly before that cold snap. So again, they can either provide the flexibility service or they can just flow that gas out onto the network on a consistent basis.
That is really different from the model that is in Europe where you have very large storage sites. They very slowly fill up over the summer, and we've all been watching them very slowly fill up over the summer. And then in the winter, that gas is there and it can very slowly and stably come out in the countries where that's where that gas storage sites are. So it's a different model. And it does provide a level of, you know, an important service, flexible service to the market in GB.
But if there's a loss of supply or an increase in demand and the market needs to balance, then that gas can stop going into the storage site and they can actually turn around within a day. So they provide a really important service, 365 days a year to the market to provide flexibility to go up and down as and when the market needs it within day. But having said that, if there's a cold snap coming, what we also see is they do fill up significantly before that cold snap. So again, they can either provide the flexibility service or they can just flow that gas out onto the network on a consistent basis.
That is really different from the model that is in Europe where you have very large storage sites. They very slowly fill up over the summer, and we've all been watching them very slowly fill up over the summer. And then in the winter, that gas is there and it can very slowly and stably come out in the countries where that's where that gas storage sites are. So it's a different model. And it does provide a level of, you know, an important service, flexible service to the market in GB.
09:19
09:19
Claire Young
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Claire Young
So yeah, described the way that it operates. It's one of five sources of gas in the UK. So we have LNG. The LNG facilities do have some storage capability there. So the boats land, they fill up the storage sites and there is an inherent level of storage there. There's some flexibility both in our network and in the transmission networks, to do with what we call line pack, which is the volume of gas that's in the network, which can which can vary during the day. We can get gas from Norway, we can get gas from interconnectors.
So when you add up all of those, those diverse sources of gas, there is sufficient flexibility to, to deliver the amount of gas that's required for energy security.
So when you add up all of those, those diverse sources of gas, there is sufficient flexibility to, to deliver the amount of gas that's required for energy security.
09:20
Graeme Downie
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Graeme Downie
09:20
Claire Young
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Claire Young
So I'm not going to comment on the cost of gas storage. You know, that's that's not that's not something I'm able to comment on. But the value that it provides, that flexible, that flexibility that provides to consumers basically means you don't have to get gas from elsewhere. So it is of value to consumers. I'm just not able to quantify that.
09:20
09:21
Claire Young
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Claire Young
So this is where we're looking forward to the government publishing the outcome of its gas system in transition consultation, because what we're hoping that will do is set a security of supply standard that will define maybe the volume of gas that the government wants to be held onshore, that in different types of sites for different durations. And the FSI use could be an important part of that security standard going forward. So the options to to have gas could include big strategic storage sites. You know, the likes of rough but not limited to rough. It could be the Fsrus.
They can provide a really flexible service, I believe for about four days where they can just provide gas into the network. It could be that you have different contracts with interconnectors. It could be that you contract for some of that gas in the LNG storage tanks, but all all of those are options that it would be good to explore. There's different costs and benefits associated with them, but they're all predicated on having a really clear articulation of the risk that the government wants to take. What level of security of supply does it want to secure, and then the market participants and ourselves would would engage in that and try and get to the most effective answer.
They can provide a really flexible service, I believe for about four days where they can just provide gas into the network. It could be that you have different contracts with interconnectors. It could be that you contract for some of that gas in the LNG storage tanks, but all all of those are options that it would be good to explore. There's different costs and benefits associated with them, but they're all predicated on having a really clear articulation of the risk that the government wants to take. What level of security of supply does it want to secure, and then the market participants and ourselves would would engage in that and try and get to the most effective answer.
09:22
Graeme Downie
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Graeme Downie
And do you think just, you know, with peak demand, we still expect for gas to remain broadly unchanged for the next decade. Do we need these kind of new technologies to maintain the supply to consumers over that time period? What's the point where as demand falls off in past a decade and beyond, where the system no longer needs those kind of things? What what's the role of those kind of technologies and others? Sorry. And storage while we're still at peak demand.
09:22
Claire Young
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Claire Young
It's a really important point that as long as there is that peak level of demand, you have to have the supply infrastructure, the network infrastructure and the right markets to attract the gas to come in and to have the physical capability to to move it around. And as you say, at least for the next decade, that level of peak peak is going to be.
09:23
Graeme Downie
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Graeme Downie
Is there a risk that as we approach peak demand, we start or as we as we pass, as peak demand falls, it's harder to attract gas because our demand is falling with that. Is that is there a risk of a cliff edge, essentially, where we're no longer peak demand? So it's harder to attract and actually the supply then falls off.
09:23
09:23
Claire Young
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Claire Young
Of so that's different market mechanisms. So we already have a standard. So for example, the gas transporters, we all have a standard. We have to have a network that's capable of meeting gas demand that you would see one in every 20 years, really cold day, really high power generation demand, really high domestic demand. We have to be able to transport that gas from wherever it comes in to wherever it's going. And we, we will continue to maintain our, our networks seek the funding from the regulator to do so efficiently and safely for as long as that network is required.
So then to attract the supply infrastructure, you've got to provide different incentives to the market because the risk is as the overall volume goes down, they don't want to bring.
So then to attract the supply infrastructure, you've got to provide different incentives to the market because the risk is as the overall volume goes down, they don't want to bring.
09:24
09:24
Claire Young
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Claire Young
It's market mechanisms, isn't it where the where the gas comes from? And I'm not a I don't have a global crystal ball to forecast the price of it. What what is important is we set a real clear articulation of risk. So the market knows what it is, knows what the what the requirement is. And then you can run a process that gets you the most efficient way to, to attract those suppliers into the into GB.
09:24
Graeme Downie
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Graeme Downie
I just want to move on to some more questions around more broader, broad questions around energy security and the role of government. Angela, are you confident that there is enough natural gas for UK households to heat their home this this winter? Based on some of the information Jenny just gave her own storage.
09:25
Speaker 2
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Speaker 2
So the gas distribution network. We receive all our gas via National gas transmission system supported with biomethane coming in. So as long as Jenny and National Gas are happy with the supply, we are content like we. So from a security of supply point of view, we've been given information advice that this winter secure. I think.
09:25
09:25
Speaker 2
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Speaker 2
It's just me and Jenny managing the system. Just just one more thing. But from a security point of view, it's worth also saying that as a gas system, we regularly run exercises to make sure that we are clear on what would happen should any security supply issues transpire. So we we do that on an annual basis.
09:26
09:26
09:26
Graeme Downie
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Graeme Downie
And can you tell. Sorry, I'm about to go off down a shout at me, but can you give us a little bit more information on what those exercises tell you and what the biggest risks or threats might be? Well, you mentioned cyber or physical. What are the kind of things you go actually, that's that's higher up the risk register than something else. We need to do more training for or more exercises for that.
09:26
Speaker 2
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Speaker 2
Cyber clearly is important right now, but all of the incidents that you ever look at end up with no gas at some point. So that is the outcome. Whether whether it be a supply shortage or a cyber issue, or a security issue or a fault with kit or equipment, that is the outcome. And so you end up managing like, how do you manage security of supply? How do you manage it so that you can communicate and effectively and you're looking after vulnerable customers and you're managing industry and critical sectors. So we've got a sector by sector plan of what we would do in gas incidents.
So everything matters.
So everything matters.
09:27
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09:27
Speaker 1
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Speaker 1
So my view is that this country is and has been screaming out for a gas supply plan, which, which encompasses obviously lots of biomethane, I would hope, but outlines clearly where it's coming from and what the plan to procure that is. So the UK typically procures gas, sorry, LNG at the minute on the spot market. So we outbid 43 other countries. So when government and many government documents have been released on this, the government documents typically say we are confident in the ability to meet our energy security because we're confident we're going to outbid the other 43 countries in order to get it.
Will that always be the case? That's that's our matter of discussion. My argument would be that a gas supply plan, which maximizes the amount of green gas we produce in this country, minimizes the amount we would have to bid and outcompete other countries on that spot market.
Will that always be the case? That's that's our matter of discussion. My argument would be that a gas supply plan, which maximizes the amount of green gas we produce in this country, minimizes the amount we would have to bid and outcompete other countries on that spot market.
09:28
09:29
Speaker 1
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Speaker 1
Absolutely. So one of the things we've been discussing, discussing as a sector is could we could we adopt, you know, a contract supply for biomethane, you know, fix a price of biomethane into specific end users or some sort of contract, wholesale contract for different style mechanism? TBC is that a good way as part of a pragmatic gas supply plan to maximize to unlock more green gas, give greater energy security, etc., etc..
09:29
Graeme Downie
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Graeme Downie
I've just got one more question till I till I finish up. Jenny. The government's talked about the possibility of strategic gas storage reserve. Given your description at the beginning there of the of the current gas storage system in the UK, do you think there's value in that and how do you think it. How might it work and be paid for?
09:29
Claire Young
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Claire Young
And so again, this is where we're, we're actively talking with designers. We're , we're interested about the different models that could be that could come up. I mean, one option could be that the government could decide to buy the gas. It could direct us to or the shippers to put it in, in storage. It would decide when that gas comes out and.
09:30
09:30
Claire Young
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Claire Young
Yeah, but, but important to know it could be provided from a range of different providers. So we've touched on Fsru, we've touched on LNG and interconnectors. It's understanding what that standard actually is. There will be different ways to achieve that. There might be demand side response that we can get in there as well. So it's important to have that real clear articulation of risk so that we can get the get the right answer strategic story.
Do you.
Do you.
09:30
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09:31
Speaker 2
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Speaker 2
Sure. And so there's just just to be really clear, there's no impact on having or not having biomethane on the gas distribution network. The network will take by, by methane and natural gas are chemically identical. And so one just displaces the other, as would a blend of hydrogen. And so the gas distribution network is here. And the amount of it that we have is about the demand for the gas network, I think.
09:31
09:31
Speaker 2
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Speaker 2
What I'm concerned about is we've built a really good and steady incremental growth in biomethane in this country. And as Charles explains, biomethane is more than just a means of generating gas. The production of biomethane on site in farming communities. It has a range of growth and commercial benefits to the UK. In addition, it displaces natural gas and so popping it into the gas network, people using greener gas as a means to decarbonise without even knowing it. It's it's a sort of an invisibly helpful thing to do. The fact that we have a subsidy scheme that is ending in 2028, although there's been an extension to 2030, means that those who want to develop biomethane plants and they take a while to develop because there's planning and all the kinds of things that go with building, even small infrastructure means that there is uncertainty now in those developers, and there are now projects waiting to put green gases onto the system.
Because of the uncertainty on the subsidy scheme. The subsidy scheme is just £4 on the gas bill, right?
Because of the uncertainty on the subsidy scheme. The subsidy scheme is just £4 on the gas bill, right?
09:33
09:33
Speaker 2
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Speaker 2
Than a cup of coffee at the Doncaster train station where I came in this morning. So I just think there's it seems to be a bit of a no brainer that we would. Considering the focus on decarbonisation coupled with energy resilience and growth, that you. You should look to see if we can unlock that sooner rather than later.
09:33
09:33
Speaker 2
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Speaker 2
Look, adding anything onto bills is a problem right now. We know that that is clear. And it's not just for biomethane. It goes for every subsidy across the entire net zero spectrum. So you could single out biomethane, but you could do the same for any other subsidy. What I would say though, is that some things that you could play with and the subsidies that make it more palatable, if you were very much worried about adding just £4. So, for example, in the last regulatory period, the regulator Ofgem added accelerated depreciation into gas bills, which added £10 onto the gas bill.
And knowing that we're going to use a lot of the gas distribution network still, and I will come on to answering those future questions. It may be premature to do that, and that £10 could be used to subsidise biomethane without any changes to to bills.
And knowing that we're going to use a lot of the gas distribution network still, and I will come on to answering those future questions. It may be premature to do that, and that £10 could be used to subsidise biomethane without any changes to to bills.
09:34
09:34
Speaker 1
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Speaker 1
Well, we need to see what the when the government released the future framework, we'll have clarity on what their preferred model to back to back the sector is. As we've said it is it's by the end, by 2028, it'll go up to about £4.80. So again, less than a pint of beer, average pint of beer I checked is £5.50. What is clear is. So the green gas support scheme is the existing mechanism. Previously it was the Renewable Heat incentive. What this sector has shown is that when the government provides support, they will build it.
Plants will be built. So there are 140 plants today. During the end of the RHI, 70 were built between 20 1415 and 16. So the sector responds really quickly because the supply chain is there to deliver it, local jobs, boosting our energy security, etc..
Plants will be built. So there are 140 plants today. During the end of the RHI, 70 were built between 20 1415 and 16. So the sector responds really quickly because the supply chain is there to deliver it, local jobs, boosting our energy security, etc..
09:35
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09:36
Speaker 1
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Speaker 1
We're going to say that we're going to be using methane out to 2050. And beyond that is actually that is not a matter of debate. Every single costed scenario shows that we will. It's not it's not. It is a case of volume of demand. It's not a case of demand, yes or no. It is a question of where is it coming from? And the choice is, do you produce more here? Do you produce more greener gas here or do you import it? That's that's it on the on the greenness of biomethane, just to be clear.
So the subsidy scheme, the green gas support scheme, you will not get that unless you can prove your biomethane is at least 70% less carbon intensive than natural gas. At least now many of the plants, most of the plants are.
So the subsidy scheme, the green gas support scheme, you will not get that unless you can prove your biomethane is at least 70% less carbon intensive than natural gas. At least now many of the plants, most of the plants are.
09:37
09:37
Speaker 1
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Speaker 1
So let's pretend you have a cow that actually I have a very good example. Denmark is one of the largest regional in terms of per capita producers of biomethane. So they have a big pig industry. Danish bacon is not only delicious, but it meets 40% of the Danish gas grid is biomethane, which is incredible if you think about that waste, if that was left to rot, that releases methane into the atmosphere. Very, very potent greenhouse gas. What that is, is they collect that, it is injected, it is cleaned up or upgraded. It is injected into the gas network.
And then the remaining digestate renewable fertilizer is used on farms in Denmark. And it's the exact same model in the in the UK. And what what it shows again, the green gas support scheme will not give you a penny unless you can prove it is at least 70%. And again, most of the plants are more than that. The big benefit for biomethane and this was the subject of a review by Whitehead when just before he was biomethane minister. And it was about Jaegers. So if you combine the bio CO2 that I mentioned. So today the bio CO2 is typically used to make bubbles and drinks and things like that, like Irn-Bru, if you use that combined with carbon capture and storage, then biomethane can be net negative emissions.
So a greenhouse gas removal as well.
And then the remaining digestate renewable fertilizer is used on farms in Denmark. And it's the exact same model in the in the UK. And what what it shows again, the green gas support scheme will not give you a penny unless you can prove it is at least 70%. And again, most of the plants are more than that. The big benefit for biomethane and this was the subject of a review by Whitehead when just before he was biomethane minister. And it was about Jaegers. So if you combine the bio CO2 that I mentioned. So today the bio CO2 is typically used to make bubbles and drinks and things like that, like Irn-Bru, if you use that combined with carbon capture and storage, then biomethane can be net negative emissions.
So a greenhouse gas removal as well.
09:38
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09:38
Speaker 2
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Speaker 2
More of a sort of simpler answer to the question, which is sorry, sorry. It's really simple, which is biomethane makes methane from what you call short cycle carbon emissions. So plants grow, it goes into a digester. It makes methane long cycle, which is your fossil fuel. It's it's the methane that's been trapped underground for millions of years. And so when you burn that, it's additive. So by methane, when you burn, it isn't additive in terms of CO2, the atmosphere.
Whereas natural gas is.
Whereas natural gas is.
09:39
09:39
09:39
Speaker 2
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Speaker 2
Sure. I mean, yeah, there's a long road on biomethane sorry on hydrogen. So we, we do know that hydrogen can be used to for industry and power generation. It can be manufactured in the UK. You do have to extract hydrogen from, from, from either water or natural gas for it to be useful. And so there's a cost to making hydrogen. But in terms of can you distribute it and can you use it for industrial power generation that is proven to be true. And so what we do know again is that the nyiso, in their holistic pathway to net zero, has around 100 terawatt hours of hydrogen in the net zero pathway.
And so and the C.c.c. also support hydrogen for power generation and industry in their carbon budgets. And so it's not whether I feel it's we can do it or not. It's actually we cannot get to net zero without having some hydrogen in the energy system. And that's simply because you're going to need molecules. Still, you're going to need gas. Still, in the 2050 energy system, you will still have some natural gas. You will still you will have hydrogen, you will have biomethane. And that is because gas supports the electricity system. So in the 2050 net zero system, gas is plays a supporting role, right?
It supports the electricity system in backup. It supports backup supplies of power generation of things like district heating and data centers who need resilience. So there's a big role for gas in 2050 in your net zero world. And some of that will be supported by hydrogen, and simply because you can store it for long, long periods of time. So it's a, it's a resilience support system. So we absolutely should be supporting hydrogen. Still, we were quite disappointed and but understandable that the government has chosen to. Move the budget, which was there to support the first hydrogen transport business model.
We. We're having to pick up the pieces as to whether the projects are viable or not, and we're trying to work out what what replaces that funding stream. So as it currently stands, the continued development of hydrogen in the UK is. Yeah, it may not get to scale simply because things are being pushed.
And so and the C.c.c. also support hydrogen for power generation and industry in their carbon budgets. And so it's not whether I feel it's we can do it or not. It's actually we cannot get to net zero without having some hydrogen in the energy system. And that's simply because you're going to need molecules. Still, you're going to need gas. Still, in the 2050 energy system, you will still have some natural gas. You will still you will have hydrogen, you will have biomethane. And that is because gas supports the electricity system. So in the 2050 net zero system, gas is plays a supporting role, right?
It supports the electricity system in backup. It supports backup supplies of power generation of things like district heating and data centers who need resilience. So there's a big role for gas in 2050 in your net zero world. And some of that will be supported by hydrogen, and simply because you can store it for long, long periods of time. So it's a, it's a resilience support system. So we absolutely should be supporting hydrogen. Still, we were quite disappointed and but understandable that the government has chosen to. Move the budget, which was there to support the first hydrogen transport business model.
We. We're having to pick up the pieces as to whether the projects are viable or not, and we're trying to work out what what replaces that funding stream. So as it currently stands, the continued development of hydrogen in the UK is. Yeah, it may not get to scale simply because things are being pushed.
09:42
09:42
Speaker 2
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Speaker 2
I think I think it's more likely that we'll end up buying more natural gas at this point in time. And so, I mean, there's lots of different ways of making hydrogen, but we have a significant amounts of curtailed wind in Scotland. Unfortunately. We've we've set out all the past hydrogen strategy. We've not seen the new one yet. That's that's a year and a half old. We're waiting for it still. But some guidance that sets out where hydrogen will be made at lowest cost would be really helpful. There is ways of making hydrogen at low cost in the UK.
09:42
09:43
09:43
09:43
Speaker 2
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Speaker 2
You could do that if you wanted to. The cost of hydrogen right now is quite high. So if you were going to do that, it would be quite expensive to do so. It has already been proven that you can burn hydrogen in boilers. You can make a boiler like we've seen them. We've tested that historically. We do know the existing gas network can carry 100% hydrogen. We do know the existing gas network can carry 20% blend. It's just that it can't do both things. It can't carry natural gas and hydrogen. It's got to be one or the other.
09:43
09:44
09:44
Claire Young
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Claire Young
Yeah, probably some of those. So my next question was around to what extent does the National Gas network rely on continued use of gases for heating buildings? And could industry and those who use gases other than for heat sustain the gas work as it currently exists? And I think that's for Angela as well.
09:44
Speaker 2
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Speaker 2
Thank you. So let me explain a little bit more about what the gas system does, because I think it sort of adds a bit of helpful context. And I think we've we just need to remind ourselves that the destination that we're aiming for is decarbonisation. It's not necessarily electrify absolutely everything. And we do know that in the, in your net zero world that you're looking for, according to Nyiso and the holistic scenario, which is their central pathway that gets to net zero, there's going to be around 300 terawatt hours of gas. Still. That's as big as today's electricity system.
So we're not going to have in the net zero future no gas, right. We will have some gas, quite a bit of gas actually. And the Nesos plan is that you would need roughly a third, a third, a third natural gas with carbon capture and storage or offsets. You will still see natural gas for some things. You will have hydrogen and you will have biomethane. And so then the important thing is to ask ourselves, what is the gas system going to do? What is it for? Right? So at the moment it, it does lots of different things.
But in your net zero world, it will support industry that can't that still needs a flame. So it will support things like black bricks, glass, steel, primary chemicals. CHP for top up in the winter or backup. So what we're seeing, I know this is a long winded way of answering your question, but it's quite important. What we're seeing is I call it a hybrid system. So the UK's energy system will be a hybrid system where you've got electricity doing as much as it can when it's windy and sunny, and when it's not windy and sunny, you've got the gas system that helps out.
And so if we think of it in that way, you're going to have a gas system regardless of how much goes to homes still being continued to be used. And on top of that, we do know heat pump rollout is going fairly slowly. And we do know there'll be a proportion of homes or businesses, for whatever reason, may well struggle. And so we expect there to be, at least in 2050, quite a bit of the gas network supporting domestic heating.
Still.
So we're not going to have in the net zero future no gas, right. We will have some gas, quite a bit of gas actually. And the Nesos plan is that you would need roughly a third, a third, a third natural gas with carbon capture and storage or offsets. You will still see natural gas for some things. You will have hydrogen and you will have biomethane. And so then the important thing is to ask ourselves, what is the gas system going to do? What is it for? Right? So at the moment it, it does lots of different things.
But in your net zero world, it will support industry that can't that still needs a flame. So it will support things like black bricks, glass, steel, primary chemicals. CHP for top up in the winter or backup. So what we're seeing, I know this is a long winded way of answering your question, but it's quite important. What we're seeing is I call it a hybrid system. So the UK's energy system will be a hybrid system where you've got electricity doing as much as it can when it's windy and sunny, and when it's not windy and sunny, you've got the gas system that helps out.
And so if we think of it in that way, you're going to have a gas system regardless of how much goes to homes still being continued to be used. And on top of that, we do know heat pump rollout is going fairly slowly. And we do know there'll be a proportion of homes or businesses, for whatever reason, may well struggle. And so we expect there to be, at least in 2050, quite a bit of the gas network supporting domestic heating.
Still.
09:48
Speaker 1
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Speaker 1
Can I chuck in just three examples to add to that as well. So today there's obviously biomethane related. Today there's sufficient capacity in the plants in Scotland to heat and decarbonise the equivalent of 15% of households connected to the gas network. So the equivalent of 15% of homes in Scotland heating decarbonised with biomethane. And they probably don't even know you need a gas network for that on industry. So biomethane purchase agreements are becoming increasingly popular with companies that are end users. And the Green Gas Task Force has set up what's called an End Users Council, which is a collection of 25 businesses that are interested in using biomethane.
Some already do two examples on that future biogas. One of the companies have a biomethane purchase agreement with AstraZeneca to decarbonise their facilities, and Engie have a biomethane purchase agreement with PepsiCo to decarbonise their facilities. Why did they use biomethane? They reduced demand. They electrified where it was viable. They both did that. They both realized they need gas. What gas did they choose? Biomethane. So we're in a situation where it's decarbonised vaccines and decarbonised monster munch, which I think is a good thing. The third thing is trucks, HGVs. So when I talked about the carbon difference between natural gas versus biomethane, not biomethane, is at least 70% less carbon intensive than natural gas, but it's 85% less carbon intensive than diesel.
And there's 3250 biomethane HGVs on the road today. Not like the little vans that go round London and other cities. It's not that you can electrify those viably, but the heavy 44 ton trucks that belt up and down the motorways every day. Biomethane is one of the most cost effective ways to decarbonise.
Some already do two examples on that future biogas. One of the companies have a biomethane purchase agreement with AstraZeneca to decarbonise their facilities, and Engie have a biomethane purchase agreement with PepsiCo to decarbonise their facilities. Why did they use biomethane? They reduced demand. They electrified where it was viable. They both did that. They both realized they need gas. What gas did they choose? Biomethane. So we're in a situation where it's decarbonised vaccines and decarbonised monster munch, which I think is a good thing. The third thing is trucks, HGVs. So when I talked about the carbon difference between natural gas versus biomethane, not biomethane, is at least 70% less carbon intensive than natural gas, but it's 85% less carbon intensive than diesel.
And there's 3250 biomethane HGVs on the road today. Not like the little vans that go round London and other cities. It's not that you can electrify those viably, but the heavy 44 ton trucks that belt up and down the motorways every day. Biomethane is one of the most cost effective ways to decarbonise.
09:50
09:50
09:50
Claire Young
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Claire Young
I think Angie has already touched on that. So, you know, district heating, moving, moving, moving customers away from their gas boilers. There are a range of different solutions, but there's 23 million homes that currently have a gas boiler that rely on that for heat. That is going to take a finite amount of time to transfer onto alternative sources. And even when they are electrified, if we then go back to the to the power network, currently, the national gas transmission system transports around two and a half times the energy that the electricity network transports. So the amount of investment that has to go into the electricity network is quite significant.
It's going to take time, and we have to be able to support that transition. But as that investment happens, as the volume of renewables grows, you still need that backup source of electricity generation in order to provide the electricity to people's people's heating. So when the wind doesn't blow, when the sun doesn't shine, when the batteries have all run out after a couple of days, then then you still need that backup. And having having gas fired power stations with carbon capture technology on the back of them, or having new ones that are just driven by hydrogen.
These are all gas driven solutions that will help support the electrification of heating or decarbonisation of heating. So whether it's district heating or heat pumps or whatever combination of of technology that is, you still need gas there in, in, in the background, whatever form that gas takes, whether it's bio or hydrogen or carbon dioxide.
It's going to take time, and we have to be able to support that transition. But as that investment happens, as the volume of renewables grows, you still need that backup source of electricity generation in order to provide the electricity to people's people's heating. So when the wind doesn't blow, when the sun doesn't shine, when the batteries have all run out after a couple of days, then then you still need that backup. And having having gas fired power stations with carbon capture technology on the back of them, or having new ones that are just driven by hydrogen.
These are all gas driven solutions that will help support the electrification of heating or decarbonisation of heating. So whether it's district heating or heat pumps or whatever combination of of technology that is, you still need gas there in, in, in the background, whatever form that gas takes, whether it's bio or hydrogen or carbon dioxide.
09:51
Torcuil Crichton
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Torcuil Crichton
Thank you chair. Thank you all for coming in. It's fascinating stuff. I'm going to ask about the gas network and the cost of maintaining that. But just to go back to what Graham was asking you, Jenny, about storage, I don't know if I've got this right. There are two types. There's a European big storage. They fill up and let it go and they fill and flow storage, which is best.
And why don't we have the other one?
And why don't we have the other one?
09:52
Claire Young
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Claire Young
They both have a part to play. So they provide different services. And you know, up until about 2019 , we did have the long range storage sites. You may have heard of rough. It's been mentioned a few times. So that was one of those storage sites that filled up over the summer and then very reliably provided gas onto the network all, all throughout the winter. So but you know, Centrica took the decision for, for the reasons that you could ask them to close that site. And, you know, the economics aren't there for the new one or the recommissioning of it.
And that's why we're looking to the government to set what that standard is, what that security standard needs to be. And then whether it's rough, whether it's fsrus, whether it's any of the other options to to understand what the what the best balance is, what the most efficient answer is.
And that's why we're looking to the government to set what that standard is, what that security standard needs to be. And then whether it's rough, whether it's fsrus, whether it's any of the other options to to understand what the what the best balance is, what the most efficient answer is.
09:53
Torcuil Crichton
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Torcuil Crichton
Okay, thanks. Thanks for that. Looking, looking at that network, notwithstanding what you said, Angela, about roasting, toasting brickworks, the need for gas into the 2050s, the whole idea is that we shouldn't have gas. That's the direction of travel. Even though you say we we will have it. And as fewer and fewer people use gas, the cost on the remaining users of maintaining that gas network is going to get higher and higher. How are we going to do that? How are we going to maintain the gas or do we want to maintain the gas network? What if what if the government decides to decommission it?
Would that be a good idea?
Would that be a good idea?
09:53
Claire Young
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Claire Young
All the analysis shows that the transmission system in particular is here for decades to come. And, you know, again, going back to what Angie has already said, the distribution network is going to be there for years to come. I go back to those 23 million homes that are currently heated by gas. You cannot just switch that off without having the viable alternative forms of keeping people warm. That is a long term transition. It's going to take years, and it's really important that in the meantime, as that transition happens, we continue to invest in the gas network.
We continue to make sure that the supplies will come in, whether that's biomethane or elsewhere, to continue to keep people warm.
We continue to make sure that the supplies will come in, whether that's biomethane or elsewhere, to continue to keep people warm.
09:54
09:54
Claire Young
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Claire Young
I can only talk for gas transmission. Our settlement, our latest price control settlement was £5 billion over five years. If you compare that with the electricity transmission networks, they had £70 billion over the same five years. So it's around £12.50 on people's bills to keep the gas transmission network safe, secure and available to to to bring in the gas from whatever sources it comes into.
09:54
09:54
09:54
Speaker 2
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Speaker 2
So I think I think the challenge is we talk about electricity and gas systems like their rivals, which isn't fantastically helpful. And so what we have today is a gas system that does what it does, and it does it very cost effectively, significantly less expensive than if you tried to transition the same amount of energy through the electricity system. And the electricity system today isn't designed to do what the gas system does. And so we've got to invest in the electricity system to enable that to happen. So there's costs of both maintaining the gas system whilst ever you need it, and getting the electricity system to do what the gas system already does.
Right. So it's, it's, we're adding costs whichever way you look at this. And then you may choose to decommission the gas network or parts of it, because I don't think you would decommission it, which would also add costs. So you're right in that we need to think very carefully about the impact of this on affordability. And it's good to see that the government are looking at what they call the gas system in transition, and they're asking questions about cost recovery. And clearly the gas system today, it's already been invested in it is here already your decision to decommission it?
It would be probably the biggest infrastructure decision that the government has ever made. And once it's gone, it can't be recovered. So I would take that very serious.
Right. So it's, it's, we're adding costs whichever way you look at this. And then you may choose to decommission the gas network or parts of it, because I don't think you would decommission it, which would also add costs. So you're right in that we need to think very carefully about the impact of this on affordability. And it's good to see that the government are looking at what they call the gas system in transition, and they're asking questions about cost recovery. And clearly the gas system today, it's already been invested in it is here already your decision to decommission it?
It would be probably the biggest infrastructure decision that the government has ever made. And once it's gone, it can't be recovered. So I would take that very serious.
09:56
09:56
09:56
Speaker 2
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Speaker 2
It's not. It's not really to do with the network, it's to do with the cost of energy and, well, the cost of doing business in the UK. More more than that. So I'll give you an example. Insert glass bottle manufacturer in the North West has told us that they can't make their factory electric. They could actually, but it would have to be four times bigger need for many more people. The cost of bottles would rise and be unaffordable in the global. And they could. They might as well just up sticks and move to another country.
And so this is what we're happening. We're offshoring our emissions. So just because we buy a bottle from another country doesn't mean it has no, no carbon. So I think we've just got to be careful here. We're not pushing for decarbonisation at the risk of dwindling economy.
And so this is what we're happening. We're offshoring our emissions. So just because we buy a bottle from another country doesn't mean it has no, no carbon. So I think we've just got to be careful here. We're not pushing for decarbonisation at the risk of dwindling economy.
09:57
09:57
09:57
Speaker 1
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Speaker 1
Yeah there was there was a good article because the GMB are supported by me and they said government make the right decision and back cow power. They deserve a pat on the head, usual usual tongue in cheek. I have a few points to make, so first of all, I cannot see the gas network being decommissioned for the foreseeable future. We're going to need gas, therefore we're going to need a gas network. The end .1.2. You don't need decommission the gas network to grow the electricity network. I don't understand why it's pitied as, oh, let's just grow this instead.
You can grow the electricity network without decommissioning the gas network. Third thing, this is a really important point. The number of properties, the number of businesses as well connected to the gas network between 2022 and 2025 has actually gone up. So while demand may be declining, the actual number of connections between those two periods went up. So we are not seeing mass disconnection away from the distribution gas network. We're not seeing it. Two more quick things.
You can grow the electricity network without decommissioning the gas network. Third thing, this is a really important point. The number of properties, the number of businesses as well connected to the gas network between 2022 and 2025 has actually gone up. So while demand may be declining, the actual number of connections between those two periods went up. So we are not seeing mass disconnection away from the distribution gas network. We're not seeing it. Two more quick things.
09:58
Speaker 1
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Speaker 1
People just businesses and still want to connect to the gas network. I will happily write to the committee and share that evidence with you. Third thing is Nisa released this really interesting ten year forecast. It's not a scenario. It is a forecast based on existing trends and government policy. What that shows is that home heating gas demand declines by only 4% by 2036. So not a not a material decline. And then the very last thing to say is all all costed scenarios need gas.
Therefore it will always need a gas network.
Therefore it will always need a gas network.
09:59
09:59
Bill Esterson
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Bill Esterson
Well, thank you very much to our first panel for your evidence this morning. We will take a short break while we change over. Order. Order. Welcome back to this morning session of the Energy Security Select Committee, managing the Future of Oil and Gas and. second panel, if you could introduce yourself, we're looking .
10:05
10:05
10:05
10:05
Lizzi Collinge
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Lizzi Collinge
10:05
10:05
10:05
10:05
10:06
10:06
Speaker 2
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Speaker 2
Domestic. 460,000 commercial. 67,000 industrial. connections to the gas network. So my first question is, when we consider what is the fairest way to look at declining and then decommissioning the gas network, the first question for me should be asked is, is this going to be the most economic thing to do before we even consider how we would go about decommissioning? But if you do go down the route of ultimately wanting to.
decommission the gas.
decommission the gas.
10:06
10:06
10:07
10:07
Speaker 2
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Speaker 2
You've actually got the. decline in use of the gas network. If that's the scenario that you want to travel down. Now, the current cost for a domestic property is about. £122 a year to pay for the gas network. If you halve the number of people that are connected to the gas network, then all things being equal, you're going to double the cost, the fixed cost that you have to pay as a consumer in your bills, whether it's through standing charge or onto the unit charge. If you go down to. 3 million domestic customers left, which is not an impossible .
scenario to envisage if the current trajectory continues, that fixed cost could be in the region of. £1,000 just for having the. ability to connect to a gas network and use gas . That's before you even use any. So clearly there's an unfairness there.
scenario to envisage if the current trajectory continues, that fixed cost could be in the region of. £1,000 just for having the. ability to connect to a gas network and use gas . That's before you even use any. So clearly there's an unfairness there.
10:08
10:08
Speaker 2
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Speaker 2
All the work that we've looked at is the people who will be left on the gas network in a. declining number are going to be the least well off, because they can't afford to switch to an alternative. They're going to be those typically in rented properties because they don't. control the appliance. They just pay the bill going along, and it's going to be those people who are left in what we call hard to treat homes, where the alternative to a gas boiler, let's say a heat pump is not an economically viable way of heating the home.
It becomes really. expensive to heat a home and hard to treat. Imagine a solid wall. construction building there. Typically what we would consider to be hard to treat. Now that's, you know, Rishi Sunak, when he was prime minister, estimated that to be about. 20% of UK households. We think it's probably closer to.
It becomes really. expensive to heat a home and hard to treat. Imagine a solid wall. construction building there. Typically what we would consider to be hard to treat. Now that's, you know, Rishi Sunak, when he was prime minister, estimated that to be about. 20% of UK households. We think it's probably closer to.
10:08
10:08
10:09
10:09
Speaker 2
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Speaker 2
You've got to manage the decline and you have to consider what's the fairest way of doing that. And the people left on the gas network are going to be the ones, you know, ideally, you know, we should be protecting our communities, not penalising. And that then leads you to the obvious question is actually, is this the right strategy? Then if we're going to leave people on a gas network to to see reduced and then. ultimately as industry and as you know from my bio recovering.
10:09
10:09
10:09
10:09
Speaker 2
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Speaker 2
To go to a voter, knock on their door and say, because we're declining the gas network, we're going to turn you off. We're going to turn the gas off. Because ultimately, that's where you have to be in a position mentally to do. If you're going to decline the gas network to zero, you have to tell people that they are going to be cut off, and that's the heating, hot water and 50% of the people, it's their cooking as well.
And I don't think you want to go there.
And I don't think you want to go there.
10:10
Lizzi Collinge
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Lizzi Collinge
My strongest advice to you don't go down in that direction. Thank you. You raised a really good point, Mike, because in my constituents of constituency of Monmouthshire right now, people are really worried about being told that their landline is going to be switched off. And there are a lot of people without. So it's just I'm just drawing the parallels. I've had a huge amount of casework about that because people are saying, you know, you can't just switch me off and not give me an alternative. And a lot of people don't have, you know, internet broadband, sadly.
Monmouthshire. So yeah, it's I understand what you're saying. So basically what you're saying is recover costs while the consumer base is large is what you're saying, I think. And would you also say, should the government.
Monmouthshire. So yeah, it's I understand what you're saying. So basically what you're saying is recover costs while the consumer base is large is what you're saying, I think. And would you also say, should the government.
10:10
10:10
10:10
10:10
10:11
10:11
Speaker 2
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Speaker 2
You know, is, is also borne out in terms of, let's say, the smart meter rollouts that we've all been embracing and we've been working towards, and it's moved from being something everybody will have to being everybody will be offered. And so it becomes voluntary. Yet we don't get people taking up the offer of a smart meter. So that tale of people left without a smart meter is, you know, it's probably what's going to be reflected in terms of where there might be with their heating appliances, but but. magnified because the smart meter costs are borne through the bills and people probably don't notice.
If you want to make a switch to from a gas boiler, say, to a heat pump, you will notice how much it's going to cost you to do, and then it becomes a further deterrent to make the shift. So there'll be those who can't afford to, and those who don't want to, who are left on the network, and you will .
If you want to make a switch to from a gas boiler, say, to a heat pump, you will notice how much it's going to cost you to do, and then it becomes a further deterrent to make the shift. So there'll be those who can't afford to, and those who don't want to, who are left on the network, and you will .
10:12
10:12
Wera Hobhouse
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Wera Hobhouse
It's my advice. Okay. Thank you. Vera. Thank you. Well, I think we would all agree that we can't and wouldn't hit the most vulnerable with with extra burdens, of course. But also from the previous panel, I'm sort of slightly concerned that all I'm hearing is, you know, we can't afford it. And anyway, it's not going to happen. And yet you you might be a little bit tone deaf towards what actually the long term government agenda is. And wouldn't it at least be. responsible to look at a. scenario where we have a very sort of significant decline in gas network, and therefore how this is going to be managed should be something that you should take very seriously rather than saying, it's not going to happen, it's .
10:12
Speaker 2
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Speaker 2
Politically too difficult to see through. Therefore, we're just keeping going as normal. Oh, look, don't get me wrong, you know, we are the least complacent organisation when it comes to looking at. alternatives to, you know, on that journey to. decarbonisation of homes. Members of my make heat pumps, they make boilers, they make heat interface units for heat networks. They are absolutely engaged in the process towards net zero and. decarbonising homes. What they don't necessarily agree with is the route by which, as has been chosen. And, you know, I stayed up late last night and got up early this morning to watch the mid-term.
results from the US. And just last week, President Obama made a comment about endorsing the candidate in Michigan. And he said, look, we might have disagreed about the means to get there, but we don't disagree about the ends. We don't disagree with the ends with government to get to net zero. We just have a disagreement about the means in which they're trying to do it and the direction of of travel. And in terms of, you know, whether we're looking at the reality of life. There are 24 million homes connected to the gas network. There's a further.
1.5 million homes using oil and LPG. Our current run rate of retrofitting homes with a heat pump is. 45,000 a year. That's our best prediction for 2026. It's going to take. 555 years at that current run rate. So we're not putting our head in the sand. We're just embracing the reality that we think the gas networks will .
results from the US. And just last week, President Obama made a comment about endorsing the candidate in Michigan. And he said, look, we might have disagreed about the means to get there, but we don't disagree about the ends. We don't disagree with the ends with government to get to net zero. We just have a disagreement about the means in which they're trying to do it and the direction of of travel. And in terms of, you know, whether we're looking at the reality of life. There are 24 million homes connected to the gas network. There's a further.
1.5 million homes using oil and LPG. Our current run rate of retrofitting homes with a heat pump is. 45,000 a year. That's our best prediction for 2026. It's going to take. 555 years at that current run rate. So we're not putting our head in the sand. We're just embracing the reality that we think the gas networks will .
10:14
10:14
Wera Hobhouse
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Wera Hobhouse
Lot longer than some people envisage, and some people want. Let's switch to the heat pump and the support of the government. And we have now got certainty we had in the budget what is going to happen with the boiler. upgrade scheme? Do you think policy certainty is actually good enough, or is there something that really concerns you about the way the government makes one announcement after the other, which seem to .
10:14
Speaker 2
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Speaker 2
Sometimes . not all align? Yeah. I mean, look, industry as a whole, I have found love, certainty. It always asks politicians for certainty if it's in their interest to have certainty, whether it's against their commercial interests, they don't want certainty. So in terms of the argument around the boiler upgrade scheme, the cut that was announced in the scheme, it's a cut to the budget of around about.
£800 million over the four year period, and for next year it will cap the budget at.
£800 million over the four year period, and for next year it will cap the budget at.
10:15
10:15
Speaker 2
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Speaker 2
The same as this year. Now that's the equivalent of about. 53,000 heat pump installs. We're currently not getting anywhere close to that number, so on the face of it, it's a cut in the budget and therefore the direction of travel that the government is signalling suggests that there is a weakening in resolve towards heat pumps. But the reality for heat pump. manufacturers and heat pump. installers is that we're not actually getting to that capped figure anyway. So there is still more to do. We can still do more in fitting heat pumps into people's homes and take up the grant that is available under the boiler upgrade scheme, but that's just one of the mechanisms.
The boiler upgrade scheme. There are other policies supporting heat pumps, some of which, frankly, if I can say are a complete nonsense such as the clean heat market.
The boiler upgrade scheme. There are other policies supporting heat pumps, some of which, frankly, if I can say are a complete nonsense such as the clean heat market.
10:15
10:16
Speaker 2
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Speaker 2
A UK gas boiler manufacturers. If people do not install heat pumps in their homes, that penalty is paid by the manufacturers and put onto the cost of the gas boilers that everybody else buys on a daily basis. So again, we have. examples of ordinary families being penalised. unfairly because of this drive to net zero on a policy that has not delivered a single additional heat pump. When government was questioned about the impact of the clean market mechanism, they couldn't point to any additional. installs that were a result of it, because it's a supply side measure when what we should be .
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Speaker 2
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Speaker 2
Supply of heat pumps. Okay, so if you were the government, what would you have announced yesterday? I would certainly have announced the scrapping of the Clinique market mechanism, aka the boiler tax, because that would have put more money into people's pockets. When they do buy boiler and they typically buying a boiler at a point of distress when it's broken down. And the last thing you want at that stage are higher costs. So I would scrap the clean heat market mechanism.
I would have.
I would have.
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Speaker 2
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Speaker 2
As we have done to government, that they should. consider what we call hybrid heat pumps. That is to say, you have a gas boiler in your home and you add on heat pump, so you have a smaller heat pump unit. It's cheaper. You do not have to get rid of of the sort of pipework necessarily. You've got your gas boiler in in place. You don't have to install a hot water tank with a hybrid, but you do with a heat pump only solution. So the. installation costs come down . In terms of the carbon saving, there's about an 80% carbon saving from a hybrid.
system compared to a gas boiler. Now it's not 100%, but it's 80% and it's a good outcome. What it also delivers, and this was interestingly, this was done in studies that were done at the Salford University Energy House. It actually reduces bills lower than a heat pump, which we knew, but lower than a gas boiler only solution. And then, as the previous evidence.
system compared to a gas boiler. Now it's not 100%, but it's 80% and it's a good outcome. What it also delivers, and this was interestingly, this was done in studies that were done at the Salford University Energy House. It actually reduces bills lower than a heat pump, which we knew, but lower than a gas boiler only solution. And then, as the previous evidence.
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Speaker 1
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Speaker 1
Gas network compare for those for the offshore oil and gas sector? There are some. similarities that pick up on some of the themes that have already come out, which is a lack of certainty and a lack of national planning, means that workers are deeply concerned about the future of their industries and the future for their prospects. We we talk a lot about transitioning workers and transitioning skills. And actually, the reality is a lot of these skills are deeply transferable.
And our.
And our.
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Speaker 1
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Speaker 1
Our members are willing and able to transition skills where required. But the reality is the investment in the workforce isn't coming from new industries. And there certainly are a pattern of of hostile union or engagement and lack of engagement from new emerging industries and technologies. But a big uncertainty comes from the. hypothetical nature of these future jobs. What does it mean? So the gas workers specifically, you know, we are a gas union GmbH was founded in the Beckton Gas Works, and we have always been a proud gas workers union. We have thousands of members led in the breadth of the country in all areas of the of gas.
And we , you know, they have. comparatively good wages, terms and conditions and consistency of contract. This is permanent work , and it is high density union industry. And it's also an industry that has .
And we , you know, they have. comparatively good wages, terms and conditions and consistency of contract. This is permanent work , and it is high density union industry. And it's also an industry that has .
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Speaker 1
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Speaker 1
Sector with the emerging technologies. Well it's a little bit of a hypothetical question, isn't it? Because what what type of industries are we actually comparing them to in terms of. So I can't really answer that question because what emerging industries are we talking about? Because when we're talking about. transitioning gas.
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Speaker 1
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Speaker 1
Where are we. transitioning them to? And I think it just comes back to in terms of your your initial question about the comparison with offshore workers, I think it's, you know, some of it's structurally very different, but it's a similar point, which is we are talking about it feels like often we are putting the cart before the horse. We were talking about shutting down. industries into a. hypothetical that doesn't exist and would be very clear that that GMB and our members, we are absolutely support the decarbonisation. And, you know, I'm personally part of an organisation called Climate Jobs UK, which was a trade union.
coalition advocating for jobs first.
coalition advocating for jobs first.
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Speaker 1
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Speaker 1
But that transition has to be real and it can't be managed decline dressed up as as a. transition that doesn't really exist. It has got to be about a national plan. And I think that's acutely true of gas because we're talking about decommissioning. But what does that mean? What are we shutting down in order to build until we've got a national plan that is realistic, that we're going to have to rip up every street in the country to replace pipes with cables, then we don't have a national plan, and we certainly don't have a national plan to transition skilled workers.
So there is.
So there is.
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Speaker 1
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Speaker 1
We hope. And we have, you know, and we have there's transferable skills across the piece about whether it's gas workers looking at heat pumps. But that lack of national plan and the honesty about how long that transition will take and the lack of holistic conversation about where gas is going to sit in the conversation about whether it's industry, power generation, where does .
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Speaker 1
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Speaker 1
Think we're worried that there's not enough workforce left. Actually, in the gas industry. It is still a growing industry, but it's certainly something for us to be mindful of. If people exit the industry before there is a replacement for those workers. If we start. underinvesting in the workforce and the industry before we're transitioning, then we can end up in a very difficult situation. The UK's gas network is one of the safest and most reliable in the world, and that is based on the fact that really skilled workers maintain it. We in households and networks, if you create.
uncertainty in the industry and people exit because they they're given opportunities or they feel an.
uncertainty in the industry and people exit because they they're given opportunities or they feel an.
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Speaker 1
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Speaker 1
Place a skills transfer plan? I think the difficulty is we can't have a sensible conversation about skills transfer ahead of a sensible. conversation about what is the direction of travel for our whole home heating and industrial heating plan. Because again, it comes back to what are you. transferring me to? It would be the question of the workforce. And so yes, there is a lack of skills, infrastructure and transitioning.
But of course there's going to be , until we understand what the national plan is for heating our homes and.
But of course there's going to be , until we understand what the national plan is for heating our homes and.
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Speaker 1
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Speaker 1
You know, what is it, 23. 24 million households from gas. And I really think it's important that we don't just have the home heating conversation in isolation without ignoring the. industrial landscape here and how important gas is for our industries across the length and breadth of the country. It's kind of difficult to have a sensible skills conversation, isn't it? Because again, our members absolutely, we will support training and skills. And, you know, we've got other things we need to talk about hand in hand with skills. It's not just skills training. It's about, you know, a no compulsory.
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Speaker 1
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Speaker 1
You know, thinking about how do we protect the level of pay and pensions that people get currently from the current system? But if you can answer the. question of where people are. transitioning to and where they're going to apply those skills, and not just in a temporary contract or a hypothetical .
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Speaker 1
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Speaker 1
Paid less than gas engineers. Other people are saying it's the other way around, but it depends where they're installing. It depends. Again, it's you have to you can't just talk about wages. We have to talk about certainty because we've got we've got gas workers who are a who are installing heat pumps, but they're not getting the orders through. So again, it's about the consistency of work. So again, it's pretty difficult to compare. And it's probably why you're getting contradictory evidence because we could all probably give you statistics that back up the argument we want to make.
But the reality is it's not really a consistent offer of alternative employment at the moment. And that's something that I think we should all it fits into the conversation about national planning, and I think that's where we can get things really wrong, is when there's a severe disconnect from what's actually happening on the shop floor, on the ground in our homes, because we talk about hypothetical jobs, hypothetical heat pump installations. But, you know, it's just not happening. We've got many .
But the reality is it's not really a consistent offer of alternative employment at the moment. And that's something that I think we should all it fits into the conversation about national planning, and I think that's where we can get things really wrong, is when there's a severe disconnect from what's actually happening on the shop floor, on the ground in our homes, because we talk about hypothetical jobs, hypothetical heat pump installations. But, you know, it's just not happening. We've got many .
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Speaker 2
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Speaker 2
Which will be done by one man band type. operations that exist. Heat pump installation might take five days , rather than you could swap a combi boiler in a day so that you could, in theory, do five boilers, and that's going to be more profitable than doing one heat pump. And so that's why you've got this. disparity in the numbers that you've got, because all people all work in slightly different ways across the industry. So it's very difficult to get a firm view as to whether you're better off being a gas boiler in store or a heat pump installer.
The reality is people are training. They're trained to do gas boiler work because that's how they typically go into the industry, because that's where the work is. They are. retraining to do heat pump work. because they're incentivized to do so. There's heat training grants available to do so, and there's an eye to where the future market might be. The problem with most installers is once they've done that training, there's not the demand out there to put that training into practice. And it's a bit like passing your driving test. It's not much good if you then haven't got a car to drive in and do any driving afterwards, you become stale and you lose the benefit .
The reality is people are training. They're trained to do gas boiler work because that's how they typically go into the industry, because that's where the work is. They are. retraining to do heat pump work. because they're incentivized to do so. There's heat training grants available to do so, and there's an eye to where the future market might be. The problem with most installers is once they've done that training, there's not the demand out there to put that training into practice. And it's a bit like passing your driving test. It's not much good if you then haven't got a car to drive in and do any driving afterwards, you become stale and you lose the benefit .
10:27
Bill Esterson
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Bill Esterson
That you've done to pass the test in the first place. Okay. Thank you. Thank you chair, thank you. Thanks very much. And just going to ask you, we have we heard from MCs who unfortunately were due to be on the panel today but weren't weren't able to be. They suggested that Ofgem should provide an. analysis of the impact of. decommissioning and indeed perhaps suggest a pilot area for decommissioning.
What's your .
What's your .
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Speaker 2
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Speaker 2
Response to the MCs suggestion? I mean, I've you know, I've got no problems with Ofgem as a regulator doing an assessment of what it would cost us and the processes that the industry would have to go through to do decommissioning. My, my challenge back to MCs is, you know, what's what's the motive behind that. particular statement? What are you, you know, what are you trying to get at in, in this study? And it comes back to, to what I've said before, if you're going to go down the route of.
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Bill Esterson
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Bill Esterson
As politicians have got to be able to say, hand on heart, you're going to cut people off. Yeah. I mean, your your point is very well made. You also accept decarbonisation. Absolutely. It has to happen. I think it's fair to characterize it. You've already said that. So how would you manage this process?
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Speaker 2
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Speaker 2
Picture is, is, is that is that sort of where you're coming from? We're saying, you know, hybrid should be an option that is encouraged. Whereas at the moment, government view on hybrid is no, we do not want to encourage. hybrids because they want the heat pump only solution to work. Now, in theory, yes, a heat pump gives you the.
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Speaker 2
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Speaker 2
So that when they come to do the next appliance switch, they might consider, well, a heat pump only option because they've got the confidence and use of a heat pump. It's a much better stepping stone to a heat pump only solution. But our view is we don't rule out any technology. We want to look at heat networks and how they can. decarbonise homes, particularly in communal blocks. And and, you know, our members make heat interface units to make that happen. Now, we also think. hydrogen has a role to play. We're not saying it's going to be rolled out everywhere, but it has a role to play and it's not.
eliminating any technology at this. stage we think is the way forward. Whereas at the moment .
eliminating any technology at this. stage we think is the way forward. Whereas at the moment .
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09:00
Speaker 1
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Speaker 1
Which starts from the place of how do we turn off a Nash or how do we erode a national strategic asset, which is the whole gas network, including the workforce? Without answering the question, to be replaced by what. And it's very odd to me to have a. conversation about any national strategic asset with the conversation isn't how do we wind it down in replacement for an alternative when we don't have the alternative established? And so we're not closed off to any .
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