A lack of political will to take tough decisions will be the biggest barrier to the creation of hydrogen networks, an energy researcher has claimed.
Malcolm Keay, senior research fellow at the Oxford Institute for Energy Studies, said the gas industry will need to take the lead if they are to become more than just a pipe dream.
Speaking at the Low Carbon Networks and Innovation Conference hosted by the Energy Networks Association, Keay told delegates one of the reasons the power sector is being decarbonised first is that in political terms it is the “low-hanging fruit”.
There has been very little direct impact on the everyday lives of consumers and because renewables have been gradually brought onto the system over time, the effect on energy bills has gone largely unnoticed.
Nevertheless, Keay said the drive towards decarbonisation has completely upturned the power sector, ending the old divides between generation, transmission, distribution and supply. The electricity market and regulations have been left “broken” by the changes.
“We really haven’t got an approach for putting the various bits of electricity industry on a level playing field; to price them in the same way, have a fair degree of competition or have a coherent approach to regulation,” he explained.
Settling on a whole-system approach to decarbonisation that also covers transport and heat therefore seems “wildly optimistic” at the moment and will certainty take a long time.
Keay said there is a clear consensus from economists that the simplest and most cost-effective solution would be an economy-wide carbon price.
But, he added: “The reason no government has really gone for that is that the politics don’t work.
“And the reason it doesn’t happen – the reason the politics don’t work – is that the carbon price would have to be very high indeed to have an equivalent impact to the support that’s been given to renewables.”
He continued: “Even if you could tolerate a price that high, you couldn’t make it credible. The whole point of the exercise is to encourage investment.
“For that, a company would have to know what the price was going to be in 20 years’ time… Our political process can’t deliver that degree of certainty.”
As a result, successive governments have fallen into an “ideological limbo” when it comes to energy policy: “Governments are in principle committed to markets but they have to keep intervening in practice, both to meet their carbon objectives and to offset their earlier interventions”.
“Energy is undergoing a revolution,” he added. “But the government is not ideologically equipped to respond in a whole-system way. It’s only equipped to respond on a piecemeal basis which is what’s been happening so far.”
Keay said the large peaks in winter demand and current lack of viable seasonal energy storage make hydrogen networks appear attractive for the decarbonisation of heat.
However, he questioned whether the government will be willing to the bear the associated political price.
Whether through taxes on natural gas or subsidies for hydrogen, there would be a large financial cost that would need to be paid by either taxpayers or consumers. Even running the necessary large-scale demonstration projects would be very expensive: “It’s difficult to see that spread across all consumers.”
Furthermore, they would definitely feel it in their wallets: “There is very little scope as there was with electricity for folding the costs gradually into the system. With hydrogen it will be very visible because there’s limited scope for blending hydrogen into the system… Somebody will have to sort out the pricing problem.”
At the same time, hydrogen networks will have no benefits to the lives of consumers and some may even be scared by the prospect of the gas being pumped into their homes.
“Heat looks very difficult to deal with,” Keay concluded. “It would require a strongly interventionist response; a clear government vision for the future”.
“The likely outcome, from my point of view is that we’re going to continue muddling on through with heat: little bits of energy efficiency; little bits of support for district heating; little bits of support for other approaches.
“It’s something I think the industry needs to think about. Are you happy with that – the death of a thousand cuts – or would you prefer to come up with a vision yourselves?
“I think it’s not going to happen unless there is a clear lead from the industry.”