The publication of the Climate Change Committee’s (CCC’s) Seventh Carbon Budget (CB7) last week marks an important moment on the journey to Net Zero. The reaction to the report has centred on the value to society from the push towards Net Zero, with electrification of the energy sector as the main driver of this.
But there is one key theme that runs throughout the report which has had less attention – change. CB7 demands unprecedented consumer behaviour shifts, through adopting new technologies, reducing meat consumption, changing holidaying habits, and through engaging with the energy system to a far greater degree than they ever have in the past. It also demands change on the part of industrial and commercial customers, who would largely be expected to electrify their operations under the CCC’s proposals.
This reflects the fact that the CCC’s Carbon Budgets are largely an exercise in economics, which is bounded by the CCC’s statutory role fixed around Net Zero and legislative targets on the way to 2050. This means they are effectively ‘solving for Net Zero’, bounded by the constraints placed upon them. If the economics points towards a need for behavioural change, then that’s what the CCC’s conclusion will be.
The real-life context of CB7
The trouble is, and I say this as a trained economist, economics rarely applies perfectly in the real world. And real-world context is everything.
We live in a world where faith in Net Zero is wavering, people are continuing to face acute cost of living pressures[1] and Donald Trump’s ‘Drill Baby Drill’ mantra will likely see cheap Liquefied Natural Gas (LNG) flood the international gas market, in turn fundamentally changing global energy economics.
Against this backdrop, relying on the majority of, if not all, consumers to proactively change their behaviour seems unrealistic. We would need voluntary change from all demographics, both the wealthier and less well-off, and from those who don’t support Net Zero as well as those who do. We would need manufacturers, most of whom operate on wafer thin profit margins, to invest significant sums to fundamentally change their production processes to switch from gas to electricity.
This can all be made to add up in an economics exercise but is hard to envisage happening in reality. So, the question becomes – what can we do as an energy industry to both encourage as much change as we can, while at the same time decarbonising in ways which do not require that level of change?
The value of the gas system
This is where the gas system comes into play. While we warmly welcome the CCC’s recommendation for a core hydrogen transmission network (aligning with the National Infrastructure Commission's previous recommendation), their report largely overlooks the value of the wider gas network, painting it as a liability rather than an asset.
However, as we set out in a recent report, ‘Accelerating Progress Towards 2030s Carbon Budget, there are several levers we can pull which can unlock significant amounts of decarbonisation with minimal impact on the end consumer:
- We are already greening the gas which flows through the system, with over 10TWh of biomethane capacity now connected. This is enough capacity to heat close to 1 million homes, which is almost certainly a greater number than are currently heated by heat pumps[2]. This contribution seems largely unrecognised by the industry and the public, precisely because there has not been any need for change on the part of the end consumer. And the potential to grow the market is far, far greater than currently assumed – watch this space for more FEN research on this topic in the coming months.
- We can also use our existing gas network to introduce a blend of hydrogen with natural gas, with trials already demonstrating how a 20% blend can be used in both the distribution network and the National Transmission System. While blending is primarily a means of growing the market by enabling producers to de-risk projects and attract investment at lower cost, decarbonisation is a very welcome positive side effect.
- By unlocking blending at transmission level up to just 5%, we can move substantial volumes of blended hydrogen and recover significant amounts of renewable energy which would otherwise have been lost. All this helps to improve the economics of all types of hydrogen production (both green and blue), greening our gas supplies with no change needed on the part of the consumer. With our continental neighbours potentially blending hydrogen as early as the start of next year, it’s imperative that we match this approach, to maintain the interoperability and diversity of supply options that come from our connections to mainland Europe.
- Finally, we can harness the power of hybrid heat pumps, which integrate a heat pump with a gas boiler in an optimised heating system. As well as delivering not far off the same carbon reductions as an all-electric heat pump, hybrids require far less consumer change, with no modifications needed to the fabric of buildings. This ultimately means a lower upfront cost, either to the household or to the public purse.
Where do we go from here?
While we absolutely should be aiming for a significant transition of our energy system to enable Net Zero, it is important to recognise the context in which we are making this endeavour and the realities of how difficult it is to change behaviour – especially when the aim is to shift the behaviour of nearly the entirety of the population.
Grounding our approach to decarbonisation in reality as well as economics will help maximise the chances of reaching our ambitious climate targets. Our approach should facilitate behavioural change where possible (and we will need it, under any scenario), but we should not overlook the role that our gas infrastructure can play in decarbonising the disengaged as part of a whole systems, multi-technology approach to Net Zero.